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“Would you tell me, please, which way I ought to go from here?”
“That depends a good deal on where you want to get to,” said the Cat.
“I don’t much care where—” said Alice.
“Then it doesn’t matter which way you go,” said the Cat.
“—so long as I get SOMEWHERE,” Alice added as an explanation.
“Oh, you’re sure to do that,” said the Cat, “if you only walk long enough.”
It’s usually a good idea to know where you are going in order to figure out the best route, as the Cheshire Cat duly advised Alice.
The Christmas break in 2016 was a good time to take a step back from the day to day machinations of Brexit, and think about where we are headed in a deeper and more historical context. Dipping into the speeches of Winston Churchill provided much food for thought. I believe that 2016 will, for good or ill, go down in history as a date as important as 1776, 1914, 1939 or 1945. We have it in our power to take the steps now that will make it one rather than the other. A couple of Churchill passages come to mind as we embark on the critical challenge before us.
In a speech to the House of Commons on August 16, 1945, Churchill counselled his listeners not to fear the future, noting:
“What we desire is freedom. What we want is abundance. Freedom and abundance – these must be our aims. The production of new wealth is far more beneficial, and on an incomparably larger scale, than class and party fights about the liquidation of old wealth… the production of new wealth must precede common wealth otherwise there will only be common poverty.”
The combination of freedom and abundance is commonly called prosperity today. What Churchill simply and eloquently stated was that this prosperity rested on the creation of new wealth. We must look at the challenges we face in 2017 which were germinated in 2016 and ensure that our responses are designed to create new wealth, not to merely redistribute the old. This is why it is so critical that our policy approach and plan when it comes to Brexit should be conceived in the potential for maximal wealth creation – what set of steps could lead to maximal wealth creation? It is then up to us to figure out how we can get from here to there. To paraphrase Lewis Carroll, if we don’t know where we are going, any road will get us there. If our policy approach is aimed at maximal wealth creation, then if we fall short, we will have fallen short of a grand aim. If on the other hand, we set our policy goal to merely cling on to what we think we already have, if we fall short, why then we will fail hopelessly.
So what does this potential look like? I have written before what my own view of the Brexit potential dividend could be. The barriers to the UK’s service sector are very high around the world, and could be lowered in trade agreements with like-minded countries, bilaterals with major emerging markets, and in true economic partnership agreements with developing countries who will embark on the difficult structural reforms their people need provided they also achieve agricultural access to a large developed market. All this is possible, but only if we do not take these opportunities off the table by the manner in which we exit the EU.
We must negotiate in such a way that we take as little of this potential off the table as possible. There are three fundamental pillars whose integrity cannot be violated if we are to achieve this goal. They can be summarized as follows. We must allow ourselves to negotiate agreements with others (no Customs Union), in the areas where we are strong (services), so we cannot be a member of the EEA (because then we will not be able to negotiate on our domestic regulations and we would not be able to engage in substantial domestic regulatory reform), and we must be agriculturally more open, so we can do the deals with developed and developing countries alike that we can do and others cannot, so taking advantage of our own destiny (no CAP or CFP). We must turn our open economy to its maximum advantage.
Churchill made another speech, on the 3rd November, 1953, after the coronation of Elizabeth II and after he had had a stroke. He closed this speech with words that are apposite to our own time where he expounded on Britain’s future and also elaborated on his own concept of well-being:
“By material well-being, I mean not only abundance, but a degree of leisure for the masses which has never before been possible in our mortal struggle for life. These majestic possibilities ought to gleam, and be made to gleam before the eyes of the toilers in every land, and they ought to inspire the actions of all who bear responsibility for their guidance. We, and all nations, stand, at this hour in human history, before the portals of supreme catastrophe and of measureless reward. My faith is that in God’s mercy, we shall choose aright.”
We do stand at the gates of majestic possibilities. But badly handled, starting without a vision of where we might go, supreme catastrophe also beckons. What determines this future are the choices we now make. By holding onto the integrity of the three fundamental pillars of the negotiation before us (no Customs Union, no membership of the EEA, and more agricultural openness), we can chart a course for our measureless reward. The journey will be hard, and will involve some short term change as transitions always do, but knowing our final destination will enable us to combine the tremendous resources that Britain has at its disposal – the mother of all parliaments, the finest civil service in the world, the centre of finance and the law, to name but a few – to achieve a goal that cannot presently be imagined.
Shanker A. Singham is Chairman of Legatum Institute Special Trade Commission, and Director of Economic Policy and Prosperity Studies at the Legatum Institute.