Brexit

I guess people need to mourn their defeats, but flicking around various TV channels’ coverage the comment that staggered me most was that of the prominent English historian, Simon Schama, who declared –  well before the result was clear –  “if Leave wins, it will be a repudiation of knowledge; a repudiation of reality’.

Or simply, perhaps, just a choice by UK voters to have their country governed by their own MPs, their laws interpreted and applied by their own judges, and so on.   Rather like New Zealand, Australia, Canada, or the United States.   Many other commentators have seen the vote as a vote against the Establishment,  which is no doubt true in part  – as the election of Jeremy Corbyn was, and perhaps the success of date of Donald Trump has been – but if so, comments like those of Schama, totally dismissive of the choices of his fellow citizens, might go down as a classic example of the sort of attitude and approach that many saw encapsulated in the EU model, and the way in which too many countries have been governed in recent years.

The market reactions so far seem hardly that surprising – except perhaps in highlighting the bounded rationality that had left so many (I was among them) almost unable to believe that, even though the polls had been a dead-heat for weeks, a Leave vote could actually happen.

The headline fall in the value of sterling is striking  – currently down 9.9 per cent against the USD.  But it brought back memories of the wild days of the New Zealand foreign exchange market, especially in the early years after the 1985 float.   But as recently as 28 October 2008, the NZD was down 9.3 per cent in a day (and more like 12 per cent against the yen).  The trend was strongly down in that global crisis and recession, but there was also a sharp bounce the following day.  I recall watching CNBC each evening during the 08/09 crisis.  It might be another few days for that  –  and to be glad it is “spectator sport” rather than something I have direct exposure to.

 

UPDATE: I thought this piece by US economics columnist Megan McArdle was a very nice articulation of views I share almost entirely.

UPDATE 2:  An absolutely fascinating set of results from exit-polling of referendum voters

 

 

19 thoughts on “Brexit

    • Absolutely! I hope that this result empowers citizens of other nations (our included) to make some tough choices, rather than just being content with the status quo.

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  1. Except that it is non binding just like ours are and like Mr Key, Cameron will ignore the result by spending the next two years obstructing the process to leave. They will get watered down proposals or proposals in weasel words just like we have had.
    Once a world socialist always one.

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  2. Not many pundits have linked the intransigence of the ECB in the face of mass unemployment to the number of migrants seeking jobs in the UK.

    I would have voted Remain but to say all Leavers are racist idiots is missing the point.

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  3. Wanting “to have their country governed by their own MPs, their laws interpreted and applied by their own judges, and so on” certainly sums up the characteristics that were in play in this vote: xenophobia, prejudice, illiberalism, irrational fear, and misinformation. The Brits do have virtually all their laws determined by their ‘own’ kind, but just like “New Zealand, Australia, Canada, or the United States” have to conform to some rules agreed by free-trade clubs they wish to do business with. They’re going to find these rules will be more onerous now, not less.

    I daresay the typical Russian in Nov 1917 felt he’d struck a similar blow for freedom and self-determination. One can only hope his modern-day British cousin doesn’t come to suffer the same degree of regret.

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  4. There is a substantial difference between the extent of EU influence or control over UK law, and that of countries such as NZ and Australia in FTAs. There are no circumstances I’m aware of where any international agency makes rules that are binding on NZers in their domestic activities, altho of course there are plenty of individual treaties that NZ govts sign, which often involve provisions which they seek, by parliamentary vote, to have become part of NZ law. You could argue that things like WTO panels govern trade disputes, but again these only affect international transactions.

    As someone who does not favour preferential trade agreements – and especially where, as with TPP, they involve attempts to try to force national govts to adopt particular types of domestic legislation/law – even if one accepted that they were on a spectrum towards where the EU had got to, it would not make me more enthusiastic about, or acquiescent to, such provisions. I’ve also outlined my concerns about ISDS panels in an preferential trade agreement context – they weren’t needed in the first heyday of globalization, and it isn’t obvious that they are now.

    Personally, I’ve never found labels like xenophobia helpful. Anyone who thinks of Michael Gove or Daniel Hannan as xenophobes seems to have emptied the word of any meaningful content (other perhaps than”i disagree with him/her).

    I should add that I’m not optimistic that the quality of British policy will be any better out of the EU than in, but at least the choices will be national. Perhaps it might be, but policy quality in the other Anglos doesn’t give much basis for confidence.

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    • Well, you don’t exhibit much in the way of a positive view of government policies generally, anyway, so I understand your pessimism on that.

      But really, the extent of influence of the EU on Britain economically is restricted to microeconomic issues i.e at the margins only. Thanks to the very intelligent decision not to adopt the Euro, macroeconomic policy remains (pun unintended) firmly in Britain’s hands.

      On human and employment rights, on the other hand, the EU has been hugely positive for many, if not most, of Britain’s citizens.

      And may I remind you that 48% of Britain’s citizens, especially the young, think otherwise, justifiably, in my opinion, other than the EU’s almost criminal subsidies of its agricultural sector.

      Basically, a few disgruntled mill workers (my ancestors) have caused a catastrophic mistake.

      So it goes.

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      • Interesting chart thanks. It isn’t a tight relationship, but I also wonder how one should interpret it. One could run a “voting against their own (economic) interests” story, or a story in which people in those regions are more aware of the impact of EU-driven micro regulation. I’m not running the latter too seriously, and in general it looked to me as tho the vote was more a class-based one, and even then not in a single dimension. Small-c conservatives and lots of the old working class for exit, and an urban (metropolitan) liberal vote for remain. The Scottish vote seems shaped by different interests, and of course there is also a young/old dimension to the vote too.

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  5. Once Scotland votes for independence and the UK dissolves and the French have a chance to make an example of the English that I am sure they will relish. I think that the citizens of England will find that they are citizens of a less prosperous, less internationally relevant US vassal state.

    Maybe that is what they want – all I can say is I’m glad I no longer live there. Mind you with New Zealand’s continuing poor economic performance perhaps I shouldn’t be so smug…

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  6. The tensions look as though they might move quite quickly to France. Not long now until the presidential elections, and recall the recent poll where French public opinion was as unfavourable towards the EU as British opinion.

    There has to be a real risk that this outcome triggers a breakup of the euro and the EU, Which could be a good outcome in the long run, but would be a very messy transition. Hubris may meet nemesis.

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    • And Hillary Clinton is on the other side of that one. I couldn’t imagine voting for either of them (Trump or Clinton) so in this case i’m not sure there is any information or virtue signal in the candidates’ affiliation.

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  7. Silly idea but from an economic view would the UK benefit from becoming the 51st state of the US? I have sometimes wondered if the US expanding to include all the world might be a way of getting peace and prosperity – eventually removing nationalism altogether. A way to achieve John Lennon’s idea?

    US could charge an entry fee and pay off their national debt.

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  8. To the great UK motherland, Kiwis welcome you back, our great leader of the Commonwealth, bye bye to the EU. We forgive you for abandoning Kiwis and for being a wimpy state of the EU.

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  9. Thank you for sharing Megan McArdle’s article. While if had had a vote I would have voted to remain in the EU, I am also concerned by the categorisation of the Leave voters. In particular I found this article – hope you can cope with the Guardian on your page – haunting.

    http://www.theguardian.com/politics/commentisfree/2016/jun/24/divided-britain-brexit-money-class-inequality-westminster

    Which when combined with your posts on the UK/NZ underperformance has got me further considering the centre right policies that – particularly the UK – have been following. I couldn’t help thinking about Taskforce 2025 prescriptions to get adults off welfare; reduce subsidies for childcare; and/or reduce govt debt faster. While in and of themselves they may be fine, when implemented in an environment of low wage and precarious employment as has been the case in the UK – and is increasingly the case here- they have contributed to a two tier society.

    I also grew up in the seventies with an over dominant state so I don’t see a return to that as a solution. But I can’t help feeling that the outcomes of the policies of the centre right are also not what success looks like. Interested in your views.

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    • Re the Guardian, I’m very grateful to the Scott Trust for continuing to fund high quality (albeit with a leftist tinge) journalism at no charge to the reader. That is quite a haunting article, altho I wonder if the wealth divide is really the main one. The polls Lord Ashcroft did (also linked to in my earlier post) point to a divide along a fault line that seems to me more like social conservative (and importance of the local) vs metropolitan urban liberal (and an emphasis on the supranational). Of course, even that divide isn’t clear cut. I don’t think any one classes Boris JOhnson as a social conservative, but then again he isn’t poor either.

      This link to another columnist I respect a lot (even if he writes for a paper I wouldn’t usually link to) captures some of that divide, and calls for a realignment of UK political parties http://hitchensblog.mailonsunday.co.uk/2016/06/boston-lincolngrad-i-saw-the-seething-resentment-now-it-is-time-to-finish-the-revolution.html

      On your NZ comments, which probably warrant a fuller answer than I’ll give them now, I have some sympathy with what you say. But I think there is an important difference between outcomes and policies. I’ve been somewhat horrified by some of what I’ve read about how the UK govt has implemented some of their welfare reforms, but my view of a successful society would not be one in which we accept 10% of working age adults being on welfare. Quite how the mix of policies and cultures that has got us into this mess is unwound I’m not really sure.

      But it is in part why I put such emphasis on the factors that have skewed our economy so strongly away from tradables, and away from discretionary investment, (thru a high real exchange rate and high real interest rate). I think that reversing the interventions that have created that persistent imbalance can do a great deal of good for NZers across the board (some losers – owners of land in Akld) and might provide a better footing for dealing with some of the less tractable problems.

      That said, I’d still favour school choice now – and hold it against ACT for pushing for charter schools only for people at the margins, not for the middle classes.

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