This is a big day for the Americans as well as for the British. Americans, including President Obama, should appreciate Britain’s desire for independence. Indeed, many Americans will rejoice in Brexit.
The UK is declaring its independence, just as the United States did 240 years ago. Then Americans threw off the shackles of King George; on Thursday the British threw off the shackles of Brussels. Even the city Birmingham, expected to vote to Remain, voted to Leave.
“Just as support for Brexit was stronger than what pollsters thought, it’s possible that support for Donald Trump is stronger that what the polls reveal.”
The EU failed the average UK voter. Laws passed by Parliament have to be EU-compliant, because they can be pre-empted by the EU in Brussels. Britain has to admit all EU citizens, and undertake to feed them, house them, and give them medical care. Worse, the EU has shown itself incapable of keeping its citizens safe from terrorists who come in concealed as refugees. It is no shame that Britain takes security seriously, especially as she approaches the 11th anniversary of the Underground and bus bombings by Islamist extremists.
The big losers of this vote are the Euro and the EU. Just like the child in the story who pointed out that the Emperor had no clothes, British voters have realised that the EU brings few benefits. If British voters see it, then voters in other countries will do so too.
Of course, the EU could always make itself more attractive by changing tactics and pursuing entitlement, tax, and regulatory reform so that its economies grow at more than one percent a year. But its bureaucrats appear to be frozen in the past. Rather than liberalise markets, their overall urge is to protect.
One of the puzzling characteristics of the EU is its attitude towards taxes. Rather than encouraging lower taxes to stimulate growth, they work to make sure that no country undercuts others’ high taxes. They even have a name and an acronym for this—Base Erosion and Profit Shifting (BEPS). They have BEPS working groups to make sure that countries don’t lower their taxes and companies don’t move to low-tax areas. Countries that lower their taxes and attract investment, such as Ireland, receive advice on how to raise their taxes.
President Obama will likely say that Britain should get to the “back of the queue” regarding UK-US trade, even though the United States would benefit from more trade with Britain. However, he will move to the private sector in a few months, after the elections in November, leaving the deals to his successor.
“Economists forecasting doom under Brexit often work for governments and big institutions that benefit from regulation by keeping out competition.”
The Leave vote is also good news for Republican presidential nominee Donald Trump. The unreliability of the polls suggests that people are not revealing their true preferences to pollsters. When it comes to admitting to politically-incorrect positions, people tend to keep quiet. Just as support for Brexit was stronger than what pollsters thought, it’s possible that support for Donald Trump is stronger that what the polls reveal.
Prediction is always dangerous, but it is likely that sterling will soon stabilise and British markets will recover. Economists forecasting doom under Brexit often work for governments and big institutions that benefit from regulation by keeping out competition. Only socialists and academics think countries are better off under layers of international regulations. Watch Britain boom under Brexit, and the rest of the EU countries strive to follow her example.
This piece originally appeared on Reaction
______________________
Diana Furchtgott-Roth is a senior fellow and director of Economics21 at the Manhattan Institute. Follow him on Twitter here.