Yahoo Finance Nobel-winning economist believes EU has only itself to blame for Brexit mess
New Nobel economics prize-winner Richard Thaler believes the EU has only itself to blame for the mess of Brexit.
The US economist says the architects of the European Union did not have the foresight to plan for what the bloc should do if things went wrong.
Prof Thaler, one of the founding fathers of behavioural economics, believes politicians failed to recognise that making rules so vague would only lead to confusion, pain and damage to the institution and other parties.
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Writing in the Financial Times last year, Thaler said: “Consider the original charter of the EU. An important principle of good choice architecture is to anticipate how things might go wrong and take steps in advance to mitigate the damage. In the formation of the EU, this step did not seem to attract the attention it deserved.”
Thaler cited the Greece debt crisis as a case in point, which left wealthier nations such as Germany and France bailing out Athens in order that Greece not tumble out of the euro.
Equally, the issue of a country wishing to leave was only addressed under Article 50, adopted in 2009.
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“The EU resembled the Hotel California described in the Eagles song, where, ‘You can check out any time you like / But you can never leave’,” he wrote.
“Although Article 50 was created to determine what happens in the case of a break-up, it is far from a full prenuptial agreement.
“Rather than stating the terms under which a country can leave, it only prescribes a process.”
Presciently, he argued, both Britain and the EU would be left to muddle through a period of great uncertainty with the prospect of defaulting to World Trade Organization tariffs and rules looming at the end of the Brexit period.
He concluded: “Since voters were given a choice that was impossible to evaluate sensibly, they should be given the opportunity to change their mind if the facts change — either via a vote of parliament or a second referendum. In short, Brexit should not mean (an immediate) Brexit.”
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Prof Thaler, of Chicago Booth business school, co-wrote the global bestseller Nudge, which explores how people are most likely to choose what is easiest over what is wisest.
Nobel judges said he had demonstrated how “nudging” – a term he coined – could help people to exercise better self-control.
He will receive 9 million Swedish krona (£850,000) from the committee. “I will try to spend it as irrationally as possible!” the 72 year-old economist said.
