24 June 2016

Brexit - Initial Thoughts

Find this on Medium, here.

I’ve already had a few friends reach out and ask what exactly Brexit means in practical terms. The answer, of course, is very complicated. I’m going to try to write out longer posts in coming days, but here are a few things to pay attention to in the news about why this is such a big and catastrophic deal:
  1. Most obviously, the international markets are going to go crazy. Already, the pound has devalued to its lowest point since 1985. The currency has not been valued so low since the USSR existed. International trade deals, including bi-lateral agreements between the UK and individual EU countries will now have to be rewritten/renegotiated. Immigration policies — including employment eligibility — will also change. According to the Lisbon Treaty, there is a two-year deadline for all of this to happen.
  2. Xenophobia and parallels to the US election — much of the Leave/Brexit movement was based on illogical arguments that are equivalent to Trump building his financially, politically and legally impossible wall on the US-Mexico border. The nationalistic and xenophobic rhetoric that fueled the Brexit movement is impossible to ignore as irrelevant or tangential. In fact, it was center in much of the vote. Trump/Trump-like figures (including Boris Johnson, who was the figure for the Leave movement) will undoubtedly see validation for their incoherent, racially motivated “policies” that will hurt everyone, including and even especially the very people who vote in favor for such measures.
  3. Exit of other countries in the EU — Sweden has already indicated it will consider holding a vote to leave the EU following the passing of Brexit, as the UK is its closest EU trading partner and it still uses the kroner. The EU is the world’s second most powerful trading and economic bloc, and these hits could destroy the EU, which will have untold impact on the global economy. The debt financing and number of refugees the rest of the EU countries will have to take on as a result of the UK exit will also massively shift, perhaps to a breaking point.
  4. International aid and the UN — DFID, the UK government’s aid agency is one of the largest in the world. With the chaos of the UK EU exit, the fund is likely to shrink (maybe even significantly). The UN and its legitimacy will also take a hit as nationalistic sentiment grows. A global rise in nationalism and isolationist policies is exactly when institutions like the UN are most important, even if the institutions need major reforms.
  5. Future of the UK — In terms of GDP, the UK is the fifth biggest economy in the world.* As Scotland and Northern Ireland have voted to stay in the EU, it is very possible both will hold separate referendums to vote on independence. If secession votes pass, the composition of the UK itself will fundamentally shift.
  6. Disconnect between the “elite/establishment” and the “commoners” — Brexit is a clear indication that a large portion of the UK’s population is angry at the “elite/establishment” control over their lives. Many believe globalization has not worked in their favor, and that the “elite/establishment” is unequipped to work towards more equality, social safety nets and inclusion. If the “elite/establishment” of the UK cannot work with the “commoners” to close these gaps, more drastic moves like Brexit will come, which will ultimately work in no one’s favor. This strongly parallels what is currently happening in the States.
*Update, 14h32 EDT, 24 June 2016 — France has technically taken over the UK has the fifth biggest global economy following the rapid devaluation of the British pound.