The process of the EU Referendum has stirred deep division and has been very frustrating for supporters on both sides of the argument. While we may have the facts about life in the EU today, when it comes to what the future holds if we #Leave or #Remain there are very few real facts. It becomes a matter of opinion. It’s not surprising how strongly the two sides disagree, and how each side calls “lies!” at the other’s claims. It makes convincing anyone to change their mind through debate of the issues practically impossible. And if you’re still undecided I feel your pain!
That said, the one thing we all have in common is that we’re all going to gamble this Thursday.
Make no mistake whether you are a #VoteLeave or a #StrongerIn, you’re playing a game of chance. Accepting that we are gambling with our future, do we understand the rules of this game and not just the probability of winning but what we stand to win or lose?
To illustrate this point think about these two bets which have the same probability of winning:
Option 1) A game where the bet requires a £10 stake and pays out £100 if you win.
You write a number down between one and five. If I guess your number you lose your £10, if I guess any other of the four remaining numbers you win the £100. This gives you 4 out of 5 or an 80% chance of winning.
Sound like a good deal?
Option 2) I call you at work to tell you I’ve walked past your house and seen through a window that you’ve left the iron on.
It will probably be OK, but there’s a 20% chance it will start a fire. You still have an 80% chance of ‘winning’ with no fire.
Still sound like a good deal? Do you stay at work or do you say ‘no deal’ and race home?
These examples are meant to show that gambling isn’t just about your chance of winning. It’s about weighing up the upside of being right against the downside of being wrong. The best time to gamble is when you have high or unlimited upside but a strictly limited downside. Option 1’s downside is limited to £10 so it becomes a bet worth taking. Conversely the worst time to gamble is when you have a limited upside and an unlimited downside. With Option 2 the fire represents just that, it might be small and cause only smoke damage, you might lose a whole room or you could in fact lose everything; your whole house and all your possessions. That’s not a bet worth taking.
So what sort of gamble is the EU Referendum?
It’s much closer to Option 2 than it is to Option 1. The downside will not be £10 if we get it wrong.
First let me be clear. I don’t believe the EU is perfect. I understand people’s worries about the lack of direct accountability, lack of control and suspicions of poor governance. While I don’t personally agree, I understand that people are worried about growing immigration too. I also believe the Union does create vulnerabilities for the UK, we are tied to Europe and her problems, economically, politically, and socially.
However, even if we had an 80% chance of being right to leave, I think the benefit to the UK will be “limited”.
The #Leave upside
It’s hard to get any tangible view of what the upside could be, even when I trawl through the Vote Leave website the focus is on what it doesn’t like about our current system and gives no tangible information on how our day to day lives would be improved post leaving. The same thing can largely be said about the media. Very few numbers have been offered with a few exceptions like this BBC business news piece which suggests we could see a 4% growth in the economy. There are ‘soft’ hopes too like increasing investment in the NHS, or education, or less immigration meaning more jobs for us Brits, and a more affordable housing market. A new hospital or school is a great thing, so is a young couple being able to afford their first home and being able to work when they want to. But these don’t benefit all of us equally; hence I call these limited benefits: a limited upside.
The #Leave downside
When we consider the potential downside, there’s no shortage of numbers. JP Morgan says we’re all going to be £45,000 worse off. The Treasury says the economy will shrink by 6.2% over 15 years. The CBI says the economy will shrink by 5% in less than half that time with 950,000 jobs lost. The TUC says we’ll all be £38 a week worse off or £2,000 a year less.
Wrapped up in these numbers is of course concerns about many things: falling investment, rising unemployment, increased pressure on our benefits system, benefit cuts, tax rises, falling value of the pound, more expensive imports, interest rate rises, businesses relocating, Scotland pushing for a second independence referendum, more costly trade deals, the EU looking to make a horrible example of us to deter any more member referendums, less global influence, etc. And crucially, many of these potential risks will affect us all, the whole country not just small groups of people; in this sense I consider them unlimited risks: an unlimited downside.
I’m not trying to scaremonger. I’m not saying all these downsides would happen. I have no greater idea if they’d happen than I have about whether my iron will catch fire. The lack of knowing the future doesn’t prevent a reasoned comparison of possible benefit and risk. But in the absence of knowing and in the spirit of gambling it’s not enough to have an 80% chance of it being right. I believe that even if there were only a 20% chance of some of these downsides happening, the pain to us all is too great, and the most vulnerable of us, the poorest, will feel it the hardest.
If you were betting your house on this would it be a good deal? You may actually be doing that.
It’s only right that we look at the other option too, what if we stay? In this case it feels to me we have limited upside and limited downside. We effectively have modest changes (good and bad) in continuing with the status quo. I understand some believe it’s not a status quo and fear ever greater union, Turkey joining, an EU army, etc. But here we have facts. The UK does have the right to veto on all these issues. And even if we agreed to them all, the downsides are limited.
So I’ll be voting remain. Not because I love the EU. Not because I don’t want the United Kingdom to be strong. But simply because the stakes are so high. I believe our downside is unlimited and if we vote to leave this Thursday there is no going back, even if we later come to realise the worst has come to pass and our house is on fire.
However, if we vote remain we can continue to demand improvements in the EU. In fact if this referendum has done one thing, its awoken us all to the EU, stimulated debate, educated us all. Our voices can make this a priority for our government. And one day if the balance changes and we have a scenario with greater upside and a limited downside we can have this debate again and you’d find me taking the bet!