Friday, June 24, 2016

More Brexit

Brexit will get a lot of attention in the American press, at least for a few days. It affected the stock market, so the news will pay attention.

This is probably a nonviolent instance of the famous cynical comment commonly attributed to Ambrose Beirce, " "War is God's way of teaching Americans geography, "War is God's way of teaching Americans geography."

Australian economist Bill Mitchell gives some historical perspective of the internal British politics of European unity in Britain should exit the European Union Billy Blog 06/22/2016.

Paul Krugman isn't too worried over the economic consequences (Brexit: The Morning After 06/24/2016):

Yes, Brexit will make Britain poorer. It’s hard to put a number on the trade effects of leaving the EU, but it will be substantial. True, normal WTO tariffs (the tariffs members of the World Trade Organization, like Britain, the US, and the EU levy on each others’ exports) are low and other traditional restraints on trade relatively mild. But everything we’ve seen in both Europe and North America suggests that the assurance of market access has a big effect in encouraging long-term investments aimed at selling across borders; revoking that assurance will, over time, erode trade even if there isn’t any kind of trade war. And Britain will become less productive as a result.

But right now all the talk is about financial repercussions – plunging markets, recession in Britain and maybe around the world, and so on. I still don’t see it.
But he rightly focuses on the significance of political decisions to follow:

It seems clear that the European project – the whole effort to promote peace and growing political union through economic integration – is in deep, deep trouble. Brexit is probably just the beginning, as populist/separatist/xenophobic movements gain influence across the continent. Add to this the underlying weakness of the European economy, which is a prime candidate for “secular stagnation” – persistent low-grade depression driven by things like demographic decline that deters investment. Lots of people are now very pessimistic about Europe’s future, and I share their worries.

But those worries wouldn’t have gone away even if Remain had won. The big mistakes were the adoption of the euro without careful thought about how a single currency would work without a unified government; the disastrous framing of the euro crisis as a morality play brought on by irresponsible southerners; the establishment of free labor mobility among culturally diverse countries with very different income levels, without careful thought about how that would work. Brexit is mainly a symptom of those problems, and the loss of official credibility that came with them. (That credibility loss is why the euro disaster played a role in Brexit even though Britain itself had the good sense to stay out.)

At the European level, in other words, I would argue that Brexit just brings to a head an abscess that would have burst fairly soon in any case. [my emphasis]
This is a good discussion featuring Ivo Daalder, Richard Haass and Margaret Warner of what Brexit implies for US foreign policy, Foreign policy experts anticipate Brexit’s global impact PBS Newshour 06/24/2016:

Britain is still a NATO member. And for ties to the US, that one that binds stronger than the EU. But ever since the Clinton 1 Administration - when the European Community had just become the European Union, Britain has been the US voice within the EU. The US policy has been to push to have the EU expand its membership as a way to incorporate eastern European nations into the West. But it also kept the EU weaker because the more countries they had, the harder it was in practice to achieve the famous "ever closer union." Because it's still American policy that the US should keep overwhelming dominance in all parts of the world and therefore forestall the rise of any potential "peer competitor," which the EU could have been before the 2008 crisis and Angela Merkel went to work on it. So from the current US policy viewpoint, it's a positive that the EU is now weakened and the "ever closer union" looks like it will be postponed indefinitely. But we also lost Britain the main advocate for American foreign policy in the EU.

Clinton I and Obama weren't quite as crass in the way they expressed it as Shrub Bush was. Actually, to the extent that Europeans have an interest in not having unending chaos in the Middle East that encourages terrorist attacks inside Europe and generates massive numbers of refugees that the EU is obviously failing to handle well, a more coherent EU foreign policy would be in practice a beneficial restraint on American Presidents doing dumb stuff in foreign policy. But with neoliberal economics the dominant economic policy approach in the EU, it's hard to see how they are ever going to achieve enough unity to actually solve the snowballing problems they have. But in Britain, their political leadership of both Labour and the Tories pretty much decided after the Suez Crisis of 1956 that they would never be on the opposite sides of the US on a major foreign policy issue. The pitiful Tony Blair was following that approach in facilitating Dick Cheney's invasion of Iraq. If the EU could ever develop a genuinely independent foreign policy in the foreseeable future, it would have to be without Britain. Or, as I guess we'll be calling it when Scotland and Wales declare independence, Little Britain.