- Politics and Social Issues»
- Europe Political & Social Issues
On Brexit 2016
I'm not a European or a Brit, but this is the research I've been doing so far as a concerned world citizen, and I'll save you some time by sharing my summarized findings. Most of my sources come from the BBC, as well as various opinions and statistics tracked today - on the 25th of June, 2016.
For those of you not yet in the know: Britain recently voted 52% to 48% in favour of leaving the EU. The voter turnout was a little over 70%, and Britain now has a maximum of two years to execute its departure once Article 50 (pertaining to the procedures for leaving the EU) is invoked.
Scottish centres voted wholly in favour of staying in the EU. While the vote was never unanimous, every single centre in Scotland reported a majority of Remain. You may have remembered a referendum a while back about them deciding ultimately to stay in the UK because of economic concerns; some say that a vote to leave the UK would destabilize their relationship with EU, and so they chose to stay. Now that the UK has voted them out of the EU, it is likely that Scotland will want to leave the UK at last.
The same goes for Northern Ireland. It is possible that we may see a reunified Ireland (whatever that means).
Sentiments are strong and rising on every side. I'll try and give you a snapshot of this from the social media I frequent, but first:
Why This Will Make The History Books
Countries like Italy and perhaps France are Eurospectics. Within nearly every country are diverse opinions, and seeing the UK, a prominent member, break free will likely cause political commotion in such places. They will be demanding referendums, and depending on the results and the decisions of their governments, we could see a massive fragmentation of the EU in a relatively short time span. At the very least, it's going to affect general elections, particularly France's next year.
This split will likely also cause the fragmentation of the UK as we traditionally know it. Scotland will become Scotland, and there is a lesser chance of there being no more Ireland in the UK. It's hard to say how long the sentiments will hold, or where they'll sway, but right now the consensus in Scotland amongst politicians of both stripes are to leave the UK and join the EU.
This is also the perfect setup for a classic historical entry: the referendum that led to this result was done by David Cameron, prime minister, who thought to use the referendum as a way to gain support for his party because he thought he would win. His gamble results in the fallout we see now, and his reputation and legacy is now this: as the catalyst for whatever happens next.
On a larger scale, this will affect how people view democracy.
C.S. Lewis on democracy
I think most people are democrats for the opposite reason. A great deal of democratic enthusiasm descends from the ideas of people like Rousseau, who believed in democracy because they thought mankind so wise and good that every one deserved a share in the government.
The danger of defending democracy on those grounds is that they’re not true... I find that they’re not true without looking further than myself. I don’t deserve a share in governing a hen-roost. Much less a nation...
I posted the quote because it resounds with me - let's be honest, the populace is dumb because they cannot be smart, not unless everyone's got a degree in economics. All the banks and financial institutions, local and global, have come out to say that it will be a very bad idea. Common sense tells you that uncertainty always leads to fear always leads to leaving always leads to crashing, and this is while the EU and thus Britain has just began to strengthen their previously crippled knees (enough for foreign investors like OCBC to tentatively suggest investing into them, or so it was when I talked to them in March).
Yet the people said: no.
We don't believe you. You're just trying to trick us. We're not afraid of you!
This is the message: that this is a proof of the people triumphing over the Other Side. It's in line with the anti-authoritarian sentiment worldwide; the difference is that people have chosen to vote with their feelings instead of statistics.
Whether or not it pays off will affect how the next generation looks to its leaders, and by extension, the intelligentsia. Will the uprising pay off?
How trustworthy are "expert opinions"?
The Short Term Economic Angle
As of writing, the pound, the euro, emerging currencies, and Asian markets have all fallen in record drops. For the next two years, while the UK sorts itself and its trade deals out, this is not likely to recover - at least not due to foreign investment. Again, the market hates uncertainty, and the UK will be a big cloud of it for a very long time.
And the reason is this: David Cameron, rather than sitting out his term to work out the rest of the deals and lead the country, has chosen to resign in October instead. Someone has to take over when he goes. There will need to be a new prime minister, a new Cabinet, possibly even a new election if the opposition wrangles enough protesting in the chaos, because how much policy do you expect to examine, amend and negotiate over in four months?
And that is assuming he starts work immediately. There is a current thought that he will sit it out and do nothing until he steps down, making this business wholly someone else's responsibility.
Until there is a clear plan, the market will not touch the UK with a ten foot pole. This is doubly important because London's main business is financial services. More precisely, global financial services.
You can see the connection, right?
Now, you may think: it's still so distant, right? Unfortunately, the markets are all linked, and everyone borrows from one another. The spread of fear has led a lot of people to put their money in gold, where it sits doing absolutely nothing in terms of returning flow to the economy. Gold is not a business. It does not create jobs or drive innovation. Money that would have gone to businesses are going to gold, and this means everyone's going to get squeezed from the top to the bottom. Money that would have kept someone employed for another three years is not going to arrive any more. Money that would have kept someone's employer alive for another five will not reach, by trickle or otherwise.
It won't be utterly devastating, but it's going to be a tight squeeze that, invariably, some will not survive, no matter how short this period of uncertainty is.
If you have free income and holding power (at least 5 - 10 years), it's not a bad time to buy in. Nobody knows how far down it's going to go, and if Scotland leaves it may dip even further, but keeping an eye on it is a good start.
“Be fearful when others are greedy and greedy when others are fearful” - Warren Buffett's principle of investing comes to mind.
If your funds are tied up elsewhere, such as Asian stocks, you're going to have to conjure up some holding power to wait out the ripples as they arrive and subside.
If your funds are tied up in British/EU instruments... it's rough, really, especially if that's where your savings are in. A lower pound means inflation because more pounds are needs to buy a certain import, and the UK ha a ton of imports on account of nothing growing very much. Inflation means things get more expensive on both ends: on the value of the item, as well as the money you use to obtain it.
Of course, a lower pound also means better tourism and actually potentially more trade, as other countries seize the rare discount opportunity. On the other hand, the EU has laws and controls and things that probably disincentivise doing so, and again, uncertainty - I might buy UK goods, but I'm not going to buy into UK businesses until I know that the economy is fertile enough for me to get a return. There is almost certainly a net loss of income as long as the details remain unsorted.
There is also some vague hope of an academic nature that the pound will, in its devaluation, return to its "true" value, as it has been historically strengthened by London's status as a financial player. Put another way, it may be like oil prices, which fell and will never rise up to its old highs again.
Here's a good summary of the reasons why Brexit won. On social media, it's much less civil.
One side is fighting for sovereignty, going against the evidently corrupt upper echelons controlling their economy. The open border "single economy" nature of the EU has meant more access to the UK for citizens of less wealthy countries like the Greeks, the East Europeans, and supporters want the ability to control their borders once again. They see little of their money coming back to them, and feel that it is unfair.
This same side is also painted as xenophobic and racist, flared up by notions that multiculturalism isn't a thing, that "they're taking our jobs", that the ones who voted for Brexit - a majority of which are 55 and older - are just an older generation yearning for the good ol' days because they don't understand anything but a dumbed down, biased rhetoric.
The lesson to learn about perspectives is damning. The Brexit campaign used exaggerated, overblown numbers that did not reflect the nuances and complications of the EU economy. They did not bring to light the steps David Cameron had been making to negotiate better terms with the EU on all aspects, choosing to proclaim that nothing short of leaving the EU would work. Norway, a country they had been touting as an example of why they should leave, came out and said that the UK shouldn't do it because they become subject to its policies but lack the voting rights.
These are hard proven tested statistics. These are blatant lies exposed, used to manipulate and stir up sentiment. Not that the other side was any better... just less sentimental, and mostly pattering about. In the end, the most effective campaign won.
The obvious parallel is to the US elections. A disgruntled lower to middle class, general distrust of the upper class and authorities, resentment and devaluation of higher education and formal training. Words from someone bearing the title "economist" has the same weight as poorly punctuated ramblings on Facebook because "economists" have been strung along for years and years in media.
The referendum is non-binding. It's just a show of what the people want.
Of course, to ignore the will of the people is political suicide. It's basically saying you're undemocratic. So every British party will be working to this end, because if you don't you are unrepresentative (and I agree with this).
There is the possibility of someone trying to weasel their way out and say that the split of 52-48 is not enough to form a mandate. There is the possibility of general elections occurring, and the invocation of Article 50 being delayed. There is also the possibility of the Queen reinstating absolute monarchy.
As an aside: one of the main reasons the EU was formed was to keep Europe from going to war over each other. This is not implying that European countries will go to war should the EU break up.
Really, the only thing is to wait and see. Not just months, but years, to see if the economy recovers, if Britain will rise or fall due to trade and immigration, if this signals the end of the EU. The following period will be dogged by articles, opinions, projections, depressions. This is a media gold mine, and it is going to explode. Dear reader, it's laudable to stay abreast of current events; just make sure you consider as many angles as is reasonable.
Knowledge is power, and an open mind is good manners.