Boris Johnson’s laboratory experiment

Boris Johnson’s laboratory experiment

Before Greece risked falling out of the eurozone in 2015, Alexis Tsipras made his famous kolotoumba (somersault). At present, British Prime Minister Boris Johnson shows little sign of backing down on his ambitious Brexit agenda, though there are many opinions implying that his is also a reckless gamble. If there is an analogy between the two cases, the difference is that Johnson believes he has a much stronger hand to play in this game of poker.

Brexit looks like one of the biggest laboratory experiments of our times. Johnson is challenging opinion on all sides. It will provide social scientists with work for years to come. On trade, he is challenging a central notion in economics: “gravity theory.” This says that states trade mostly with their neighbors and that anything which deters such trade leads to a lower rate of economic growth. Last Tuesday, the PM said that he seeks a trade deal with the EU27 similar to that of Canada or that of Australia. The Canada model is of a basic free trade agreement covering goods, not services or agriculture. But this assumes customs checks as these goods enter the European Union. Those checks involve delays and are costly for firms engaged in intricate supply chains that straddle Europe. So they deter trade and investment.

If the EU won’t agree to the UK emulating Canada’s deal – precisely because the UK wants the right to have a competitive advantage by not respecting EU labor, environmental or consumer rules – then Johnson says he’ll accept a deal like Australia’s. Let’s put aside the fact that Australia doesn’t yet have such a deal with the EU. The meaning here is that the UK and the EU would simply have an agreement based on the minimal rules of the World Trade Organization. This is a scenario that the government’s own economists estimated would leave the UK economy between 6 and 9 percent worse off by 2030. A Canada-style agreement would be better, the economists estimated, but still negative.

Either model can be justified only if you believe that the UK can gain compensating advantages by increasing its trade with the rest of the world. This is to defy geography and overturn the “gravity theory.” Critics argue that there isn’t much potential for the UK to gain more by trading with places like Australia – they’re too far away and too small.

However, an uncertain factor here is US President Donald Trump. He promises the UK the biggest of all trade deals. The UK might also sign a deal with China. The strategic question then becomes: What if Johnson’s plan works and the UK grows faster than forecast? Economic theory would have to be revised and, in the practical world of politics, the EU and others would have to adjust somehow.

The second part of Johnson’s experiment concerns the bargaining process itself: Can the UK can really be “David” to the EU’s “Goliath”? By any objective measure, they’re two unequal players. Theories of bargaining say that the weaker side should pursue a softly-softly strategy, trying to win round the other side. Well, Johnson has torn that up and is being belligerent, a la Varoufakis, believing it’s more effective. London believes the EU27 will become divided in how to respond, because the gains and losses vary so much. Yet, so far, nothing unites the EU27 more than Brexit. The EU’s unity in the negotiations defies expectations.

The third big aspect of Johnson’s gamble is his claim that he can bring the country at home “back together again.” At the election, he promised to move on from Brexit and put right the many problems in society. He intends to invest more in the National Health Service and in the economically disadvantaged regions of the North of England. As if Rome suddenly solved the problems of the Mezzogiorno. If successful, he would consolidate his election victory by redrawing the political map of the country, winning support in areas that previously voted Labour. It would be the substantive victory of a new populist politics, reinventing what his party stands for and how it is seen.

These are three big gambles and they each challenge conventional wisdom. The likelihood is that Johnson will fail on each aspect, confirming the futility of populist politics. So he may do his own kolotoumba.

He has resources to fall back on. His own political style is to be able to deny facts, to then deny he had denied them, and to claim victory from defeat. After all, he sold out his Northern Ireland allies without blinking.

Or he may take the country into an isolated and defeated future. We blame Brussels and we’re blind to what might have been. The “What if” scenarios can always be challenged.

But whatever the outcome, this is a laboratory experiment with lessons for us all.

Kevin Featherstone is Eleftherios Professor of Contemporary Greek Studies at the London School of Economics where he is also Director of the Hellenic Observatory.

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