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Vladimir Gligorov

Brexit: The Public Square versus The Political Market

Introduction
The rather important topic with the rise of populism has been that of the relationship of
the deliberative with the representative democracy. Alternatively, between demagogy and
plebiscitary support. The topic as old as political thought, starting with Xenophon, Plato, and
Aristotle (Sen reports on similar themes in early Indian political thought, but I know nothing
about that).
The way to approach this topic is that of the public choice theory. Here is an essayistic
account of the theory and of the topic on the example of Brexit. The query is this: How could
have such an issue like the Irish border post-Brexit been so utterly disregarded in the public
debate preceding the referendum?

First Jump: Brexit


The way a country joins the EU is to negotiate a treaty, then vote on it in the Parliament
or in a referendum. The vote can fail. A well-designed treaty should theoretically ensure
unanimous support. The key issue here is a well-designed treaty.
The same approach should apply to a secession. However, in the case of Brexit, the
procedure was reversed. First, the end-result was decided on in the referendum, by a majority
vote, then the terms of the secession are being negotiated.
The argument could be made that there is not much of a difference between the two
procedures because public debate preceded the vote on Brexit. Thus, the question is whether
there is a significant difference between the choice made in the public square and the one that
emerges from negotiations, in the political market as it were?

Getting around the Theorem


Public choice theory has been motivated by the search for the solutions to social choice
impossibilities since its modern revival in the 1950s. (Plato, I think, was aware of the problem
in the Republic, thus the benevolent and enlightened dictator; Aristotle was aware of the public
good problem.) Could democratic decision-making avoid the unpleasant conclusion that either
the indecisiveness of the majority rule or the unlimited dictatorship are the only two possible
outcomes of social or public choice?
Public choice theory provides many positive answers which work in specific
circumstance, but none in general (consult Mueller’s book). One is tempted to conclude that
there is something with voting that is at fault. After all, the market, at least in theory, decides
on any number of issues, i.e. who ends up with what and at which price, unanimously, i.e. in
the Pareto-optimal way.
Public choice relies on the Wicksellian argument which goes as follows: a trade at an
agreed price in a market can be taken to have had the unanimous support if everybody could
have offered better terms of trade, but did not. Every bilateral trade in such a competitive
market satisfies the strong Pareto condition, i.e. the unanimity condition (more in Gligorov,
The Unanimity Principle).
Thus, what if the political decisions are made in the same way in which they are made
in the market? Political market includes public goods though, so a decision on any single issue
comes with free riding and externalities, so
(i) unanimity has to be required, rather than implied,
(ii) items to be voted on may have to be bundled, i.e. log-rolled, and
(iii) votes may have to be traded.
With that, costs and benefits of e.g. item by item voting may be properly aligned for
each and all voters. The final vote on the e.g. trade bill, or the budget, or on market regulation,
or on all of them together will still be necessary to ascertain that the process has indeed
delivered the result which commands the necessary overall level of support.
Why is the vote on the final composite bill required? Because the overall costs may add
up to more than the public, the voters, may have had in mind when voting on any separate issue
or on any bundle of issues short of all the issues put together. So, what are unanimous referenda
on parts may not imply unanimous support in the referendum on the whole.
Why? Because vote-trading should enable not just the representation of preferences but
of their intensities too. That violates the independence of irrelevant alternatives condition of
social choice theory (i.e. binary preference ranking and choice). That, however, means that the
decision can be manipulated – voters may misrepresent their preferences in order to get their
preferred outcome. Overall, however, in an up or down referendum, especially if it requires
unanimity or realistically qualified majority (e.g. that all of the regions in UK vote for the deal),
they may not agree.
That is why, a referendum on the final deal is needed and it needs to be planned in
advance, it has to be expected. The hope than is that the political process of vote-trading across
specific issues of interests will not only aggregate the votes and the issues, but will also
discipline the manipulations to those that can at least command the support of the majority in
the final referendum. Majority vote will still lead to some inefficiencies (compared to
unanimity), but at least the sign should be the right one, and that is all that is being decided at
that late stage.

Agora
Brexit was deliberated in the public before the vote. Is there a difference between
trading votes and trading opinions? The difference is in the motivation and consistency.
The motivation in the political market are the interests of the participants. Negotiations
over the terms of trade of votes or issues lead to consent. The key book on this, with all its
flaws, is by Buchanan and Tullock, Calculus of Consent. The idea is to find a mechanism to
eliminate or minimise coercion and the associated rent-seeking and require consent. Political
market is the answer.
Relying on interests and political trade also minimises the information requirements a
la Hayek. In addition, one can solicit the support of expert knowledge to instrumentalise the
interests a la Weber.
In the public square, arguments are exchanged rather than votes. The arguments are to
support opinions rather than knowledge, so consistency is not required, persuasiveness is. In
addition, information requirements may be heavy, so emphasis on the ends rather than on the
means may be one way for an average member of the public to minimise the investment needed
to have an informed opinion. That task falls on experts.
So, intrinsically, in the public square, the debate tends to be between demagogues and
experts, between those who emphasize the ends, the desirable, and those who point out the
needed means, the feasible.
In addition, the demagogues are not constrained by the requirement of consistency
while the experts are. This is really the Socratic argument – the demagogue is happy to accept
the premises and reject the conclusion or even more often advance a conclusion and then search
for premises. Or, to loud the ends and dismiss the concerns over the lack of means or
alternatively to argue that with power (e.g. of the majority vote), everything is possible.
I.e. laud Brexit and reject that there is the Irish border problem or propagate Brexit and
then search for solutions to the Irish border problem.

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