Category Archives: UK Politics

Brexit

One week from today, the United Kingdom (UK) will vote to leave the European Union (EU). This creates a lot of uncertainty around the UK’s future and consequently… mine – or does it? For peace of mind, let’s look at some of the surrounding motivations, consequences, and implications surrounding the “Brexit” vote on June 23rd.

Unlike the US election, my Facebook newsfeed is not filled to the brim with clickbait articles claiming absurd facts with the only source being the same article posted on another ad-selling website, nor is it filled with arguments based on misinformation on satirical or absurd, unfounded websites. The more I read, the intricate and deep rooted the problems only become more convolute.

European Union

Started in the wake of World War II to foster economic interdependent economies through trade [1] to provide incentives for peace – or less incentives for war. Today, this “unique economic and political union” is shared between 28 European Countries.

The EU operates on voluntarily and democratically agreed treaties among member countries. Of the 26 treaties ratified, three have been ceased, all originally signed in the 1950’s. One treaty expired after 50 years and the other two were replaced by the Amsterdam Treaty.

The EU likes to think of themselves as “one market without borders”, but still admit that some barriers remain including broken national tax systems, slow and inconsistent e-commerce, and a lack of recognition of vocational qualifications across national borders. [2] In efforts to unify markets, “hundreds of technical, legal and bureaucratic barriers to free trade … have been abolished” [2]. They also describe themselves as a “huge business opportunity” with “unrestricted access to nearly 500 million consumers” [2].

One blatant benefit of the EU is the unified monetary system – the euro. Nine of the twenty-eight countries do not use the euro of which the UK is one of them. For the consumer and business owners, there is no need to worry about exchange rates and fees while accessing their “500 million” consumers. Personally, the unified euro was a dream while traveling in Europe – I didn’t end up with $30 in assorted currencies that was too little to exchange back.

Some of the major policy areas the EU focuses on are climate, human rights (including justice and migration), environment, health, and energy. To maintain access to the EU’s “one market”, you must adopt all of the policies ratified by the EU, including free migration of people and contribution to the budget. Switzerland talked about restricting their boarders and the EU said it would revoke the access to the market; Norway has to adopt the laws of the EU and contribute to the budget (at a slightly lower rate as the UK) and has no say in it! [3]
What are the Consequences of Leaving?

Renegotiating Trade Deals

Britain would have to renegotiate trade deals with 50+ countries that have access to the “single market”. In addition to taking a large amount of time (possibly decades) to hammer out these deals, the EU is not going to be generous or allow the UK to cash in on favors owed – it is going to make the UK an example about leaving.

Losing Market share of Economic Services

Those who think the UK can get a better trade deal than the one they currently have are very quixotic.  Even beyond that, they feel a World Trade Organization deal such as Canada’s would be good enough. Unfortunately for London’s financial center, that deal would not include financial services, thus allowing places like Frankfurt to gasp some more market share while new trade deals are negotiated.

“ ‘I don’t think we would be shut out of continental markets,’ said Tarun Jotwani of the TKG private investment group. ‘London is far too important.’” [5]

While the doomsday scenarios are extreme and likely scare tactics, I find this amount of confidence far too arrogant and narcissistic. Jotwani seems to think that there is no reality where London can be replaced and that no one will leave London to maintain access to the “single market”. I would hope the executives in London are preparing large scenario analysis to find ways to maintain access to their customer base else it will make the economic turmoil of a Brexit that much more devastating.

TRUST

Nobody thanks the government surveillance programs for preventing terrorist attacks because their effectiveness depends on their secrecy. A true success of their program means that no one ever knows a threat was viable. People just have to trust that the liberties they sacrifice are not in vain.

But honestly, politicians have been lying to the people they govern. In the US, there is widespread frustration with the “establishment”. This frustration coupled with the xenophobic and racist attitudes has led to the rise of an abominable entertainer and abhorrent businessman.

The lack of trust and frustration with broken promises, the “Brexiteers” are obviously frustrated with the current establishment as seen by the following poll.

Even more reputably, according to the European Commission’s poll “Do you tend to trust the European Union?” less than 30% of Britain’s participants responded ‘yes’ as reported by The Economist. [3]

One of my major frustrations are reading transcripts of financial claims by politicians on narrow claims refuting industry leaders; I can understand their frustration. Because of the complexity of the economic issues at hand, Europe’s statistical office, the British government and the IMF all have different figures on many different metrics. [3] This lead’s people to not want to trust the experts.

One example that is important to me is the fact that scientific researchers would lose access to the EU funding. The Institute of Physics (IOP) and Royal Society says funding will dry up. “Gove says we hand over £20bn [to the EU], and get £10bn back.” [4] To cast some shadows of doubt around Grove, the Guardian reports that the “Research and Innovation” budget for the EU is €10.3bn [6], confirming that the UK does not receive the figure claimed by Grove when queried about research funding.  This simple example of contradictory information is infuriating because (1) it’s so hard to dispute – his source isn’t revealed (2) it is about something I care about and (3) it makes any decision I would make as a voter even ten times harder.

Parallels to the US Elections

Taking the plunge and leaving the EU is filled with lots of obscure questions and even more convoluted answers, but staying in the EU isn’t exactly the safe bet either. Ultimately, no one can say with 100% confidence what will happen or what will be best. I definitely do not know or do not even begin to think I understand how this came about or how important this is…

I do look at this as some broad parallels to the US elections: Establishment vs Anti-establishment.

I do not think electing such a strong anti-establishment candidate is what’s best for the US, but I’m sure glad they are sending a message to the current establishment that they need to stop the charade they have played else they will be beat. The nomination process is polarizing – the most radical candidates (Trump, Sanders) have the strongest chance during the nominating process where moderates and independents (the SWING VOTES) are excluded. Super delegates are extremely anti-democratic, one person has the equivalent voting power of 10,000 people, although someone who is an “expert” should be able to make a better, more informed decision with stronger prescience.

I do not think it is time to abolish and dismember the current state of politics, but to dismantle those who uphold policies that are self-interested and suppressing of people and accountability. Like Trump, I think leaving the EU would be too radical of an anti-establishment move fueled by the frustration and emotions of those who have lost trust in the system and thus given up.

The death of democracy is not likely to be an assassination from ambush. It will be a slow extinction from apathy, indifference, and undernourishment. — Robert Maynard Hutchins, Great Books of the Western World (1952)

Radical and anti-establishment candidates have succeeded in the past, which lead to World War II, the exact type of event the EU stands to prevent. In no ways do I think the UK referendum would lead to such a catastrophic event, let me make that clear, but extreme distrust and contempt  leading to extreme radicalization of governments and people will have catastrophic consequences.

Like within the US, I am not ready for the UK to give up on the establishment. This is just my personal opinion from my minimal experience with the topic. I think the motivations for the Brexiteers is emotionally charged and fueled by distrust and frustration rather than rationale. I would also rather see another (smaller) country be the first to leave and be the example of what happens to trade deals consequently.


Enjoy!

Sources:

[1] http://europa.eu/about-eu/basic-information/about/index_en.htm accessed on 15 June 2016

[2] http://europa.eu/pol/singl/index_en.htm accessed on 15 June 2016

[3] http://www.economist.com/sites/default/files/EconomistBrexitBriefs16.pdf accessed on 15 June 2016

[4] http://www.theguardian.com/politics/live/2016/jun/15/eu-referendum-live-osborne-punishment-budget-farage-flotilla-thames?page=with:block-576197a7e4b04ceead988c1c#block-576197a7e4b04ceead988c1c accessed on 16 June 2016

[5] http://www.marketplace.org/2016/06/03/world/could-brexit-sink-europes-financial-capital accessed on 16 June 2016

[6] http://www.theguardian.com/politics/2016/jun/09/what-is-the-european-union accessed on 16 June 2016