Was it a good idea for Britain to
vote to leave the European Union?
There seem to be some good arguments
on both sides, and it is usually a good
idea to avoid telling people in another
country how they should vote.
The main advantage of an economic union
is that it provides people with freedom
to buy things from other places. In the U.S.,
people have the freedom to buy things from
Maine to California or Florida to Washington.
We can hope most people realize that the
U.S. is better off allowing trade across
the country than it would be if policies
discouraged people from buying things from another
state. As a country that traditionally
has been a major trading nation there is
a risk for Britain in breaking away from
trading partners.
Back in the 1960s, Britain tried to get
into the group (then called the common
market) but they were refused, because
of the veto by French President Charles
De Gaulle (see
http://news.bbc.co.uk/onthisday/hi/dates/stories/november/27/newsid_4187000/4187714.stm
Britain finally joined the community in 1973.
The stock market downturn that happened
right after the vote is mostly an indication
that investors were expecting the opposite
result. If they had been expecting
the Brexit vote for the last month, then
stock prices would have started falling
a month ago. There is no reason for a jolt
for stock prices when an event happens that
has been expected.
In practice it seems that the European
Union has not been as democratic as it maybe
should be. It is hard to say if the vote
will lead to any reforms in the way the EU
operates.
Trade policy questions often do not follow
typical party divisions, and that also has
been the case in Britain. There are both
supporters and opponents of Brexit in both
the Conservative and the Labor parties.
Another variable to wonder about is whether
there will now be a renewed push for Scottish
independence, as voters in Scotland favored
the EU and perhaps will try to be admitted
to the EU as an independent country.
Since Britain never joined the Euro
common currency, the Brexit will avoid
that complication. The future of the
Euro will be a topic for another day.
……………..
–Douglas Downing
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