An old saying goes, “Democracy is two wolves and a sheep voting on what’s for dinner.” Democracy reared its head in Great Britain on Thursday, and the sheep was somehow surprised that it lost.
Perhaps the reason we have a Representative Republic is because pure Democracy is so full of surprises. The Founding Fathers never mentioned the word “democracy” in the Founding Documents, choosing not to let the people fight it out, thus making every decision by pure majority. Referenda, by their very nature, are democracy in action, as the person or idea with the most votes, majority or plurality, wins. Be careful what you wish for. Sometimes, the people are unhappy, so they speak up. The result of the British Exit from the EU was a prime example. Personally, I am proud of the voters of Great Britain for bucking their “leadership” and speaking their own independent minds.
It seems that the citizens of Great Britain have had enough of doling out their sovereignty to an entire continent. Or two. Or three. After decades of declining independence, leadership, and prosperity, the European Union (EU) had apparently usurped too much. So the citizens spoke, and they issued a resounding notification that they were mad as hell, and they weren’t going to take it anymore. In record numbers, they passed the Brexit.
Most of the world’s “great leaders” didn’t see it coming. Many of us did. For years, I have questioned the ability and, more importantly, the willingness, of the Brits and Germans (in particular) to subsidize the less productive members of the EU. Apparently, their patience was waning.
In his early 1990s book, Money Madness, economist Milton Friedman predicted the advent of a common currency in Europe, which shortly after that became the Euro. In the same publication, he also predicted its ultimate demise. Fortunately for England, they did not accept the Euro, choosing instead to keep the Pound Sterling. Good choice. The separation will be made easier because they already have their own currency. The Euro will no doubt eventually fail, as productive countries flee from the tyranny of Brussels. Due to the multi-country Euro currency, the separation of these countries from the EU will be much more traumatic, as they will have to redo their monetary systems. Germany and France are prime examples.
Over half of recent new laws that pertain to Great Britain were passed in Belgium by the EU, whose “leaders” were not elected by Brits. The borders were sieves, and entire sections of many once-great cities are now places where average native-born citizens dare not go. All of Europe is littered with “no-go zones,” although most European elites deny their very existence. Great Britain pays hundreds of millions of Pounds Sterling to the EU annually; far in excess of any benefits they receive. Wages are stagnant, lifestyles are declining, and people no longer feel financially stable. That’s just the economics; social problems are as bad or worse, as many worry about their personal safety.
I will resist any urge I am feeling right now to draw comparisons locally.
Despite the economics I mentioned, make no mistake. Success of the Brexit vote was based on immigration policy (in my opinion). No other grievance among people has the weight and power of the desire to protect the homeland from people who do not want to assimilate. The perception is that the root of all the problems is in the loose and uncontrolled immigration policy of the EU countries. Borders have been functionally erased. Imagine how bad it would be, except for the natural borders formed by the waters surrounding the British Isles!
Friday was an ugly day in the markets, as American and international investors faced their worst fear – uncertainty. I have never understood why people react so suddenly, and with such irrationality and fervor, and I am quite sure I never will. However, the flipside of this phenomenon is that sanity most always returns, just a little slower than insanity hits. As investors, we should watch in amazement, yawn a little, and have a nice weekend. Things will soon be better.
Today’s liberals use the term “progressive,” and imply that their way is “forward.” Forward is a term coined by Karl Marx to describe a steady move toward socialism. Many of today’s young people, and far too many older folks, worship the ground Bernie Sanders walks on, believing somehow that “Democratic Socialism” is a superior system. The Brexit vote should be a wake-up call for these idealists, but I am probably dreaming.
A classic example is Prime Minister Cameron, who could not accept the will of the people, as he was on the side of the status quo (remaining in the EU). His arrogance was such that he resigned, unable to bend to the will of the people he is paid to serve. Make no mistake, American power brokers, usually called the “establishment,” are scared to death of the Brexit success, and will attempt to diminish its effects on Americans, using propaganda, lies, and scare tactics. Don’t be fooled.
As to the threat issued to the British people during his recent visit, President Obama warning to place England “at the back of the line” for trade negotiations, it is laughable on its face. The new president, no matter who, will be front and center, establishing new (hopefully better) trade deals with the sovereign country emerging from Thursday’s vote. Our oldest and largest trading partner will not be ignored. It will not be a one-sided choice, as we depend on each other.
I have a feeling that Maggie Thatcher is having a very good day from her perch in Heaven.
These opinions are purely those of Van Wie Financial. But it seems that we are far from alone.