Brexit will go down in history as a blunder

By the fifteenth century, China’s Ming dynasty had become a global power, with trade routes reaching across the world. Rather than continuing with its growth, Ming authorities ordered all its ships and merchants back to the homeland.

This was the beginning of China’s isolationist policies that lasted until 1800s. History tells us that Ming orders came out of the growing adherence to the Confucian philosophy, which promoted self-sufficiency and the evils of material wealth.

China also wanted to shore up its defence against the Mongols and pirates.

The impact of withdrawing from the world stage was predictable. China fell behind in everything - from diplomacy to technology. Its vast size meant it was still a powerful country, but isolationism cut it off from the cultural currents it had once embraced.

China’s full scale return to the global mainstream was staged only at the end of the 20^th century after Deng Xiaoping launched the nation’s "second long march" towards globalisation.

Post the Brexit referendum, we can reconstruct this story in context of the United Kingdom. We would have to replace the Confucian philosophy with ultra-nationalism and the fear of the Mongols with the threat of a possible influx of immigrants.

The Ming dynasty's decision is recorded as one of the prime political blunders in global history and history may well record Brexit as UK's Ming moment.

Look at the consequences following June 24. With Scotland voting to remain in the EU (a majority of 62 per cent in its favour) and Northern Ireland too going with "Remain" (with 56 per cent in its favour) Brexit could trigger the breakup of the UK.

Ironically, the economic penalty could be more brutal for the millennials of the UK, even though they voted overwhelmingly in favour of "Remain". EU is the UK's largest trading partner and the exit may plunge the British kingdom into recession.

The estimate released by George Osborne, the British chancellor, suggests that by 2030, the UK's GDP may be 6.2 per cent lower than what it would have been if the kingdom had remained in EU.

The British government has estimated that Brexit could cost some £4,300 ($6,000) per household, annually.

Even if the UK opts for membership to European Economic Area (EEA) to protect its access to the EU markets, the Osborne analysis points towards a GDP loss of around 3.8 per cent.

Switzerland and Canada have negotiated this option, which gives them some access to the EU markets, but not to most services, including financial services: the mainstay of the British economy.

The flummoxed politicians must take a leaf out of the markets behaviour after the so-called freedom of Britain from European family.

Global stock markets lost about $2 trillion on Friday (June 24) on account of Brexit.

British banks took a $130 billion hit on Friday, with financial giants such as Barclays and Lloyds down by 30 per cent.

The pound sterling sank as low as $1.35, a near 10 per cent drop in value and its lowest rate against the dollar since September 1985.

Problems will further rise when the UK begins negotiations on its exit from the European economy.

At a time when pragmatic and farsighted international leadership, essential to manage economic integration and tectonic shifts in global polity, is needed, the world feels shortchanged by the Brexit.

Brexit alerts us to the dangers of majoritarian ascendancy coupled with jingoism. Examples of poor decisions by the majorities are found in racism and xenophobia, and any other bigoted behaviour exhibited in the past.

But, British leaders once again proved that the only thing we learn from the history is that we learn nothing from history.

Harvard economist Kenneth Rogeff has correctly observed that UK’s vote to leave EU is, in fact, a failure of the British democracy.

Dubbing it as "Russian roulette for republics", Rogeff points out the absurdly low bar for exit, which was based on a simple majority alone.

Given the voter turnout of 70 per cent, this meant that the "Leave" campaign won with only 36 per cent of eligible voters backing it while a majority in Parliament doesn’t support Brexit.

The view of the majority is always right only when its leaders put the right questions before it. It is clear that British leaders have not put the accurate questions before their citizens.

Britons have no idea of what they have voted for and the consequences of the verdict on their lives and future.

American chief justice John Marshall once observed: between a balanced republic and democracy, the difference is that of order and chaos.

The UK has probably voted for a chaotic (jingoistic) democracy over a reasonable republic.

Their choice will take its toll on the future of the global trading and financial system.