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“Brexit” a Week Later: “Change” is NOT a Synonym for “Bad”

February 1, 2020 brought the emergence of a United Kingdom newly freed from the stranglehold imposed by membership in the European Union (EU). The severing process, dubbed “Brexit,” took well in excess of 3 years after a 52%-48% approval in the popular vote. It was completed on January 31, 2020, to surprisingly little fanfare in the American media. I believe there will be more Brexit-style departures from the EU, starting relatively soon.

As usual, my humble opinion is not shared by all. The usual suspects are already posing several hypotheses that would result in undoing the will of the people. The naysayers have dubbed their new movement “Breturn.” I do not believe that it will ever see the light of day. Quite the opposite, in fact.

Spearheaded by the United Nations, governments around the world have been expanding their size and power for decades under the euphemism “globalism.” For citizens, having one’s own central government become too large is bad enough, but imagine being subjected to big government in another country! That is NOT the same as living in Florida and having a State government, while concurrently being governed by a Federal government in Washington, D.C. Ours is one country with one nationality; the European Union is not.

Our several European friends identify themselves as Portuguese, Spanish, German, Italian, Dutch, or whatever the specific country of their birth and residence. We identify ourselves as American citizens, residing in whatever state, regardless of birthplace. Never have I talked to anyone who claims to be a citizen of the European Union.

The origin of the EU was, in my opinion, a noble venture with reasonable goals. Since European geography is small and inter-country travel is frequent, the EU allowed Europe to function in a manner similar to our states. Unrestricted passage among and between countries similar in size to our states seemed reasonable and prudent, at least in pre-9/11 days. Its origins go back to 1951, and the EU we know today was finalized in 1993.

Central governments tend to have some characteristics of cancer cells. Left to their own accord, they grow, spread, and metastasize. So it went with the EU, slowly at first. In time, the EU wanted to exert its collective economic power, and a bad idea was born. The Euro currency was hyped to the various EU members, and several of them took the bait. Bad idea.

The Euro, an optional common monetary unit, began in 1999 as an accounting currency (not circulated). Printing and distribution began in 2002. Not all European countries adopted the Euro, preferring their own currencies to the collective. Chief among them was England. As a result, Brexit was less complicated than it otherwise would have been. Notable others not adopting the EURO include Denmark, Sweden, Romania, Poland, and a few others.

Individual differences among and between people, nationalities, countries and currencies have always existed, and will always exist. Comparisons are a necessary consequence of those differences. Obscuring those differences under a common currency does not change that. Look for the next “Brexits” to be from other countries that avoided adopting the Euro.

Brilliant economist Milton Friedman predicted in the early 1990s that Europe would adopt a common currency, and that common currency would ultimately fail. In 2004, he stated that there was a “strong possibility” that the 12-member (at the time) Euro Zone could collapse “in the next few years.” Once again, Dr. Friedman appears to have been spot-on.

Stifling individualism, identity and creativity in search of equality tends to limit the power of superior ideas to create better societies and economies. 52% of the voters in the UK seem to understand that premise. We will be watching the UK for signs of economic change, whatever direction it may take. I’m predicting success.

Van Wie Financial is fee-only. For a reason.