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Brexit Reflections

I was taken by surprise last night to learn that the brexit referendum passed.
It makes little sense to me that the UK would quit the EU when they can get what they want while still enjoying membership benefits.

If immigration is what concerns them most, land-locked countries like Hungary with much less influence have been successful in enforcing their own rules while remaining in the EU.  How much easier would it be for the island UK, a major world economy with huge clout to do the same and get away with it.  Whether it’s keeping out/deporting Pakistanis and Poles or avoiding bailing out broke Greeks, the national government can do what it needs to and the rest of Europe can react as it will.  That’s pretty much what Viktor Orban has done in Hungary.
The “bureaucrats in Brussels” so often derided as international tyrants can’t make Britain do anything it doesn’t want to, except threaten them with what they just did to themselves.

That’s what I don’t get.  If the underlying problem is British national leaders failing to act, then quitting the EU will just make things worse and not solve any of their problems.
If this goes through, England will lose Scotland and maybe have new conflict in Northern Ireland. The English will have to renegotiate trade deals across the planet with far less leverage than they had before. I don’t see how anyone, rich or poor gains from this.
This is a huge mistake especially when much smarter strategies were available.
Hopefully they have a revote or it gets hung up in parliament.

I sympathize very much with the people in the UK voting ‘leave’ since they are reacting to so many problems that are tiresomely familiar in the US. I know how it feels to compete for jobs against foreigners who depress wages and who are allowed to hire preferentially while people of my ethnicity are not. The injustice of being sold out by the elites of your own people is infuriating. But I suspect the British public is falling for a scam by scapegoating a council of paper-pushers in Brussels instead of bending their own leaders to their will. They have much in common with the movement growing around Trump and Sanders style populism in the USA, but I don’t see a pragmatic guy like Trump making stupid self-destructive trade moves that defy common sense just to spite “the globalists.”
That said, I hope this serves as a warning to the EU, especially Germany that it has to change its policies if it wants other nations to cooperate. The Germans are the dominant economic power in Europe but they have overplayed their hand nevertheless. I am hoping this will lead to the downfall of Merkel’s equalist enlightenment school of politics and to the emergence of a “Europe first” mentality.
If Germany and Brussels bureaucrats do not change their ways, they may lose the EU and once these kinds of things fall apart, they cannot easily be put back together.
If this situation spirals out of control, with other nations following Britain’s lead, we need only fast forward a few decades to see the re-emergence of wars between European powers.

A Tale of Two Debtors: Britain and France After the American Revolution

By the 1780s, France and Britain had approximately the same debt after spending huge sums fighting over the American colonies.

One recovered and the other collapsed into revolution.

The difference was their systems of finance and taxation.

While the outstanding war debts may have been the same, the interest rates were not.

Bourbon France had to pay twice as much interest on its loans as did the British. And that made all the difference.

To begin with, the English system relied far more on indirect taxes and tariffs for its income.
The French system meanwhile focused on many direct taxes that ended up discouraging economic growth.

The result was that by the time of the French Revolution, England yielded more tax revenue despite having only 1/2 the population of France.

Britain and France were set apart most of all by their systems of credit.

England had relied on the world’s 1st national bank since 1694 to efficiently raise large long term loans. At the same time, new loans kept flowing and interest rates dropped because the English parliament had the power to consistently raise enough taxes. The stability of this system drew in a steady steam of further capital from Dutch investors.

The French crown on the other hand relied on a host of middle men—tax farmers, nobles, high ranked clergy, lenders, and merchants for loans, at high rates of interest.
Without a central source to consolidate its loans, the crown found itself struggling to raise money quickly, keep track of its loans, or pay interest.

Worse, in the French system of direct tax farming, it was more profitable to farm taxes and loan out advances than it was to start businesses and engage in productive industry.
The French system encouraged parasitic plunder while stifling real economic growth that would produce more wealth in the long run.
Wealth ended up being gradually drained from the economy even as the French national debt skyrocketed with each successive war…

Paraphrased and summarized from:

The Rise and Fall of the Great Powers
Paul Kennedy, 1987
Pages 76-86

 

UK public debt from National Bank founding to modern times

 

French Debt Until the French Revolution

French Debt Until The French Revolution

Islamic Extremists in London

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