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To Leave or Not to Leave (that was the question)

To Leave or Not to Leave (that was the question)
Way out / Credits : Sjoerd Los

By now, I’m sure you’re bored with Brexit.

Fear not!

This isn’t going to be a post on my predictions for the future of Britain, the UK or Europe. Because I have no idea what is going to happen. But if you want a quick summary, I’d recommend John Oliver’s hilarious show on Brexit (or head over to The Economist for more in-depth coverage).

What I’d like to explore is : what were the motivations behind Leave voters and what can we learn from them?

The European Dream

I could probably write many posts about it, but simply put I love Europe. My wife and I spent our honeymoon in Greece last year. We recently went for a 3 week babymoon to Spain, France and Italy and it gave me a glimpse of how awesome Early Retirement could be.

I love the idea that a bunch of countries decided to get together to preserve peace on the continent, grow its population culturally by allowing free movement of people across borders and facilitate business with free movement of goods. It’s also such an ambitious goal that it was bound to face difficulties along the way.

the people have had enough of experts

So why did a majority of Britons voted out of the European Union?

A dual US-UK citizen recently wrote a piece in Yahoo Finance on his reasons for voting Leave.

Let’s dive in, it’s interesting.

Before we start, and to put things in context, I feel obligated to quote Michael Gove, the UK justice secretary, who said “the people have had enough of experts”.

Home Alone

So why did the author decide to Leave?

I voted to leave because the EU is anti-democratic. The best estimates indicate that between 15% and 55% of the laws we are subject to in Britain are now passed by faceless, unelected, largely unaccountable bureaucrats in Brussels. How did we get here? By voting to join a free trade block in 1975 — and hanging around, making no effective protest, as the EU morphed into a political project, and bloated federalist super-state.

There are some good points here that the EU appears as a bunch of unaccountable bureaucrats in Brussels. The EU doesn’t have a President like the US does. It understandably makes it more difficult to relate to. This is probably not ideal, but can this be a deal breaker?

I voted to leave because the EU is a boondoggle. They shuffle money from rich countries to poor countries (and also back to rich countries!) making decisions about what kinds of projects ought to be funded. (No, they don’t often consult with the citizens of either the country getting the project, or the countries paying for it.) A Portuguese golf resort, a Bavarian hunting lodge, a virtual clone of Malmo, Sweden in the video game Second Life. A hemp farm. Puppet theatre.

Is the US working any differently? What about the transfers between the richer states and the poorer states that we have in the US? Does your local government asks its citizens opinion for every project its invests in? I don’t really see the EU doing anything out of the ordinary here.

But wait for the next part, it’s the most intriguing:

I voted to leave because EU membership burns the wealth of British taxpayers — to the tune of £23 million a day. And that’s outside of the billions it costs British businesses to comply with often bizarre and Byzantine EU directives, such as those enforcing the curvature of bananas, banning diabetics from driving, and making it illegal to sell eggs by the dozen. There may be a reason Europe is the only continent in the world with a shrinking economy. (I also voted to leave so we can make our own trade agreements, on our own behalf, with the rest of the world.)

There’s so much wrong in this paragraph I don’t know where to start.

  • Contribution to the EU budget is actually correct, but omits that for every Pound given to the EU, the UK receives 0.60 Pounds back in European investment. The UK basically pays around 4.3 billion euros a year to access a market of 500 million people (see 2016 EU budget).  Put this in perspective with the roughly 900 billion euros a year of public spending in the UK and the “cost” of being in the EU represents less than 0.5% of annual its budget.
  • If these claims about byzantine rules in EU seem ridiculous it is because they are. They’ve been so widely spread that the EU had to dedicate a page to debunk them.
  • Europe’s economy is not shrinking, it is still expanding albeit slowly, and this would be forgetting that Latin America, Russia and Japan are indeed shrinking according to the last IMF report.
  • What about economies of scale? It’s difficult to think that the UK, with a GPD of 2.7T$ would have more bargaining power than the EU as a block with a GDP of 16T$ when, let’s say, it wants to trade with China.

Now let’s finish with probably one of the most often cited reasons to Leave the EU:

And while I’m neither totally thrilled nor all that comfortable sharing a camp with Nigel Farage, or (if they exist) Britons outside of London who just don’t like having so many immigrants around… I voted to leave because, as the man said, an idea is not responsible for those who believe in it.

This one is clear and reminds me of some political rhetoric here as well. This seems to be part of the economic cycle : when the economy grows, migrants are welcome in the country to provide cheap labor. When the economy slows down, the perception changes.

What we can learn from this

The fact that most media, the markets and the polls all thought Britain would eventually vote Remain gives us a unique opportunity to try to understand what is happening around us.

  • People are desperate for change and likely voted out of exasperation for the political class and the current economical or social situation. In the UK, as in the US, middle class wages have been stagnant for years. In this case, a theory goes that if people feel that they’ve been screwed by the system, the downside of their situation being limited, change (any kind) is better than continuity. The bigger the disruption, the better. Voting out of the EU did just this.
  • Politics are becoming more polarized. In this referendum, the young and urbanites overwhelmingly voted Remain, while the rural and older people chose to Leave.
  • We don’t know what we don’t know: because the votes were so polarized, it would have been difficult for anyone on either side to know what the other side felt. All the institutions, political figures and the market belong to the same ‘elite’ that the Leave camp was campaigning against. All of them thought they were right and with possibly overconfidence, overlooked the fact that they had no idea they were the minority.
  • Activate your BS detector: so much of the arguments mentioned by the Leave voter are inaccurate that they shouldn’t have been support for a decision. But they were catchy and difficult to debunk which made them more attractive.
  • Your vote matters! This one seems obvious but there have been numerous report of people who either didn’t vote or didn’t believe their vote would have made mattered.
  • Polls can be widely deceptive : These charts come the poll aggregator Predictwise, which has been cited in several publications for its polling results. You will see how the Leave vote had been predicted to lose up until the last hours of the referendum and suddenly crossed over. The same site tracks polls for the US election, for a republican / democrat winner.
UK Remain Leave Vote predictions
UK Remain Leave Vote predictions
US Democrat Republican Vote predictions
US Democrat Republican Vote predictions

We should always remember that we don’t know what we don’t know.

The surprise of Brexit hasn’t triggered a financial crisis, even if markets did get volatile in the days following. But if a similar surprise happens on the US election, we might be on for a wild ride.


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  1. The election is going to be an interesting one this year. It reminds me of the South park episode where they voted for a new school mascot. The two, and sole, options to vote for became a Douche, and a Turd Sandwich – yeah two party system! It was pretty funny but hit this election year on the head with the two options to vote for and I am assigning neither candidate to neither role, nor am I implying anything about one being female and one being male and the above choices. :)
    The most interesting thing I thought came out of the vote was the younger people wanting to stay and the older people wanting to leave. Could it be the older people that were around fro 1975 onward just ahd enough and saw it get turned into something they didn’t support anymore, and the younger people just don’t want to “wreck the economy” and stay the course, but lobby for changes? I don’t know, but that was the overall consensus from “they” and the talking heads after the election. More interesting is the recent development of the head Leave backer opting out of being the next PM. Sort of “Oh hell no, I don’t want to get stuck with this!” kind of attitude. :) I guess the PM is a whole new kettle of fish to fry, and maybe he just doesn’t want to land in that political minefield/boondoggle, but to me it speaks volumes about his real investment in the Leave movement.
    Nice post!

    • I agree that these guys not wanting to run for PM and lead the change they supported is awkward. The Economist compared their campaign to a dog chasing a car and finally catching it. What happens then? Nothing because it wasn’t planning on catching it in the first place.
      As for the young wanting to stay, many of them don’t know what UK outside the EU is. They travel more and enjoy that they can go anywhere in Europe so freely. They benefit from exchange programs that allow them to study anywhere in Europe. They’ve seen tangible benefits. The older generation can always say “it was better before”. And in many cases it probably was. Wages have been stagnant for 20 years and, while it’s not directly related to politics and Europe, it’s easy to make the mental shortcut that before, before the EU, it was better so someone must have messed up.
      This is happening in many developed countries, so we’re bound to see more of the anti establishment votes.
      I need to watch that south park episode :)

  2. It was interesting to read the quotes you shared, Nick. Call me crazy, but the Brexit hysteria was so bothersome to me that I largely ignored it, save for gathering an understanding of the big picture details. I agree with your suggested takeaways and am hoping that the rest of the world can learn from Brexit.

    • The coverage of this story was definitely everywhere. It is a big deal in itself but it seems that the markets have already shrugged it off, now that we see the Leave camp less enthusiastic about implementing their idea than campaigning for it.
      Hopefully, some introspection will happen within the political class and something good will come out of it!

  3. You had great takeaways here that many people fail to look over. I have no idea how Brexit is going to play out in the coming years but there will be some growing pains. I was shocked when the vote happened but I think the reaction was overdone. I did not want to turn the news on because they all have such bias opinions I find it better to just read from more neutral people who do not leave out key details to persuade people in one direction or another.

    • Thanks for the nice words Stefan. I too was surprised, but if so many people had a different opinion, I thought we should try to get their point of view.
      I very often try to be factual, so if you see an overly biased article, call me out!

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