Over the past few days we have witnessed the aftermath of the Brexit vote. Stock markets have plunged and the British Pound has lost 12% of its value over two trading days. Ratings agencies have downgraded the UK from AAA to AA, to say nothing of the hysterical reactions by the the European ruling elites and their Remain camp supporters. Rachel Maddow is not even a Brit but that doesn’t stop her from claiming Brexit will lead to World War 3, and livid commentators both British and European are saying things like “Some things are too important to put to a vote,” and “Democracy doesn’t work.”
Some things are too important to put to a vote when that some thing is your pet project. Democracy doesn’t work when votes are cast and you lose. The meltdown of the progressive transnational elite isn’t surprising to those of us who have raised kids. It’s nothing more than a toddler laying down in the aisle of the grocery store to have a fit when you refuse to buy him a breakfast cereal sugar-bomb, just those freaking out are much older, better dressed and speak with pleasant accents. Many of these people truly believe that they know better than others, and they cannot believe that the ignorant masses ignored them to do the opposite. Unfortunately they are too busy making fools of themselves by peddling apocalyptic visions like Jeremiahs in tailored suits that they are blind to why the masses voted the way they did. After all, they have profited from globalization and the European project. They don’t worry about their job being shipped abroad, or watch as their neighborhoods get turned into refugee camps.
So the stock markets are jittery because they hate volatility. That’s a natural reaction because everyone would love to live in a nice predictable world and that includes stock traders. But Brexit is a scapegoat for an overvalued market in an earnings season where few companies outperformed their mediocre expectations. The drive to contain volatility that started under Paul Volcker has led to a string of market bubbles that burst every 8-10 years. We’re about due for a blow up and the increased volatility the markets are showing right now reflects traders coming to their senses more than it does an unknown impact Brexit will have on the EU. Oh, and as for S&P and Fitch downgrading the UK’s credit rating, I happened to watch a great little movie called The Big Short on the way back from Ireland last month, and these are the same outfits that were slapping AAA ratings on balloon mortgages with zero down in Florida just before they tanked the economy in 2008, so I’d recommend keeping that in mind whenever someone mentions the ratings downgrade in an important-sounding tones. Here’s a brief clip from the movie.
Although I supported Brexit and continue doing so, I see it as a step towards a better future not just for the UK but for an integrated Europe that includes the UK. That continent has 3000 years of history written in blood, and it is naive for us to think that the EU is going to fully integrate 27 nations, end all conflict and govern 400 million people effectively in 25 years. The EU as it exists today has failed and Brexit proves that, but Brexit doesn’t mean that the dream of a united Europe is dead.
Americans tend to forget that our republic’s first shot at ruling itself was the Articles of Confederation, a disaster that almost ended the experiment in democracy within a few short years after independence. The articles gave too little power to the central government and too much power to individual states, whose governors took them in different directions. Thankfully cooler heads prevailed and a second attempt was made, and in 1789, 13 years after independence and 6 years after the end of the Revolutionary War, the US Constitution was ratified. The constitution created a series of checks and balances between various branches of government as well as protected minority votes and proscribed majority votes, providing a balance of power that the articles lacked.
Europe can do the same. If cooler heads prevail, Europe can create the balance of power needed, allowing Europeans to have a say how they are governed, creating institutions that serve the people instead of dictating to them. Provide more effective governance and people will be clamoring to join just as they did in the early days instead of threatening to leave as they are now.
These are all large issues with answers beyond everyone, including the commentariat on BBC and CNBC. It will take time for tempers to cool and for sanity to be restored, but in the mean time the best course of action is to do what the British are best at: Keep Calm and Carry On. It’s about time the Continent learned this from their island neighbors.