The Foundation Stones of the BREXIT issue
Before embarking in any detail blogs regarding the political and economic merits relating to BREXIT I would like to consider the environment leading to this referendum.
I think what is happening in the USA at this time allows us to sit back and observe what happens when the people feel that politics is stagnant, and thus irrelevant. If we use a simile of the US Congress and the House of Representatives as two conflicting factions of Europe, and President Obama as the people wanting to move forward in their lives but stifled by the conflict, then we can understand why Donald Trump is doing so well. My view is that the European Commission has lost sight of the problems in Europe being more interested in the degree of curvature of a banana than the real problems of economic inequality, global instability, and now the refugee crisis. Indeed, the refugee crisis demonstrates the difference between out-of-touch grandstanding vision, and reality.
In the late 1970’s, my mentor, Walter Wriston, and probably the most influential banker in the world at the time responded to my question regarding the political influences on deregulation of financial services and global capital flows (Big Bang in 1986) by stating that politicians come and go. Business drives economic prosperity, and the banks are the enduring stable force to ensure the required liquidity to facilitate global trade. I have never forgotten his response, essentially because it has shown over the years to be the case. I was also taught by him that there are two factors in global business decision making; inevitability, and consequence. To him (in 1979) deregulation of financial services was inevitable, with timing being the only consequence of interference from politicians.
I had the opportunity to attend a presentation to senior bankers by Jacques Delors when President of the European Commission. He was expounding ever closer European union in his attempt to convince senior bankers of the merits of forcing European federalism upon the UK. I suggested to him that businessmen, rather than politicians, would drive any unity in Europe, if deemed beneficial, while the politicians were still talking about it. Even his (French) economic adviser could not dispute the reality of my comment. It was interesting last week to see how few of the CEO’s of major corporates in the UK were prepared to openly endorse the views of David Cameron regarding BREXIT.
My opinion from many years of experience throughout the world is that the EU model is broke. The Cameron negotiations demonstrated that there is no appetite from vested interest parties to fix it other than tinker at the edges. In recent years the faults in the USA federal model have clearly demonstrated how damaging such models can be to the people when vested political interests can completely stifle the function of Government, and thus damage the lives of the people it is there to protect. Therefore, the only other route is to let the EU empire fall, and then remodel into something more worthy of consideration by the people. Does the UK want to be part of this (inevitable?) decline when it has other options? I think that a risk analysis would err on the side of caution, i.e. stand outside as a spectator and watch. And let us not forget that the Greek crisis revealed another truth – that the big decisions were made in Berlin – not Brussels.
Business will always find a way to trade, and thus survive. Thus BREXIT is only about the people of the UK, and their influence over decisions regarding their own future.