Champions of the movement to withdraw the United Kingdom from the European Union, like champions of many causes and candidates, promised a range of positive results if the British would simply shed the burden of their participation in the Union. There would be billions of pounds available to improve public health, immigration would be sharply reduced and the economy would take off. Now, strangely, having secured victory, these champions are suggesting that what they promised will prove to be vastly greater than what they actually will deliver.
In fairness to all concerned, both champions and opponents were doing a lot of guessing. The European Union itself is a novel experiment in shared sovereignty. Every new challenge it faces, every new innovation it tries, represents a historic first. There are no controlled experiments, no epidemiological studies, no time-series analyses that provide even a modest degree of assurance about the results of any particular significant act affecting the membership and operation of the EU.
Which might make one cautious about promising too much, or predicting consequences too dire . . .
Perhaps the most significant thing “missed” by advocates of Brexit, in my very humble opinion, was the extent to which the economic interests and political will of the major players in the global capitalist system were at odds with this novel experiment in creating an economic island out of . . . well, islands.
Markets hate uncertainty. If times are good, fine. If times are bad, fine. But if times are confusing, investors will behave in unpredictable and erratic ways.
More to the point, the massive computer models that drive so much of global trading activity today were designed by human beings using past experience. The models tell the computers how to shift investments in response to a remarkable range of “normal” events, including “normal” disasters (natural and human-made). But all the programmers could write into their models about the effects of Brexit were speculations . . . many of them negative. The result: 2 trillion dollars in value wiped out of global markets in a single day, the day after the referendum passed, and nearly another trillion dollars on the following Monday. While there have been some modest gains since, those gains pale in comparison.
And it gets worse. Because nothing, at this point, suggests that the uncertainty will be short-lived. The EU’s leadership is indicating that it can’t and won’t start the proceedings, because it is up to the United Kingdom to do so. The Brexit champions, now that they have secured a public declaration that the marriage with the continent is over, seem remarkably unmotivated to consummate the divorce.
Meanwhile, the fallout is raining down, globally and nationally.
The volatility in the markets means the value of many a UK pensioners’ retirement funds (whether held personally by them or by some investment fund that must manage assets to provide their pension) has been substantially reduced already, with recovery uncertain. For the parent governments and corporations, this means having to draw additional capital away from current activity to shore up fund imbalances, or (as so often happens) betting that this all will sort itself out and make up for the losses . . . at even greater risk to future wage earners.
Meanwhile, the cost of credit for the government of the UK is likely to go up as the financial odds-makers express uncertainty about the future of the UK economy. At the moment, those are small shifts in costs, but the longer the uncertainty persists, the larger they become.
And while the jury still is out, all of this turmoil has and is likely to continue to promote a decline or at least a postponement in investments in the British economy, both from domestic and from international sources. One cannot yet foresee whether the EU and its individual members will choose to make things easy on their former spouse, or whether they will seek, by ways subtle as well as blatant, to punish their former partner who has unilaterally declared her independence.
There are good reasons to believe things will work out better than the worst cases now floating around. Whether or not the United Kingdom is in the European Union, their respective economies are tightly knit together, and, most likely, their fates as well. Too much of the social, economic and even political fabric of these nations has been woven together for either side to rip it all up in spite.
But there also are good reasons to believe that it will be messy, uncertain and destructive of what little economic energy seemed to have been generated by Europe’s overall slow recovery post-2007.
Which means the promises of a greater, more glorious, more profitable future for Great Britain must be put on hold for some time to come.
And like justice, a promise delayed is a promise denied.
Such, at least, seems to be the viewpoint of most frustrated or angry voters, like many that gave Brexit its victory.