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Brexit: A polite warning. Everyone will be fine.

June 28, 2016

I was happily away from this stuff for a few days and look what I find 🙂

I comment regularly at Project Syndicate, and the tone of the overwhelming majority of the written reactions at that publication was absolute hysteria.

I can understand that for a politician or banker in the UK this screws up your summer, maybe even your year, more than any event you can remember. For the rest of the world, however? Probably not even top 5.

Just to name a few disruptive events that I can remember, and I’m not that old: Great financial crisis / dot-com / s&l. Fall of Berlin wall / reunification. End of communism throughout eastern europe, end of USSR. Bombings in UK/Ireland. Balkans war. Ukraine war. Mini oil crisis. Fukushima. Chernobyl. Tienanmen square. 9/11 and the resulting hysteria and militarization. The fairly transparent fraud of the Iraq war and the years of blowback that followed.

Nope, sky is not falling. Misguided or not, voters expressed their dissatisfaction at the ballot box. Keep in mind, the same process were done to put the European structures together — in several cases voters rejected various treaties and multiple votes were held, with some small concessions between until voters finally approved.

So this is on the whole a good thing. Firstly, a functioning democracy that makes a decision you don’t like is almost always better than an undemocratic system. Secondly, lots of small governments are less susceptible to monoculture – risk of the Big Mistake for everyone all at once.

The one Brexit-related subject I want to talk about at some point is that the debate, as far as I can tell from here in the US, focused on exaggerated economic fear-mongering on the Remain side, vs exaggerated migrant/immigrant fear-mongering on the Leave side. From my point of view in sunny upstate NY, I didn’t see that much nuanced discussion of the merits of the EU’s interpretation of democracy and sharing of power. Save that for another time.

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5 Comments
  1. The British economy just fell into a black hole. Europe’s economy is standing on the edge, balancing not to follow. Economic fear-mongering? More like realistic warnings, that turn out to be harsh reality the morning after.

    • A little soon to be talking about the effects… this is something that will play out over decades.

      • Can you tell that to my British colleagues who are now wondering whether they should get packing or apply for a local passport? Or should they wait and see how that plays over decades? Perhaps the British pensioners who live in Spain or the US, and get their pension in pounds, that is 10% less worth overnight should wait a few decades, too. Or the companies that now make contingency plans to move their offices to mainland Europe – should they wait and see how things look in 50 years or so?

      • “Should they wait to see how things turn out … etc”

        Well, yes. Are you suggesting you judge the outcome of a fundamental decision of political and economic structure after less than a week?

        While I feel for the pensioners and expats, they both realized a benefit by removing economic activity from their home countries, and they did this by exposing themselves to currency risk.

        Take a look at the GBP-EUR chart for the past 5 years, lets say. It’s been all over the place. Also consider that The lower pound will at the same time make the UK’s exports more competitive. Had the pound suddenly risen instead, you would have a different group screaming bloody murder, exporters threatening to fire their workers and offshore, etc.

      • Yes, and I am, in fact, suggesting to judge that fundamental decision based on a single day. The day after it was taken. The day when all the major figures that campaigned for that decision admitted that all their claims were “mistakes”, “misunderstood” and so on. Not that I believed them for a second, but many voters did.

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