Brexit: Britannia Waives the Rules
Brexit aftermath, June 2016: In voting to leave the European Union, Britain has opted to become another Norway. One of the most prosperous and contented countries in the world, Norway does fine with its own laws, currency, and trade agreements, including a good one with the EU. It is hardly a bad model.
Short-term troubles
The gnashing of teeth over the upset Brexit victory resounds around the world. For awhile, chaos will attend financial markets, and the pound will take a dip (boosting British exports).
The Scots voted against Brexit, though not in the numbers predicted. Many voted “Remain” because they feared Brexit would mean another Scottish independence fracas. Others will complain and demand more autonomy. They would be mistaken to support independence given current oil prices. And they receive a great deal from being part of the UK. The Scots also need to fish. They will come to appreciate regaining control of their own conservation policies.
Nannies and minders
The New Yorker predicted defeat for Brexit and UK Independence Party leader Nigel Farage, whom they compared to Donald Trump. Farage leads a party with one seat in Parliament. He will not be prime minister. Trump believes (improbably) that he will be president, and his party (if it is his party) holds majorities in Congress. Farage is far more articulate and silver tongued, though the Trumpeters are trying to polish their very rough diamond.
Never mind, the Evening Standard assured its readers, the vote may mean nothing. Brexit will require an Act of Parliament. The EU will have something to say about that. Few MPs are likely to vote against a referendum with the highest turnout in thirty years. The EU bullied the Dutch, Irish and Danes when they showed signs of independence. It is less apt to bully the fifth largest economy. It needs Britain too, after all.
In the end, the argument over Brexit came down to statists vs. libertarians. Statists think the state must regulate every aspect of people’s lives. The proles are too dumb to know what’s best for them. After the vote, the Establishment and the BBC forecast apocalypse: surprise. In 1992, Britain opted out of the Eurozone. The same people predicted a recession and the end of the City of London as a financial mecca. You don’t hear a peep about adopting the euro today. Predicting disaster if they don’t get their way is a common tactic among our respective national nannies.
Using Churchill
Winston Churchill, whose quotations were bent out of all context in the debate, is still being used to lecture Britons. American lectures began with President Obama. (He caused a blip in Brexit polling when he said an independent Britain would go “to the back of the queue.” As the historian Andrew Roberts pointed out, Britain wasn’t at the back of the queue in 1940, or 9/11.Britons bled alongside Americans and others in places like Afghanistan and Kuwait.)
One critique trotted out Churchill’s “Europe Unite” speeches of the early postwar years to lament how the great man’s wisdom was ignored by voters. But isolated quotations, from a time when Churchill saw Franco-German rapprochement as the main need, are not dispositive now.
Churchill’s view
A fair-minded person is obliged to consider: Why, after so many inspiring speeches supporting the concept of European unity in opposition during 1945-50, did Churchill as prime minister (1951-55) prevent British involvement in the European Coal and Steel Community, the European Army, and other projects which led to the European Economic Community, and ultimately the EU?
A clue to what Churchill thought then was his message to his cabinet in 1951. It concerned the Schuman Plan, a single authority to control the production of steel and coal in France and West Germany. On the invitation for Britain to join, Churchill said:
Our attitude towards further economic developments on the Schuman lines resembles that which we adopt about the European Army. We help, we dedicate, we play a part, but we are not merged with and do not forfeit our insular or commonwealth character. Our first object is the unity and consolidation of the British Commonwealth. Our second, “the fraternal association” of the English-speaking world. And third, United Europe, to which we are a separate closely-and specially-related ally and friend…. —National Archives, CAB 129/48C(51)32. To read more click here.
Wise advice
As a British investor friend said to me, “after the thing matures everything will be fine for the UK.” A Canadian active in business for four decades said, “this is really Britain’s opportunity.” Along those lines I recommend economist Irwin M. Stelzer’s article “Nothing to fear” (Hudson Institute).
“You need six things for a successful economy,” Stelzer wrote his British friends. Whichever way the vote went, he explained, Britain would still have them:
1) A large economy. Britain’s is the world’s fifth largest.
2) The rule of law. “…so that no Vladimir Putin can snatch the fruits of your labour or profits from risk-taking investment.” (Putin approved Brexit, which may not be altogether settling; but that is another story.)
3) The English language in world business.
4) A time zone. “…that allows you to work 24/7 with economies around the world.”
5) World-class businesses in the growing services sector. “Your design firms, law firms, insurers, music businesses are among the world’s best, beating my country’s rivals in many cases.”
6) A vibrant, exciting culture “that attracts the best and the brightest employees of foreign firms. Offer a young investment banker the option of London or Frankfurt, of educating his children at Britain’s fine schools and colleges or having them attend class anywhere else in the EU, and guess where he will choose.”
“All will come right”
After Munich in 1938, Churchill warned “of a bitter cup which will be proffered to us year by year unless, by a supreme recovery of moral health and martial vigour, we arise again and take our stand for freedom as in the olden time.” On 23 June 2016, such a stand was taken.
I’ve visited the UK thirty times since 1974, logging 100,000 miles. Land’s End to the Orkneys, the Hebrides to East Anglia. It has an ability to produce prosperity and contentment in a large, concentrated population. The improvement was palpable after the advent of Margaret Thatcher. I have no doubt that in the end, as Churchill said, “all will come right.”
