Wednesday, June 29, 2016

The Brexit Vote - Get a Grip!

If you read the newspapers, even The New York Times, and listened to the media in the first few days after the Brexit vote, you would have thought that the vote to exit the EU meant the end of the world as we know it and a financial downturn.  But neither is even remotely true.

The vote to exit the EU does probably mean a major change or disruption for those living in Great Britain.  Most directly, it will have a pervasive negative impact on the economy, which translates to a loss of jobs and a worsening of people’s financial well-being.  All the talk by Brexit supporters about how Britain will benefit economically and financially from  this action has already been discounted or minimized by them after the vote.  It was all a big lie, but that’s politics.

But for the rest of the world, it’s quite another matter.  The EU will continue to muddle along, with or without Britain.  It was certainly never a driving force for holding the EU together; that’s been the role of Germany and France.  Yes, it means some change in trade with Britain, but probably nothing serious.

The Times spoke about it upending the post-WW II system of European relations.  Hardly!  Britain did not join the EU until 1973, and it never adopted the Euro currency.  The idea behind the EEC (the predecessor of the EU) was to link the countries of Europe so inextricably, first economically, that wars such as had occurred in the past would be virtually impossible.  Since the main antagonists have always been Germany and France, it not impacted at all by the vote.

Unless the Brexit vote encourages other European countries to do likewise, the EU will continue to perform it’s valuable function. (There has always been discontent among many with the EU, and with some good reason.  But on balance, the positive impact always has won the day, and will continue to do so unless the vote is put to the people in a referendum.  Then all bets are off.)  The EU has other problems with potentially more serious impact on its continued viability than the exit of Britain.

As for the United States, Britain may be a vital ally both militarily and financially, but a marginally weaker Britain will not seriously impact the U.S.’ interests at all.  It may make the politics of dealing with the EU more difficult without an inside friend to argue our case, but that may have the positive advantage of our being more careful at how we cultivate our relations with Germany and France, especially.

But while the whole media reaction is somewhat silly, it could have done real harm.  Investors and financial markets have been very volatile this past year and are easily spooked.  By all this fear-mongering, it was feeding the impulse of investors in financial markets around the world to view this change with alarm and to overreact, creating a truly dangerous situation which could have had a real negative impact.  Thankfully, however, after a few days, the markets realized this was much ado about nothing, and have stabilized.

This raises the question of why the media have treated the Brexit vote in the manner they have.  I have the feeling that all this fear-mongering by the media has only one real aim … to sell newspapers and increase media market share.  We are long since past the age when journalism was taken seriously and practiced with ethical standards.  In the modern world, for media as for all other corporations, the only relevant question seems to be, “What sells?”  And I am certainly not the first commentator who has pointed out the dangerous portent that provides for our future well-being.