Editor's note: It's been a month since “Brexit”…the historic event that wiped out more than $3 trillion from the global stock market in two days.
But what happens now?
Today, Casey Research founder Doug Casey breaks down what the decision means for Britain…and how it foreshadows some big changes in the world at large.
On June 23, the UK had a referendum in which 52% of voters opted to leave the European Union. I applaud Britain for leaving the corrupt, costly, and dysfunctional EU. It may be the best thing that’s happened to Europe since the end of World War 2. And, I think, it signals the start of some major new trends.
In principle, the idea of the European Union sounded good. All the signatory countries joined a customs union so goods and people could flow freely.
The idea was to both increase general prosperity and decrease the chances of another war. It sounds very libertarian—in principle. But in practice it turned out very differently. And may wind up doing the opposite of its intended purpose.
Europeans could have had all the benefits of free trade simply by eliminating all import duties and quotas—a very simple and costless solution. Having duties and quotas amount to putting your own country under embargo. They increase the costs and decrease the availability of foreign goods and services; that lowers a country’s competitiveness while decreasing its standard of living. It sounds insane.
Why would any country want to do that? Because some industries and unions in the country want to keep out competition. Duties and quotas can help them, even though hurting the country at large. Politicians also like duties and quotas because they give them additional power, tax revenue, and opportunities for bribery.
If a country really wants to prosper to the greatest degree, it will unilaterally drop all duties and quotas. No trade agreements are necessary.
But that would have been too easy for the Eurocrats. Instead, they set up a gigantic bureaucracy in Brussels. They did eliminate internal duties between EU members, but at the cost of regulating everything within the EU while retaining duties and quotas against non-EU members. The EU employs 50,000 functionaries, imbued with dirigiste attitudes. Pound for pound they’re much more obstructive than those working within the Washington Beltway. Europe is, after all, the ancestral home of cultural Marxism, and the people who take it most seriously all want to work in Brussels.
The EU has reduced the standard of living of the average European. But perhaps its creation was inevitable since the average European is overwhelmingly socialist or fascist in philosophy. They seem to love the idea of government, as big, and strong, and with as many layers as possible. But the bigger and more complex any organization gets, the more likely it is to fail. My prediction that the Continent will one day just be a giant petting zoo for the Chinese is intact—assuming the current wave of migrants approve.
400 million Europeans now have to deal with regulation coming from Brussels as well as from their town councils, provinces, and national governments. On a local level there was at least some semblance of control since those laws were passed by people with the same language, ethnicity, and culture. The laws were destructive, but at least they were imposed from within. But the EU adds thousands of new laws and regulations, created by a class of people who are responsible mainly to other members of their own class in Brussels. They’re united by the ridiculous ideas they picked up in university from their Marxist professors.
EU regulations dictate the shapes of bananas and cucumbers. Manufacturers of bottled water aren’t allowed to say it fights dehydration. There are laws against unsupervised children blowing up balloons. Laws against unlabeled olive oil in restaurants, the amount of cinnamon in certain pastries, the maximum size of vacuum cleaner motors, the disposal of tea bags, and the “correct” methods of producing hundreds of varieties of French cheeses.
You’ve likely heard of these regs simply because they’re so outrageous and nonsensical. They’re annoying, but actually quite trivial. What you don’t hear about is a vast body of agricultural, industrial, and labor regulations because they are technical and affect businesses more than consumers. Meanwhile, 10,000 registered lobbyists circulate around Brussels inducing Eurocrats to pass laws favoring this or outlawing that and distribute an annual budget of about 150 billion euros among the politically favored. That is where the real damage is done.
The EU also aggravates the current problem with migrants from the Middle East and Africa. All Western European governments are massive welfare states with free food, housing, medical care, schooling, and living expenses for citizens. And even for residents who aren’t citizens. Benefits like these will naturally draw in poor people from poor countries. That’s why France, Belgium, Holland, and the UK already have substantial and rapidly growing minorities of Muslims. The governments of Sweden and Norway are actually importing these people, at great expense. The EU not only promotes bad policies, but makes the whole continent bear the burden of mistakes made by its most misguided members.
The free-market solution to the migrant situation is quite simple. If all the property of a country is privately owned, anyone can come and stay as long as he can pay for his accommodations. When even the streets and parks are privately owned, trespassers and squatters have a problem. A country with 100% private property, and zero welfare, would attract people who like those conditions. And they’d undoubtedly be welcome as individuals. But “migration” would be impossible.
Some have said that Britain shouldn’t Brexit because it will cause chaos. There’s some truth to that—but not because what Britain did was in any way destructive. Their action is best compared to that of passengers on a sinking ship who are the first ones to board a lifeboat. Nietzsche had it right when he said “that which is about to fall deserves to be pushed.” Any chaos that occurs is the result of the EU’s flaws, not Britain’s exit. It’s as if you have a 100-story building which is about to collapse. It’s better to arrange a controlled demolition than wait for it to fall at a random time.
So, where will this all end? In tomorrow's essay, we'll look at a few trends that Brexit will initiate, or accelerate. And also how you can insulate yourself from the fallout, or perhaps even profit from it.
Editor's note: According to Doug, a giant financial hurricane is about to make landfall. When it does, it will trigger a financial crisis for the ages.
That's why we recommend you watch this short presentation. By the end of it, you’ll learn why last month's global selloff was just a taste of what’s to come. More importantly, you'll learn how to protect yourself and your family from this coming crisis. Click here to watch this free video. It’s one of the most important messages you’ll ever see from us.