The Brexit Tsunami

Union Jack

The day after Britain voted to leave the European Community, the Washington Post ran an article about large numbers of Brits googling to find out what the European Community is and what the impact on Britain. of terminating its membership might be. Talk about getting to the barn door too late.

All along we’ve known that the opposition was driven by some mix of fear and anger, much like Donald Trump’s supporters in this country. What we didn’t know was how strong that side would be. The vote was expected to be close, with a lot of speculation in the last few days that the “Remain” forces were gaining strength.

A broad spectrum of experts, including just about every economist willing to be quoted, argued that Britain’s exit would be bad for the country, bad for Europe, bad for the world economy and generally bad. The 52% who voted to leave either didn’t believe those predictions, didn’t care about them or weren’t even aware of them.

Even in the first day, it looks like those experts knew what they were talking about. Markets around the world are taking a beating. The British pound’s free fall may be good for tourists visiting Britain, may eventually help British exports, but sure looks bad in every other respect.  And in one of those “you can’t make this stuff up moment”, Donald Trump observed that it might be good for his golf courses in Scotland.

And that’s only the first day. What’s really most ominous about Britain’s decision is the extended period of uncertainty and instability that it will usher in. The legal structure of the European Community is incredibly complex and detailed. Negotiating Britain’s removal will be lengthy, contentious and a source of continued confusion. Some of the “Remove” proponents argued that the country on its own could cut a better deal with the European Community than it could as a member. That’s an example of wishful thinking that’s off the charts ridiculous.

But so much more could happen and just about every scenario you can imagine ends badly. Will other countries decide to hold their own referenda? Almost certainly. Will others exit as the result of that process? Pretty good chance.

For Britain, or perhaps more precisely England, there may well be an extreme irony. There is already talk north of the border that there will be another vote on Scottish independence. The Scots, it turns out, aren’t so keen on leaving the European Community. In fact, the “Remain” vote won decisively in the land of kilts. It’s not hard to imagine Scotland splitting from England and then turning around and applying for its own membership in the European Community. Try to picture Passport Control between those two countries. And how will they sort out where the British Open is played?

And if that weren’t strange enough, the “Remain” side won decisively in Northern Ireland, prompting some supporters to argue that the time had arrived for reunification of Ireland.

Moreover, for anyone still skeptical about the reality of a global economy, that gigantic thud you heard on Friday was the Dow Jones Average falling 611 points.  Are you still sure that Brexit has no relevance to you?  Since the Great Recession of 2007, this country has had a slow and steady, albeit not terribly robust, recovery.  Some economists were already speculating about when the next recession, pretty much inevitable in their view, would begin.  The large waves being stirred about by Brexit could lead relatively soon to the next economic downturn.

Besides the potential for economic turmoil, what are the other major consequences of Brexit?  For one, Prime Minister David Cameron has announced his resignation.  That’s actually too good for him.  Cameron, after all, decided to call for a referendum in the first place and then failed to rally his party to support the “Remain” side in sufficient numbers.  The key point is that Cameron did not have to call for a referendum.  He was feeling pressure from some Conservatives and, rather than show leadership and political courage, opted for the expedient of throwing the decision to the voters.  History will not be kind to David Cameron, which is only fitting.

Pollsters got another vote wrong.  You might want to cut them some slack since it was close but that’s being too generous.  In the last few days, all the polling stories suggested that the tide was moving in the direction of “Remain.”  The pollsters apparently underestimated the “Leave” vote, which was either a methodological problem or a lot of people deciding late.

That the first explanation could be right should make you worry about polling for the American election in the fall.  Trump certainly has a following that looks in many respects like the winning coalition in Britain.     Besides being angry, fearful, less educated and generally older, Trump voters are not very concerned with facts.  That the Brexit forces ignored sophisticated economic warnings about the consequences of leaving Europe makes them seem a lot like voters supporting Trump.

There’s one other point worth making that has been almost totally ignored in the public discourse about Brexit.  It might be tempting to cite yet again George Santayana’s admonition that those who forget history are doomed to repeat it, but I think the problem is slightly different.  I’m pretty sure that most of the “Leave” supporters never recognized the original purpose of European unity.

The predecessor organizations in the early post-WW II period to what eventually became the European Community had a single overriding objective.  The goal was to tie the countries of Europe, and particularly Germany, so closely together that another war among them would be not only inconceivable but practically impossible.

The period in Europe since the end of World War II has stood in marked contrast to the half century that preceded it.   If Brexit foreshadows a general unraveling of European harmony, the economic problems that are already  evident will be the least of the consequences.

It’s hard to end this complex foreign relations challenge anywhere but on the 2016 Presidential Election.    That Donald Trump was visiting one of his golf courses in Scotland just as the vote was occurring sums up his understanding of foreign affairs just about perfectly.  At a time when impulsive, emotional responses are really dangerous, that’s all he brings to the table.

Yet, watching the Brexit vote unfold, it would be naive to argue that he has no chance to be elected president.  Brexit reminds us that he actually could win.  It should also remind us that elections have consequences and those consequences can be both dangerous and destabilizing.  Brexit should be a wake-up call for everyone on this side of the pond.