In his annual letter to shareholders, published earlier this month, Amazon CEO Jeff Bezos said this about decision-making:
Some decisions are consequential and irreversible or nearly irreversible – one-way doors – and these decisions must be made methodically, carefully, slowly, with great deliberation and consultation. If you walk through and don’t like what you see on the other side, you can’t get back to where you were before. We can call these Type 1 decisions. But most decisions aren’t like that – they are changeable, reversible – they’re two-way doors. If you’ve made a suboptimal Type 2 decision, you don’t have to live with the consequences for that long. You can reopen the door and go back through. Type 2 decisions can and should be made quickly by high judgment individuals or small groups.
And the consequences of using the wrong type of decision-making process:
As organizations get larger, there seems to be a tendency to use the heavy-weight Type 1 decision-making process on most decisions, including many Type 2 decisions. The end result of this is slowness, unthoughtful risk aversion, failure to experiment sufficiently, and consequently diminished invention.
The opposite situation is less interesting and there is undoubtedly some survivorship bias. Any companies that habitually use the light-weight Type 2 decision-making process to make Type 1 decisions go extinct before they get large.
Whatever you may think of Jeff Bezos, it’s worth taking a moment to consider this wisdom because the UK is facing a Type 1 decision. The decision to leave the EU is a Type 1 decision because it would be irreversible. The decision to stay is. however, a Type 2 decision because we could still leave at some future date if things suddenly took a turn for the worse. The leave option is a door with a handle on only one side. If we go through and don’t like what we see on the other side we can’t go back to where we were before. Which is why, to use the words of Jeff Bezos, the decision must be made methodically, carefully, slowly, with great deliberation and consultation.
Those who would encourage us to leave the EU must therefore give us compelling reasons for walking through the door. Unless they can show that things are much better on the other side, we would be very silly to take the risk. So far, though, most of the methodical and careful analysis is telling us that we should stay.
A month ago, Chris Giles did a round-up of the academic and consultancy reports, the results of which ranged from Britain being a bit worse off to a lot worse off by 2030. In one of the scenarios it modelled, Oxford Economics concluded we might be very slightly better off but in all the others, per capita GDP was worse by 2030.
Of course, all these reports are only estimates, albeit thorough and well-informed ones. No-one can be sure what the world will look like in 2030. It may be that Britain can leave the EU without any long-term damage.
The trouble is, most of us don’t live in the long-term. People in their 40s are hoping they can make enough in the next decade years to have an outside chance of retiring before 70. People in their 20s have similar thoughts about maybe one day buying a house. Even five years of economic turmoil, coming so soon after the crash, could ruin it for them. Many of the world leaders who are warning against Brexit are not worried so much about our economy as their own. The IMF is warning about the severe impact on an already fragile global economy. Even if the optimists are right and Brexit will slightly improve the UK economy, the process of leaving is likely to be damaging in the short-term. It’s like going for cosmetic surgery to remove a minor blemish but having to endure severe pain for several weeks. Is it really worth it?
And this is where the Leave campaign has failed dismally. They have poked holes in the methodical and careful analysis that questions the wisdom of leaving but they haven’t set up any body of evidence of their own. They have not made a compelling case for walking through that one way door. And, given the risks, that case would have to be very compelling. Their warnings about immigration are a red herring. As the Open Europe report said, most developed countries have relatively high levels of immigration. The likelihood is that after Brexit, the level of immigration will be more or less the same but more immigrants will come from outside Europe. So too are the presumed benefits of deregulation. The most the Brexiteers can come up with is a few things about the EU that make us a bit cross. For that, they want us to storm out of the party in a huff and slam the door behind us.
To persuade people to go through a one-way door you need a really good story. ‘Things might be a little bit better by 2030’ doesn’t really cut it. Leaving the EU might just be worth the risk if there was a convincing vision of a great post-Brexit future but so far, no-one has come up with anything even close to that. At best, what’s on offer isn’t that much better than what we have now and that’s small reward for the aggro in between.
Leaving the EU is what Jeff Bezos would call a Type 1 decision. There is no way back. Most learned opinion is telling us there are serious risks in going through that one-way door. Surely, then, the rational thing to do is to stay put. There is nothing much on offer on the other side.