As Britain Puts It “The things I Do For Love” – Aman Jindal’s View On Brexit
Britain in an historic referendum voted to exit the European Union ending its 40 year old love-hate relationship with Europe. This is the first time a member state has decided to exit the EU. Sterling witnessed its biggest one day drop since 1945, as world markets went into a tailspin. A frenzy of put options (options that bet on a stock underperforming) were sold in derivatives markets on UK stocks. Article 50 of the European Treaty which details the mechanics of how a nation can exit the EU is sketchy at best. A messy divorce is imminent.
The Tragedy of Referendums: “When you play the game of thrones, you win or you die. There is no middle ground”. Referendums have been historically hailed as the purest form of direct democracy with Switzerland being the exemplary disciple. But beneath the seeming justness lie problems. Referendums have a history of looking at a multi-faceted issue from a binary glass, where the only two outcomes are yes or no. One thing that the world has learnt the hard way over the last century (two world wars & a cold war lasting 40 years) is that a world without boundaries is the way forward where jingoistic nationalism has no space. Yet the Brexit issue again became a rallying cry for jingoistic nationalism. Rather than analysing real causes of fundamental issues plaguing Britain viz. unemployment, rapid immigration & loss of jobs, the yes/no binary glass put everything that is wrong with Britain at the doorstep of EU. Boris Johnson in the run-up to the referendum exclaimed “Leaving EU would be like prisoner escaping Jail”. Referendums are inherently susceptible to demagogy and tyranny of the mob.
“What we don’t know is what usually gets us killed”. The rallying cry for the Remain campaign was the economic instrumentalism of EU necessary for Britain’s future and the loss of independence (the paranoia created by Leave campaign) was tacitly accepted. In a sense, remaining with EU came across as a necessary evil for Britain. Naturally the spirit of the public would be to break away. In the country-side, the benefits of EU never percolated and under-investment in public and educational infrastructure led to jobs going to immigrants. Though immigrants added a net positive contribution to the British economy, they came to be seen as the ills of EU. While the real reason being an indifference by London to look beyond itself. Consequently the majority of the countryside voted to leave the EU.
The decision has been made, the will of the people has been ascertained. Whether it was prudent or it fell victim to rhetoric & tyranny of the mob, is for the future to decide. But as days pass, the sense of euphoria is subsiding. The leave campaign has toned down its rhetoric, its leader has declined to be the next PM and answers to Britain’s problems are still unknown. The leading banks have started searching for alternative sites in Paris & Frankfurt to shift offices as London risks losing its pride.
EU is staring at a Euro 7 billion hole in its budget, as Britain which contributed about 20% of its GDP would no longer be there. Painstaking trade negotiations between Britain and individual EU members are on the anvil, while EU risks facing a Domino effect with more member nations looking to go down the Brexit road. The noises from Holland are already ominous. The Brexit might eventually turn out to be the most significant politico-economic event deciding Europe’s future and the question that may eventually come to haunt is was the method of exercising freedom was right and were there better alternatives which weren’t imagined.