The EU still doesn’t get it
6 July 2016
SUGGESTED
Economic Theory
Government and Institutions
Economic Theory
11 November 2024
So Brexit it is. And if you believe many of the pundits opposing it, it would seem the UK has just voted to leave civilisation itself, and that all kind of maladies will now befall Britons. To put it mildly, the Armageddon scenarios seem a tad exaggerated.
Some seem to forget that Britain is the fifth largest economy in the world, and the second biggest in Europe, which involves not only economic but also plenty of political power. Should a country or a group of countries not want to do business with Britain, it may be their problem as much as Britain’s. We of course know this is not going to happen. The main reason the UK abandoned the EU is because the latter has increasingly become a tyrannical institution imposing its policies at many levels on members, because they have realised (finally!) it is the only way the EU can work.
Actually, members who use the Euro as their currency are in an even worse situation than Britain. Spain and Greece – for instance – have decided they wanted to stay in the Eurozone at all costs. These countries’ governments have sacrificed a generation of its citizens, resulting in chronic unemployment, a wave of mortgages defaults, personal bankruptcies and personal tragedies. And all for what? For a union with a supranational currency which was doomed to fail from the beginning? Why? As I have written many times before on the subject, it is not possible to have one sole currency used by all EU sovereign members, with different governments ruling countries that have different needs at different times.
And what about the experts auguring an end-of-the-world scenario for Britain and even for the world triggered by the Brexit? In the past, experts – including some of the most famous in the world – have been proven overwhelmingly wrong. Social scientist Philip Tetlock studied the predictions of 284 experts, some very famous, including members of world-renowned think tanks during 21 years, six U.S. presidential elections and three wars, and published the results in 2005. The evidence showed that the average expert was roughly as accurate as the proverbial chimpanzee throwing darts at a chart with figures and data. The saddest part however is the fact that there is no accountability for these catastrophic mistakes in judging future political and economic events, and all these experts continue to be invited by CNN and others to enlighten the world with their ‘expertise’. Those who get it wrong time and again are no less likely to be invited by the media than the really good proven forecasters (and they do exist).
In short, don’t worry too much about the political and economic judgment of these so called experts. Short term turmoil is inevitable, fostered in good measure by the “experts” and their doomsday scenarios. The situation will stabilize and the benefits of the decision to leave a failed institution (which may not exist anymore in the not so distant future) will become evident.
It is distressing to read the reactions of EU politicians and even outsiders; the first promising and the second demanding ‘changes’ in the EU. They still do not seem to understand that the only solution to make the EU and the Euro really “work” would be to take away the remaining sovereignty from EU members, and transfer even more power to unelected eurocrats. They have been on this path for some time now, generating plenty of unnecessary conflict and acrimony between nations that would otherwise get along splendidly. How can anyone still think that the solution is ‘more of the same’?
The EU is going from crisis to crisis, but Brussels seems unperturbed. The new ‘sick man’ is now purportedly Finland and after that, the next one is probably Greece (again!) and the next one after that is… well you get the drift. The solution to build a solid EU with members maintaining their independence is to adopt a parallel currency monetary system.
By not joining the euro, the UK escaped the worst, but it was never at a safe-enough distance from the Eurozone’s calamities. The majority of the British voters were fed up with the diktats from Brussels and decided to bolt out of the EU. We can only hope that other EU members follow suit.
Some seem to forget that Britain is the fifth largest economy in the world, and the second biggest in Europe, which involves not only economic but also plenty of political power. Should a country or a group of countries not want to do business with Britain, it may be their problem as much as Britain’s. We of course know this is not going to happen. The main reason the UK abandoned the EU is because the latter has increasingly become a tyrannical institution imposing its policies at many levels on members, because they have realised (finally!) it is the only way the EU can work.
Actually, members who use the Euro as their currency are in an even worse situation than Britain. Spain and Greece – for instance – have decided they wanted to stay in the Eurozone at all costs. These countries’ governments have sacrificed a generation of its citizens, resulting in chronic unemployment, a wave of mortgages defaults, personal bankruptcies and personal tragedies. And all for what? For a union with a supranational currency which was doomed to fail from the beginning? Why? As I have written many times before on the subject, it is not possible to have one sole currency used by all EU sovereign members, with different governments ruling countries that have different needs at different times.
And what about the experts auguring an end-of-the-world scenario for Britain and even for the world triggered by the Brexit? In the past, experts – including some of the most famous in the world – have been proven overwhelmingly wrong. Social scientist Philip Tetlock studied the predictions of 284 experts, some very famous, including members of world-renowned think tanks during 21 years, six U.S. presidential elections and three wars, and published the results in 2005. The evidence showed that the average expert was roughly as accurate as the proverbial chimpanzee throwing darts at a chart with figures and data. The saddest part however is the fact that there is no accountability for these catastrophic mistakes in judging future political and economic events, and all these experts continue to be invited by CNN and others to enlighten the world with their ‘expertise’. Those who get it wrong time and again are no less likely to be invited by the media than the really good proven forecasters (and they do exist).
In short, don’t worry too much about the political and economic judgment of these so called experts. Short term turmoil is inevitable, fostered in good measure by the “experts” and their doomsday scenarios. The situation will stabilize and the benefits of the decision to leave a failed institution (which may not exist anymore in the not so distant future) will become evident.
It is distressing to read the reactions of EU politicians and even outsiders; the first promising and the second demanding ‘changes’ in the EU. They still do not seem to understand that the only solution to make the EU and the Euro really “work” would be to take away the remaining sovereignty from EU members, and transfer even more power to unelected eurocrats. They have been on this path for some time now, generating plenty of unnecessary conflict and acrimony between nations that would otherwise get along splendidly. How can anyone still think that the solution is ‘more of the same’?
The EU is going from crisis to crisis, but Brussels seems unperturbed. The new ‘sick man’ is now purportedly Finland and after that, the next one is probably Greece (again!) and the next one after that is… well you get the drift. The solution to build a solid EU with members maintaining their independence is to adopt a parallel currency monetary system.
By not joining the euro, the UK escaped the worst, but it was never at a safe-enough distance from the Eurozone’s calamities. The majority of the British voters were fed up with the diktats from Brussels and decided to bolt out of the EU. We can only hope that other EU members follow suit.
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The trouble is that chaos on the continent affects us in the United Kingdom too. It is pretty clear that the European Union is both unwilling and unable to organise an orderly break-up of the Eurozone; it seems unlikely that the Eurozone is going to morph into a single ‘United States of Europe’; it surely can’t carry on in the disastrous way it seems to be going. So I expect a disorderly break-up (timing uncertain). The only alternative would seem to be an initiative from one or more EU member-states to establish a parallel grouping to the EU, possibly including some countries which at the moment are trapped in the Eurozone (and possibly also including the UK, Norway and Switzerland). Political conditions are fluid across Europe at the moment and there might well be considerable support for such a move.