Brexit Chaos Was Entirely Predictable Because the World Works on Routine, and Brexit Breaks All the Routine Systems on Which Trade Has Relied

Yves here. While Richard Murphy’s bottom line on where Brexit is taking the UK is sound, I have to differ with some of his logic. I don’t see the big reason for the coming train wreck as the result of habit, but as largely due to the lack of respect for and the resulting utter hollowing out of operational competence in government and in large swathes of the private sector. For instance, David and Colonel Smithers have both discussed how the civil service in the UK is a shadow of its former self. The importance of organizational capacity becomes even more important as more and more systems have been made more efficient, which also makes them more fragile. Just in time is a prime example, since eliminating inventory buffers makes production far more vulnerable to supply interruptions.

In other words, it would have been possible to have a much less chaotic Brexit, but it would have taken a radically different cast of characters and mindset, starting with a realistic vision of a possible deal with the EU rather than assuming a game of chicken would produce an EU capitulation. The Glorious Brexit and “taking back our sovereignity” could have been linked back to British examples of getting things done, like its early manufacturing prowess and its history of engineering advances. Ministers and their juniors would have talked to people in industry and transport to understand logistics and border regimes.

But even with a much more grounded view of end points and how to get there, the UK would have needed a war-level mobilization to prepare for life outside the EU. The additional activity would have been stimulative and thus provided many workers with better incomes (and hopefully a bit more tucked away) before hitting Brexit potholes. And more business leaders, managers, and front-line staff would have been in an anticipatory/problem solving mode, as opposed to confused, trying to arrange their business to avoid UK activity if possible, and/or braced for a crash.

But as Clive once described long-form, the UK practices managerialism with makes US rule by MBAs look good. It is apparently common for supervisors to dismiss workers who warn of expected or actual difficulties with company initiatives as dull and lazy, that someone clever could make it all go away. Pollyannaism as leadership is about to take a big beating.

By Richard Murphy, a chartered accountant and a political economist. He has been described by the Guardian newspaper as an “anti-poverty campaigner and tax expert”. He is Professor of Practice in International Political Economy at City University, London and Director of Tax Research UK. He is a non-executive director of Cambridge Econometrics. He is a member of the Progressive Economy Forum. Originally published at Tax Research UK

Every newspaper has the story that Honda has stopped production today. The issue is straightforward: port logistics are stopping them getting the parts that they need. And rumour has it that they are far from alone. All this is happening before Brexit adds to the woes come 1 January.

I do not wish to revisit Remainer sentiment. That some of us said this would happen is not the point. Unless, of course, it is. By which I mean that some of us said that this would happen not because we were Remainers but because it was entirely predictable that chaos would ensue from leaving the EU, and that was before COVID 19 was added into the mix.

It takes only a little understanding of the human condition, and what follows on from it about the business condition, to realise that most of the time most of us survive by a thread. The stresses of life seem to be pretty big for many. Whether they really are is irrelevant: perception is what matters here. That is what is actually real, because perceptions relate to how we see the world. And, if most of us, most of the time see the world as stressful then that is what it is.

How do we cope? Through the use of routine. We eliminate as many decisions as we can during days that demand we take more decisions than we might wish for by simply reducing the rest to the level of repetitive action to which little thought need be given. And that’s fine. Broadly speaking, most of us do not create destructive routines (or we would no longer be here) and so this process works.

The same is true of most of the remaining decisions, of course. We reduce them to the point where heuristics can handle most of the required choices. That leaves our energy for what is difficult. And even then those remaining decisions seem to be hard,

What Brexit was always bound to do was require massive degrees of decision making, almost none of which could be based on routine, and where the heuristics simply cannot work because the rules are not known. So, what Brexit was always going to do was increase stress. And it was always going to increase the error rate, because the great thing about routines and most heuristics is that we know that we can use them because mistakes do not happen when we do; experience has proven that. But now we have no such back ups.

So, right across the country right now very large numbers of people are flying blind. The government has not told them what to do, because the government has no deal, and so does not know what to say (and if in doubt, note that the Northern Ireland arrangements were supposedly agreed yesterday, weeks before being used and years after the need to know them  was understood to exist). And, as is usual in life, training is absent and there is no time to read the manual.

Of course, such situations happen daily in life. But the ratio of routine and heuristic decision making to ‘flying by the seat of your pants’ judgement is usually quite high. Only now it is not. There is far too much guesswork in the system now. And that means the system will fail.

All human systems are, proverbially, as good as their weakest link. Right now there are vast numbers of ver weak links. Of course systems will fail. And the impact can and will be exponential. Once something has gone wrong the scale of decision making required grows, very rapidly over relatively short periods. And every one of those will carry a high risk of being called wrong. The risk of chaos is very high.

And that’s what is happening. This has nothing to do with Remainers, the EU, or anyone else sabotaging anything. With the greatest will in the world, this was likely. It has been exacerbated by the government’s refusal to reach an early deal so that the transition period could be used for actual Brexit preparation. And Covid has obviously not helped. But I stress, this was always going to happen. Asking literally millions of people to amend their routines and heuristics and simultaneously make decisions based on ignorance was always going to be a recipe for disaster. And disaster is what is unfolding.

I take no pleasure from this.

People will probably die because the government did not understand this.

Others will suffer considerable hardship.

And none of those is necessary. Even if Brexit was the right thing to do, and even if the vote was properly held (and neither is true), this could only have been avoided by having a deal agreed before a transition and then having as long a transition as possible before the new rules had to be used. Simultaneous systems would have made sense to the greatest degree possible. But none of that has happened. There has, in effect, been no transition period. There has just been an extended negotiation.

Who do I blame? It’s  not hard to work that one out, is it? The UK government is, of course, responsible. It wanted Brexit. It created the chaos. It created the delay. It has not done the preparation. But most of all, the people in our government have no comprehension of the issues I have noted in this post. The idea that in the real world it takes time to make things work has clearly not occurred to them. And that is why they are to blame and no one else is.

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  1. PlutoniumKun

    Shorter version: If you want to know what dinner will be like, ask who is in charge of the kitchen.

    I don’t think anyone – inside or out – of the UK system really understood just how deep the rot had gone. This is the work of decades, starting with Thatcher of course, but she had many willing helpers. If Britain wanted out of the EU (or to be precise, if England wanted out (the Celts generally made their opposition clear), its Britains’ decision.

    But the incredible absence of even the slightest degree of administrative, tactical or strategic thinking has been a thing of wonder to witness (for those who don’t have to live there). WWI histories will no longer be the apex of British ‘what they hell were they thinking’?

    1. Timh

      Thatcher wanted UK to be the low cost employment centre. She changed employment law so after 2 years (from 1 year) an employee was regarded as protected, and inbetween could be shuffled out the door for no reason. In Germany, 3 months notice on both sides.

    1. Yves Smith Post author

      Actually, I do mean private sector, since I refer to government right before. Outsourcing to the private sector (judiciously) might not be such a bad ideas, but consultancies are full of MBAs who are good at PowerPoint and not much else.

  2. Harry

    There is a good Craig Murray piece on what we are likely to see in the immediate future. He is more “saguine” in the short term, but his longer term prognosis is pretty much in line with NC. The reason for his short term “optimism” is that a) he thinks there is very little obstacle to a deal because the UK is not operating in good faith. There is a form of words to get around all of the apparent obstacles. Indeeds Gove recent trip to Europe may well have been to do the real deal. b) But most importantly, regardless of whether a deal is done, the UK is unlikely to enforce the new rules other than on a spot check basis for the foreseeable future.

    One trivial observation. Ironically, much of the reduction in the capacity and competence of the UK civil service was because of EU entry. No point doubling up functions, so the UK capacities were dismantled over time. The obvious thing to do.

    1. Colonel Smithers

      Thank you, Yves, including for the shout out, and Harry.

      With regard to Harry’s second paragraph, I would say that this is not a trivial observation, but duplication was limited in extent. The overlaps were not as big as one imagined. The UK’s peers did not reduce capacity and competence as much.

      UK capacity in, for example, animal health, Home Office forensic science and the parallel health service operated by the armed forces were gutted due the shopkeeper’s daughter and her disciples knowing the cost of everything and value of nothing. In addition, it provided an opportunity, much in evidence during the pandemic, to give public money to friends and family.

      Outsourcing to private firms (e.g. McKinsey’s James Kelly (Mr Laura Kuenssberg) at the Cabinet Office), think tanks and bringing in party political advisers limit career (and policy) options for the central / Whitehall civil service. At the moment, there are in excess of 100 “special advisers” in Whitehall. In the good times, one does not notice these shysters, but come a systemic stress…

      As sucking up to (UK) politicians became key to career progression, the already limited appetite for Brussels and other overseas postings became further limited. This has hampered the departure from the EU.

      The prevalence of special advisers and increasing politicisation make life difficult for career civil servants, not just in terms of careers. After the Tory victory in 2015, there was a mass escape from George Osborne’s “catamites” at the Treasury.

  3. The Rev Kev

    ‘Cabinet Office Minister Michael Gove has warned that a post-Brexit trade deal might be impossible unless the EU budges on its demands, but claimed Tuesday’s Northern Ireland agreement makes it more likely that it will be done.’ Sooo, it is up to the EU to budge on non-negotiable demands because hey, they have to. Yep, sounds legit-

    General Haig would have been proud of such leaders.

    1. Richard

      I am not so sure, it can also make no deal more palatable to the USA because it secures the GFA so can be seen as an enabler for no deal.

      This is argued here today in the New Statesman

      We will soon find out!

  4. Halcyon

    Brexit, Brexit, Brexit. What else is there to say? I think it’s all been said at this point.

    The one thing that keeps coming back to me – a few years back, like many in my generation, I was having terrible difficulty finding work. At the time, my Leave-voting stepdad tried to console me with the line “Find something tolerable for a bit. In a couple of years, things will be very different… we’ll be out of Europe then.”

    It’s just a reminder that the Sunlit Uplands that were sold to a great many people were genuinely something that they believed in. When they fail to materialise, those same people will look around for someone to blame. The divisive, grievance-fuelled politics that drove Trump is not dead as a viable electoral strategy, despite his narrow defeat. I fear Britain will see much, much, much more of it in due course.

    1. LawnDart

      Gut worker’s rights, ignore environmental protections, and when soles must fight amongst each other for their bread or whatever crumbs are offered, mission accomplished.

      All according to plan..?

  5. David

    I’d add that a large part of the problem is the lack of professionalism not just inside government, but in the very process of decision-making itself.
    Thatcher, for all her weaknesses (and my goodness they came not singly as spies, but in battalions) did rely very much on internal expertise to guide her in making decisions. She was influenced by outside forces, the media and so on, but she did work largely through existing channels. So did John Major: the preparation for the 1991 Maastricht Political and Monetary Union negotiations (the only case I can think of that resembles Brexit at all) was highly professional. Major knew he wasn’t the sharpest tool in the box, and took advice readily. The “victory” he claimed, was essentially because he had followed the advice of professionals.

    This began to change under Blair. As “reformers” had been urging for decades, he brought in expertise (or at least people) from outside, and established networks of political advisers. Their common feature was that they tended to be young and inexperienced, and to be loyal to their Party and often to their Minister. The inevitable happened: power started to pass into the hands of non-experts who were primarily interested in their careers, their Minister’s success and the next day’s headlines. The professionals who negotiated Maastricht knew that they would have to live with their decisions and proposals for the rest of their careers. The outsiders had no such concern: they’d have gone off to the media or to a seat in Parliament by the time the bill came due. It’s not just that Cummings was an amateur focused on short-term politics, it’s that the system which gave him so much power, and led ultimately to his undoing, simply didn’t exist a generation ago. The crisis was predictable once you understand these things, and until professionals manage to get some of the power back, more crises like this are likely. The problem, in other words, is amateurishness, but at the level of system and process.

    1. PlutoniumKun

      For all his faults, Major seems to have been the last of a style of PM who had good judgement about his advisors and knew instinctively who to listen to (very occasionally Cameron did I think, but like Blair, he rapidly seemed to start believing his own PR). Major, of course, was utterly despised by what became the Brexiteers.

      I suppose it will be a question for future historians as to whether this was an inevitable process, or if it could have been reversed. Or even, if you are to take the most optimistic stance, that this is just part of an ebb and flow of how power works, and like an addict, once the UK hits rock bottom, it will see the light and start rebuilding its decision making structures from the bottom up. Sound public decision making structures are something nobody notices until they disappear.

      Some have speculated that it was having a more direct view (or at least, from just a generation onward) of the horrors of WWII that made European politicians less careless about taking peace, stability and prosperity for granted. Perhaps the tragedy of the UK is that in winning the war, exactly the wrong lessons were learned. And yes, I know the war was a long time ago, but for the Brexiters, it seems like yesterday.

      1. vlade

        I have a theory, that the majority of the Anglosaxon countries is still, nationship/stateship wide, in their teenage years (except for the UK, which has gone to the middle age where grown men think they are teenagers again and, as a friend of mine says, Scarlett Johanson waits just for them).

        The reason being, none had a (serious) war fought on their territory that they lost or almost lost and were occupied thereafter. Even for the UK, the last serious war in Great Britain was the Civil War in 17th century, and last serious invasion was 11th century.

        Pretty much every European countries (ex Sweden and Portugal I think, in a way Spain too, as that was a civil war) had their territory fought on an occupied in the living memory, in fact, we’ might be coming shortly to the first-time-ever in millenia where there could be majority of European population that doesn’t have war in living memory (once WW2 veterans outside Balkans die). Which all does have impact.

        1. PlutoniumKun

          I think there is some truth to that, especially with the electoral system design. Countries that have gone through a trauma rarely opt for an electoral system that will inevitably give voters a rigid binary choice.

          In the aftermath of the Irish Civil War, the architects of Irelands constitution went to great pains to try to create a political/electoral system which was designed to give what were seen at the time as the main actors in the State some slice of power or prestige. Systems like that can be very frustrating, but they do tend to prevent any party or individual doing anything too radical (for good or ill). In Ireland, there has always been an acute fear of instability due to the closeness of the violence in Northern Ireland and the possibility of it spilling over. Britain never felt that I think as NI never felt part of the UK to so many in Britain.

  6. HH

    The ability of people to succumb to political fantasies like Brexit while completely ignoring the practical structures that enable their comfortable lives is a bizarre fact of the modern world. The question for the people of the UK will be whether the hard knocks they are about to receive return them to more responsible governance or if the result will be even worse mismanagement by populist charlatans.

    1. vlade

      To an extent, it’s actually understandeable, as the politics is complex. European politics is even more complex, as it’s quite away from the way the UK or US politics operates. It’s way more consensus based, because it has to be – there’s no “winner takes all”, most systems (France being probably the largest exception, David can comment more than I can) expect coalitions.

      To the UK voters, coalitions seems to be unnatural (see Tories + Lib Dem), and the politicians don’t know how to run them either (see the same). Hence you get complainst from the British that “it’s undemocratical!” (duh? there’s Brussels civil service, yes. The UK has civil service too. Council and all major decision making organs of the EU are either elected or nominated by elected politicians, either at a national or European basis), although one could well argue that the UK’s system is elective dictatorship rather than democracy, because the winner’s executive can operate pretty much under no constraints until the next election, by tradition the party is supposed to fall in line (literally to be whipped. What does that tell you?).

  7. Maff

    “Even if Brexit was the right thing to do, and even if the vote was properly held (and neither is true)”

    I think the author meant to write, “and, in my opinion, neither is true”.

    I don’t really want to get into the vote (remainers spent double the leavers, so please no whinging about spending limits), rather address “the right thing to do” reasonably seriously. Here is how you do that. First, you ask every individual that question and you expect individual answers. There is no more general answer, other than totting up the count of individual answers (aka a referendum) or scoring some people more highly, like cosmopolitan free-market economists (obviously biased, so not fair). Answering that question as a rational individual involves constructing a personal estimate of something like a utility (value) associated with the outcomes. Toy example: you care only about jobs, GDP, free movement of people and sovereignty. First you estimate how these will change, say a percentage, and then you have to apply a personal benefit associated with each percent change for the different factors.

    Utility = A*jobs+B*GDP+C*free movement of people+D*sovereignty

    There is no absolute correct choice of A,B,C,D. It is personal. Personally, my D is high, my C is negative and A is bigger than B. (I even have an E – to stop plant diseases coming in)

    Thats it. Everyone has different A,B,C,D and they are not wrong because of that, utilities are personal.

    1. vlade

      The first is an opinion. The second one, way less so.

      When the referendum law was discussed, the original requirement was that “leave” would have to be a super-majority. Which is pretty common for decisions that create massive changes (not so for Swiss, but that has some specifics which do not really apply. Like the fact that another referendum could have been run to decide what the new EU relationship would be, which the Brexit fanatic were absolutely refusing), and also to effectively stop “let’s run it every year, all we need is to win one”.

      That was turned down on the basis that the referendum would be advisory (because there can’t be binding referendums under the UK political system).

      Except that when leave won – and let’s remember, it wasn’t a landslide – the leavers suddenly started to claim it hadn’t been just advisory, but binding, and was effectively forcing the political system to behave as if it was (rememeber the attack on the judges as “enemies of the people”?)

      So from that perspective, yes, the way how the vote was done was dodgy.

      1. Anonymous2


        Plus readers of newspapers like the Sun, the Mail, the Telegraph have been deluged for decades with anti-EU propaganda. It has been lie after lie after lie. Over time they created a substantial slice of the electorate with a completely false view of the world in which they live.

        A misinformed electorate cannot deliver a genuinely valid democratic vote.

        The UK looks more and more like a failed state. It could very easily disintegrate.

      2. Tom Bradford

        I think Matt is correct – neither the fact of leaving the EU nor the validity of the vote to do it have an objective right or wrong attribute/value and are matters of opinion.

        I don’t have anything invested in Brexit either way and can understand that for some – perhaps many – people the costs involved are worth paying to be ‘free’ of the European juggernaut. After all, NC itself has found much fault with the EU’s often German-centric rule from the top down to its own benefit and as a member Britain played a part in the appalling crucifixion of Greece set out in detail here in NC. Margaret Thatcher is frequently accused of having known the cost of everything but the value of nothing, but it seems to me that judging Brexit purely on its effect on GDP is doing the same thing.

        Nor can the referendum be said to have been improperly held in a strictly technical sense, but I don’t think there can be any doubt that it was fundamentally dishonest. The question asked was entirely subjective – a “Do you think…” – but on a subject far more complex than, say, being for or against the death penalty, abortion or cannabis reform. And in deciding what they thought people were subjected to a cacophony of “facts, truths and promises” from both sides – though perhaps more so by the proponents of Brexit – that were anything but, with very little opportunity to hear or weigh genuine, honest argument.

        Hence I do agree the author is being a little one-eyed in declaring Brexit to be ‘wrong’ as though it was objective fact, yet does have a case for proposing that the vote was ‘improperly held’.

        1. vlade

          I don’t disagree on the first part (“The first is an opinion”).

          On the technical sense – well, purely technically maybe (as in it was mostly legal and what was illegal didn’t likely make much difference). Which is why I had it as “way less so [an opinion]”.

          My beef there wasn’t just with the lies around that, but the process as I wrote above. It was first – to avoid hurdles – sold as “advisory” (hence also the “do you think..”), but when passed, leavers immediately switched to “must happen”.

          It was also, on purpose, presented ambiguously, so that it could mean anything to anyone.

          TBH, I don’t blame Farage and his ilk for that. It’s like blaming fish for being in the water. It’s the idiocy of Cameron and co., supported by internally warring Labour that they failed to pass proper process.

          Which IMO, would be to first run a super-majority referendum on “do you want to start a process”, which would work somehing like:
          – first, figure out what the UK wanted as a model when it left.
          – trigger A50, and try to negotiate the model with the EU (the EU would have a loong time to see what was coming, so it would not be a problem).
          – run a confirmatory referendum, which would ceritify it, or rescind A50.

          But this is too long a process for the instnant-satisfaction people, and, TBH, I can see how more than a few would suspect it could be used to torpedo “the decision”, as you need at least some trust in pols to run this.

      3. Ludus57

        I would just add that prior to the vote, David Cameron did say to the British electorate that he and his government would take the ( legally advisory, as the Referendum Bill stated) result as binding. That is the point at which the already-set-in rot went viral.
        The only good outcome was that the result of the referendum caused Cameron to resign.
        One of the BIG questions of modern British politics is : Cameron or Johnson – Which of the two will history judge the greater idiot?

  8. Dick Swenson

    “utility” is just another term intended to mask the fact that there is no objective means to measure one important economic variable except “current cost in a monetary denomination of your choice.” And this is still somewhat subjective and worst of all time dependent. Someday economists or those who (like me) are just camp followers will stop pretending that economics is like physics and recognize that most economics is simply descriptions of social and cultural behaviours, and, hence, are only measurable in a vague and therefore changing and changable manner.

    The observation by Mr Murphy in the original text that we are creatures of routine (or habit) is critical – change is mentally disruptive and forces back to our (unknown or unconsidered) ideologies and prejudices. Someday this will be admitted and thus release us from wasting a lot of time pretending that personal topics such as Brexit can be discussed rationally.

  9. Jack Parsons

    The most important business asset is momentum. This squanders the momentum of thousands of businesses.

  10. Mattski

    “[E]ven with a much more grounded view of end points and how to get there, the UK would have needed a war-level mobilization to prepare for life outside the EU. The additional activity would have been stimulative and thus provided many workers with better incomes (and hopefully a bit more tucked away) before hitting Brexit potholes. . . ”

    A principled exit FROM all that was neoliberally destructive in the EU arrangement, pointed TOWARD something like Samir Amin’s de-linking/development of local industries starting with food. . . that one might have been able to rally a country and renaissance around. This was nothing of the kind. And a hollowed-out state was not up to it, anyway.

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