Daily Times

Countries usually don’t knowingly commit economic suicide, but in Britain, millions seem ready to give it a try. On June 23, the United Kingdom will vote to decide whether to quit the European Union, the 28-nation economic bloc with a population of 508 million and a gross domestic product of almost $17 trillion. Let’s not be coy: Leaving the EU would be an act of national insanity.

It would weaken the UK economy, one of Europe’s strongest. The EU absorbs 44 percent of Britain’s exports; these might suffer because trade barriers, now virtually nonexistent between the UK and other EU members, would probably rise. Meanwhile, Britain would become less attractive as a production platform for the rest of Europe, so that new foreign direct investment in the UK — now $1.5 trillion — would fall.
Also threatened would be London’s status as Europe’s major financial center, home (for example) to 78 percent of EU foreign exchange trading. With the UK out of the EU, some banking activities might move to Frankfurt or other cities. This would be a big blow.

Losses could be considerable. A study from the Organization for Economic Cooperation and Development (OECD), after making assumptions about UK trade and investment, concluded that “Brexit” — shorthand for Britain’s “exit” from the EU — could “shave off” $3,200 from average British household income by 2020. No one really knows, but other studies reach similar conclusions.
Indeed, the adverse effects may be undercounted, argues OECD Secretary General Angel Gurría. Noting that UK economic growth in the first quarter of 2016 was the slowest since 2012, he says that uncertainty over Britain’s future is already causing businesses to delay hiring and investment decisions.
What would Britain get from all this? Good question.

There are three main complaints against the EU, says Nile Gardiner, who was an aide to British Prime Minister Margaret Thatcher and now works at the conservative Heritage Foundation.
First, the outpouring of regulations from Brussels — the seat of the EU — has compromised Britain’s sovereignty. On some issues, the European Court of Justice can overrule British courts.
Second, the EU’s liberal migration rules may expose Britain to terrorists or over burden its welfare system. (Once people become EU citizens, they are allowed to live or work anywhere in the bloc.)
Finally, the EU imposes costs on Britain — an annual contribution to the EU budget plus the costs of regulations. The EU certainly isn’t immune to criticism. It is often an elitist institution that has centralized too much power in Brussels for a continent characterized by huge differences of national history and culture. It has also committed massive errors, the adoption of the euro probably being the largest. (One currency didn’t work well for all countries. Britain wisely decided not to join.)

Still, most complaints seem exaggerated. The UK’s net annual contribution to the EU budget is about 0.5 percent of Britain’s GDP. That’s hardly crushing. Some EU regulations may be overkill, but Britain’s labor and product markets are among the least regulated of advanced countries.
As for immigrants, studies “show that these workers pay more in taxes than they receive in benefits,” says

Frances Burwell of the Atlantic Council. “They’ve come to work.”
What this debate is really about is Britain’s place in the world and its self-identity. Britain has long been of Europe but also apart from it. The British Empire was once the world’s largest. To be simply another member of a continental confederation, albeit an important member, offends this heritage. The nostalgic yearning is understandable, but it is not a policy.

Ironically, leaving the EU would confirm the UK’s reduced status. The UK would have to renegotiate its trading agreements with the EU and dozens of other countries. A deal with the EU is essential. For the UK, the best outcome would be to retain much of its preferential access, which — as a practical matter — would mean continuing contributions to the EU budget and abiding by most EU regulations. The status quo would survive, except that the UK would have no influence over EU policies. Anything less than this would have the EU putting its own members at a competitive disadvantage.

Viewed this way, Brexit is an absurdity. But it is a potentially destructive absurdity. It creates more uncertainty in a world awash in uncertainty. This would weaken an already sputtering global economy by giving firms and consumers another reason to pull back on spending. It would be better for the UK to stay in the EU It would also be better for the EU, because Britain provides political and intellectual balance. Finally, it would be better for the United States, which doesn’t need a major ally — Britain — to go delusional.