Sunday, July 3, 2016

Brexit: The Good, The Bad, and The Ugly

Brexit, UK, EU

If you were like me you stayed up late last night watching in awe as the results came back region after region in favor of a Brexit.  Next you have probably noticed the huge turmoil in the markets and have read all the negative press resulting from this historic vote.  Here I'm going to lay out the Good, the Bad, and the Ugly of this vote.  Before I begin, let me just say that I was actually voting a little for a Brexit (I'll explain why), but not like this.  Not when 51% of voters decide the fate of the other 49.  That's tyranny of the majority if I've ever seen it....almost as bad as our supreme court....oops did I say that?

The Good
I don't think I've seen a positive point on Brexit in a very long time, but obviously there has to be positive aspects otherwise the Brits would never have voted the way they did.  A lot of scholars and newspapers were painting this as a vote of the "uneducated and lower class," which in many ways it was since the sticking issue was immigration, but don't be fooled into thinking that there isn't a logical reason for Brexit.

So what are they.  Well first of all, it's important to understand the main issues of the vote.  The first and what became the most prominent issue was immigration.  This was such an issue because back in the 90's when Eastern countries joined the EU, the UK was the only major country to almost unequivocally open its doors to immigrants, whereas EU rules that eventually were put into place meant that the free movement of labor would have to be accepted 7 years after a country entered the EU.  In other words, when Romania entered the EU in 2007, other countries were required to allow immigration rights to Romanian citizens 7 years from then.  (Mind you this is a big problem right now in countries like France, which have had huge throngs of Roma and Romanians immigrating, of course the French then just deport them...yes, that doesn't fit with the rules).  But for the UK, when they started to reach a saturation point for their immigrants, the time had already ended for not accepting them.  Of course, this also played well in the UK's favor as they were able to show how tolerant and accepting they were, but over time this image has faded and been replaced by a nation that has become increasingly xenophobic thanks to terrorism and increasingly protective of the lower class jobs that these immigrants seemingly gobble up.  So the main point here of leaving is the UK now finally controls its immigration laws again, and can save Britain for so-called "Britons."

This leads to the second point of the Brexit, which is complete control of rule of law.  This has always been a problem with the Brits and the EU, and well...with the EU in general.  There is a term called a democratic deficit that really explains this.  It is that in the EU states are required to sometimes give up sovereignty on issues, meaning they can no longer decide the issue but must instead, listen to the other states.  The two most prominent issues recently with this have been the debt crisis and the refugee crisis.  In both cases, many states within the EU were required by EU law to do something their populaces resented or refused to do.  With the Brexit, the Brits no longer have to worry about life under the "tyrannical" EU.  They are more or less in control of their own decisions now even though their decision making power is lessened.

Another large problem people cite is that this will adversely affect all British imports and exports to Europe, and while this is most certainly the case, just as we learned from our sanctions against Russia, those who wish to impose sanctions or retribution risk ruining their own industries as well.  For example, in Poland the apple industry entered a huge depression as well as many fishing industries in Norway since their main country of export was Russia.  Russia on the other hand just found a different seller in the large world economy.  This is even easier for the UK as it has great working relationships with the US, who has been struggling to build a better trading agreement with the EU with TTIP, and it also helps that the UK is completely accessible by sea and able to do trade with just about anywhere.

Another important point that is a possible good is that Brexit can change the face of the EU into an actual working institution(sic!).  The Brits have always been a reluctant partner in their membership in the EU.  They entered merely to maintain top quality trading partnerships with EU states and also to keep the EU or the EEC, as it was back then, from becoming too strong and making decisions without its offshore partners.  Even with the formation of the EU, Britain maintained many negotiated perks that allowed them to remain in the EU as a decision maker but outside of the EU in many aspects.  They have also acted as a great ally to the US in furthering the expansion of the EEC and EU based on liberal-democratic principles, which in my opinion, may have been good for much of Eastern and Southern Europe, but has crippled the EU in its ability to create a viable state.  One of the biggest problems has been the British insistence on retaining the Pound Sterling as their currency, setting the precedent for other states to remain outside of the Euro and also setting a precedent of creating a financial system where there is no regulating body over the monetary policy of the currency.  In this new EU system without the British, not only will a long dissenting and powerful voter no longer remain, but other outliers may follow suit, allowing the EU to create a powerful, regulated state not only in name but in reality.

So just to recap, the British gain sovereignty, they can control their borders, they control fiscal and monetary policy, their trade may not be adversely affected, and the EU might be able to follow suit.  Those are the good things.

The Bad
Now we get to the bad that results or could result from the Brexit.  The first and most prominent bad is the volatile market.  London has long been a huge trading hub around the world and the Pound has been a long-standing reserve currency for much of the world.  This is mainly due to Britain's past as an empire, which is why when the Pound took a hit, so did a lot of Asia.  Many think this will eventually stabilize, but London will lose its status as a large gateway to European markets, many think another city like Berlin or Paris will rise to take its place.

This is also another problem as much of US investment into Europe goes through the UK before entering Europe.  The UK has traditionally made a good entrance point into European markets because of its close and stable partnership, let alone the fact we both kind of speak English.  But now with the Brexit there will be all kinds of new tariffs and trade barriers that will make moving into the EU from the UK much more difficult and US firms and businesses may just opt to skip the problems of the UK for the larger market.

Another huge problem for the UK is that many of its regions like Gibraltar rely on the EU for its success.  Gibraltar for example is mainly composed of large banking institutions, which work with the rest of the EU thanks to the open market within the EU.  Now, with Brexit decided by mainland Brits, Gibraltar's future as a major European player is in jeopardy, and if Spain opens up its offer for annexation again, Gibraltar may decide to jump the UK ship.  They're not alone in this either, but that's the Ugly.

Finally, there is the problem that this is an experiment that could go terribly wrong for the UK and if they come crawling back with ashamed looks to the EU for help, they will have lost all of the benefits they had once negotiated under a much more prosperous era for the UK.

So in short, the bad is the UK could be left out in the cold, losing its prestige as a trading hub, losing key trading partners, influence in Europe, and perhaps even losing part of its populace.

The Ugly
This is what everyone fears most when something new happens.  If the UK had voted to stay on, they would have just kept voting on an exit over and over again until it finally happened, but governments are much happier with the status quo than with wide sweeping changes because you can never be sure where the changes will stop.

The UK for example is the United Kingdom for a reason, it is made up of many different populaces and people, but the vote in both Scotland and Northern Ireland went entirely for staying in the EU and the Scots have already said they want to hold another referendum to leave the UK and return to the EU.  Then there's Ireland, who hasn't said anything, but clearly voted stay.  Don't forget about Gibraltar or the many other little states that didn't even get a say in the UK's vote.  These could all slowly fall away and vote to leave.

But the UK isn't the only fragmented state that could shatter.  The EU has faced crisis after crisis and there is a good possibility that the fractured state could break up.  This is what many are now afraid of in the EU, that other states will follow suit and the strong Euro and strong Pound will disappear into oblivion along with a strong Europe.

Of course, my personal opinion is that the core EU is much stronger than people think, and that Britain's exit was only a matter of time.  Other states in the EU will probably also follow suit, but after the turmoil fades, the remaining EU and UK will be much stronger than they would have been had they continued their ship's present course, which at the moment seems to lack an actual heading.  The problem with our democratic version of politics is it focuses us on the present and short term effects rather than on a grand strategy.  Will the British exit create turmoil and a lot of change?  Undoubtedly, yes.  But if there is one thing the debt crisis and the refugee crisis taught us it's that something needed to change in Europe.  And change is a comin'.

Thank you for your support.  If you would like me to write about something please contact me, and if you would like to sponsor my trip somewhere to showcase your business or to work with me please send me an email as well.  You can also find my works for Kindle on Amazon.

Additionally, follow me on InstagramFacebook, or check out my photography website at A River Runs Through It Photography.  Finally, check out my travel guide website for planning trips and picking destinations at Travel Guide 201.  Additionally if you like my work consider donating at the bottom or click on a couple ads and maybe even buy something :)

No comments:

Post a Comment