Hans-Werner Sinn advises EU leaders to be "generous" to Britain, saying it may seem "counter-intuitive," but letting Britain go "on generous terms" would be the "only way to keep the EU together." It's true that "no relationship can flourish if its members feel trapped." But a divorce settlement needs to be mutually acceptable, and that requires two parties to know their limits and be rational. The other problem is that even if leaders want to be magnanimous, their constituents may not let them.

Britain will leave the EU and seek to negotiate new trade deals with the bloc. Theresa May will not go by the precedents of Norway and Switzerland, as Britain wants to regain control over its borders. As she is so eager to ditch EU laws, Britain will not be in the jurisdiction of the European Court of Justice. The question is whether the EU will accept these terms, which it sees as cherry-picking.

Ideally Britain wants access to the single market without accepting free movement of EU citizens. Yet the EU will not let it happen, fearing it would encourage other members to follow suit. The author says this "approach is all wrong," explaining that "free trade with the EU does not have to be accompanied by free movement of people." His theory is that, "the economic effects and welfare gains resulting from free trade are substituted, not enhanced, by those of free movement of labor."

If a country doesn't let in immigrants. wages are "more likely to arise" which would affect prices. The author says: "these differences increase gains from trade," which is what trade is about - "exploiting such differences." He thinks "if the EU refuses to sustain free trade with the UK, its citizens will suffer as much as the British." And he doubts whether other countries would follow Britain's example, should it leave the EU, while getting what it wanted with impunity. He says there are "two types of political community."

The first denotes a distribution of wealth such that any redistribution or other change beneficial to one individual is detrimental to one or more others. This "pareto optimality" gurantees more solidarity and a sense of belonging.

The other community relates to the "redistribution of resources...... by majority decision-making," which creates "winners and losers." It's not gains that matter, but securing the majority rule at all costs. In the course of action the pie gets "smaller," leaving some unhappy.

The author says such a community tends to be unstable, "because the losers tend to opt out. The only way to keep them in is to make leaving even less appealing – say, by punishing them."

To be more specific, the EU is actually "sending the message that it is a union in which some members are bound to lose," - a narrative that Trump loves to espouse, one that lent his support for Brexit, predicting more countries to leave the bloc.

The European project could be saved - according to the author - should the EU be able to "transform itself from a redistributive union ruled by the majority to an optimal and voluntary union ruled by unanimity – one that conforms to the Pareto principle." To start with there should be no "common EU finance minister at the head of an authority with autonomous taxation powers. The next is to offer the UK a mutually beneficial free-trade agreement."

The EU "could end up suffering the fate of the Soviet Union," if it can't be flexible and consensual. But it will be difficult to keep everybody happy. Even in a family there are members who are happier than others. Parents sometimes face a daunting task of keeping the family together. It is true that "penalties and other coercive measures" don't win hearts and mind. Discontent and apprehension remain, which hang like a sword of Damocles over the welfare of the family, with "its members vulnerable to exploitation."