The UK referendum has been won by the leave side. That is a surprise and people hate surprises. The world is chaotic. As I write this, gold is up 5% or so, the stock markets are down about the same. The US$ is up against every currency except the Yen and bitcoins. The Pound sterling is down. What should a careful person do next?
Take a deep breath. No one knows what any of this means and meaning is more important than data. Consider:
- 52% of the people who voted, voted to leave. That’s about 38% of all who could have voted. A slight advantage to one side’s ability to get out the vote will get the result.
- Withdrawing is a minimum 2-year process and in reality likely much longer. So the actual form of the leaving and the impact on either the UK or the EU are unknowable, yet.
- There are regional disparities. Scotland wanted to stay by a meaningful margin but lower turnout. Already people propose another referendum on leaving the UK. Northern Ireland has people who propose union with the Republic. Be careful, ideologues subscribe to the idea that one must never let a good crisis go to waste.
- So far this is process. The implementation steps are mostly unknown and the specific problems they will attempt to resolve are, as yet, undefined.
- The world is a competitive place and we have not seen how others will act to optimize their interest versus the new situation.
There will be fog for the next while. Like the fog of war, the noise and turmoil takes time to process. Decisions that you make without knowing the meaning of the information at hand are likely very right or very wrong. Unless it is your business to deal with that sort of situation, why play?
In another three or four weeks some of the fog will have dissipated and more information will be available to assess likely outcomes. Well-formed decisions lead to smaller potential gains but a much greater likelihood of there being a gain. There is no rush.
The commentary so far seems to be all economic and that is just part of what the EU is about. As a society, or as a politician the real question has little to do with the excitement of the vote. The question is, “Why would so many people want out?” Especially a good question if leaving is to their economic misfortune. Clearly, there are things perceived to be wrong with the European Union. Should they be addressed? Can they be addressed and have the UK remain in the union?
I have not given it much thought, but this at least is obvious. Some of the British see the EU to be too bureaucratic. Too intrusive. Too micromanaging. Too remote from the people. Too selfish. Too beholding to special interests. What some have called “The dictatorship of the bureaucracy.”
The current salient point for governments here is that “The dictatorship of the bureaucracy” is visible. Especially in the US. For many of us, Donald Trump and Bernie Sanders are aberrations. What if they are not? If he eventually runs, Trump may very well win and for the same reason that the exit vote prevailed.
Government regulations may be for the good, but eventually the cost of complying becomes greater than their collective value. Then what? President Trump. The UK, without Scotland and Northern Ireland, as a standalone political entity. More countries in Europe exiting the EU. Perhaps the devolution of North American countries.
Before the price of bureaucracy is imposed, it is wise to assess the value. No person ever quibbles about the price until they are dissatisfied with the value received. It is as true for the customers of government as it is for all other customers.
Don Shaughnessy arranges life insurance for people who understand the value of a life insured estate. He can be reached at The Protectors Group, a large insurance, employee benefits, and investment agency in Peterborough, Ontario. In previous careers, he has been a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.
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