I reluctantly dive into the topic of the day….Brexit.
The morning after the Brexit vote a large number of people were apparently regretting their vote. A combination of misinformation and misunderstanding appears to have led many people to vote in a manner that they didn’t really believe in. Here’s some of the reports:
- The most Googled items in the UK after the vote were “What is the EU? and “What does it mean to leave the EU?”
- The UKIP party admitted to lying about the size of funding that would be used to fund the NHS.
In short, the UKIP party misled voters on one of the key points of their message and many of the voters had no idea what they were voting for. But it gets worse. The more I study this topic the more I realize that it was based largely on fabrications. For instance, the Leave campaign latched onto the myth that the UK has lost its sovereignty and desperately needed to take its country back. But this was pure nonsense.
A May 2016 research report from Chatham House outlines the depth of the sovereignty myth. In short, the idea that the UK has lost its sovereignty is deeply misleading. For instance, the UK controls 98% of its public expenditures and still determines almost all of its major policy initiatives. Further, the UK still controls its monetary policy since they retained their own currency. This alone makes them largely independent as they’re not hamstrung from the many problems I’ve outlined with the EMU over the years. The idea that the UK isn’t sovereign due to EU membership is incredibly misleading.
Another myth that’s been floating around is the idea that the EU has hurt the UK’s economy. But the facts don’t support this claim. As the Chatham report notes, the UK has been one of the best performing developed economies in recent decades with very low unemployment and higher growth:
I feel bad for the people of the UK. I feel like they were consistently lied to and deceived in what has now become a world of post-factualism. This was such an egregiously bad decision that it feels almost criminal for it to be allowed to go through. Sadly, it doesn’t look like the wheels are in motion to do anything but go forward with the result of the referendum. And I worry that this could lead not only to a break-up of the UK, but also a disintegration of one of the world’s great economic powers.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.