Brexit: Britannia Waives the Rules

Brexit: Britannia Waives the Rules

Brex­it after­math. 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

Brexit
Euro­zone par­tic­i­pa­tion (Wikipedia). BLUE: 19 EU mem­bers in the Euro­zone. YELLOW: EU mem­bers oblig­ed to join the Euro­zone (Bul­gar­ia, Croa­t­ia, Czech Repub­lic, Hun­gary, Poland, Roma­nia and Swe­den). PINK: EU mem­ber with euro opt-out (Den­mark). RED: EU mem­ber vot­ing to leave (UK). GREEN: Non-EU mini-states using euro with a mon­e­tary agree­ment (Andor­ra, Mona­co, San Mari­no, Vat­i­can City). PURPLE: Non-EU states using the euro uni­lat­er­al­ly (Koso­vo, Mon­tene­gro).

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.

Brexit Nannies

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. Britain and oth­er Euro­pean coun­tries had been invit­ed to join:

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…. It is only when plans for unit­ing Europe take a fed­er­al form that we our­selves can­not take part, because we can­not sub­or­di­nate our­selves or the con­trol of British pol­i­cy to fed­er­al author­i­ties. —Nation­al Archives, CAB 129/48C(51)32. To read more click here.
Churchill’s vision was a sov­er­eign Britain linked first to the Com­mon­wealth, sec­ond to the Atlantic com­mu­ni­ty (U.S. and Cana­da), and third to Europe. But that was then, this is now. Churchill nev­er had to con­tem­plate any­thing like the EU of 2016. Unfair use should not be made of his words.

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. “…which is the one in which the world’s busi­ness is done.”

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. I’ve always been impressed by its 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.”

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