On Thursday, June 23, 2016 the British public voted on whether to stay in the European Union or not to remain in it, to Brexit – British exit from it. The Prime Minister, David Cameron, wanted the vote to be a reaffirmation of his position within the European Union. Instead a very small majority voted to exit the EU. Cameron, the head of the Conservative Party, has resigned his position.
Interestingly the head of the Labor Party, Jeremy Corbyn, is maintaining his position by a thread. He is in no position to assume the leadership of the country. And Nigel Farage, the leader of the far right UK Independence Party, who strongly supported Brexit has resigned from his political party, stating that he has achieved his goal with the Brexit vote, which is strange since the party only has one member elected in Parliament.
All this leaves Britain at this time, June and early July, essentially rudderless. Nothing has happened yet politically. The question is or questions are: When will something happen? And who will bring the happening about? Currently both Britain and the EU are each waiting for the other group to start the process.
Economically there have been disastrous changes virtually overnight: the Pound sterling and the Euro over night dropped significantly, raising the prices of just about everything from gasoline and food to all their imports and their stock markets have dropped significantly, to just begin to name changes. The pound sterling has decreased 11% against the dollar and 9% against the euro which has also dropped in value. Prices within the country have certainly risen. The probability at the end of the first week of July is that an actual Brexit may not begin until 2017.
The final vote was 17,410,742 to exit from the European Union and 16,141,241 to remain: 51.89% to leave and 48.11% to stay. A difference of 1.89%.
Geographically the vote is a loud announcement of the inequality that exists within Great Britain. London and the South East consist of the financial and government centers of the nation, the people living there are far more well-to-do than the rest of the nation. The rest of England, Scotland, Wales, Northern Ireland, and Gibraltar generally speaking, are largely ignored by the wealthier regions. What exists, and this is also true for a good part of the industrial world, is an ever increasing unequal distribution of the GDP or National Income. Some people do financially better each year, while others, the majority, seem to do worse. This is true even though the GDP increases every year.
Interestingly both Scotland and North Ireland voted to remain in the European Union. The probability is that Scotland will again organize a referendum, she had one several years ago which failed, in order to separate from Britain and after it is passed, vote to stay in the European Union. North Ireland is caught in a bind; it is split between those who want to join up with Eire and those who support the Sinn Fein and want to remain as part of Britain, actually between the Catholics and the Protestants. We could again have religious wars there.
The part of Gibraltar that is part of England voted to stay with the European Union. But Spain also claims that land which is currently part of Britain. It will probably remain with Britain even though it voted to not exit from the EU.
The European Union is a political-economic union currently of 28 member states that are located mainly in Europe. It covers an area of 1,669,808 square miles and has a population of over 508 million people, that’s roughly 150 million more people than currently live in the United States. The EU has developed a single internal market through a standard system of laws. Their policies ensure free movement of people, goods, services, and capital within their area. All the states enact their own legislation but maintain a single market through common policies on trade, agriculture, fisheries, and regional development. Passports within the EU have been abolished. There is a common currency, the euro, within nineteen of the member states.
The European Union operates through a system of super national and intergovernmental bodies. The seven principle decision-making bodies are the European Council, the Council of the European Union, the European Parliament, the European Commission, the Court of Justice of the European Union, the European Central Bank, and the Court of European Auditors.
The Union developed gradually from 1951 on. It went through a number of stages in its development and is still dynamic, moving toward a United States of Europe. The current EU came into existence in 1992. It covers 7.3% of the world’s population and in 2014 generated a Gross Domestic Product (GDP) of 18,495 trillion U.S. dollars.
Its members are alphabetically: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Spain, Sweden, and the United Kingdom.
A number of different languages are spoken within these countries but they do far better economically as a single unit than they did as individual nations. Each member retains full sovereignty as an individual nation within the whole. This can create problems but they all benefit from being interdependent.
This British referendum brings to the foreground a number of issues that existed but were not as obvious before. The modern 21st Century Capitalistic System that has developed from the prior century is not working for the majority of the people in Britain or for that matter, in most of the industrial nations. The rich are continually getting richer and every year, even though the Gross Domestic Product (GDP) increases, a smaller percentage of it is left for the poorer majority of the population. Too many people are struggling to just survive. They are looking for potential leaders who will promise them a better tomorrow, like Donald Trump in the United States who is very free with promises. In Governments in countries like France and Austria their present governments have moved to the far right.
What we see is the masses objecting to having been taken for granted for the last twenty years or so. What we see is, rather than have the governments take on the problems and work toward solutions, the state governments and the well-to-do have ignored the situation and the general populations, angry and frustrated, have looked for people who will lead them out of their mainly economic dilemmas. The leaders, who have arisen generally come from the far right, from the intolerant political parties.
In addition Civil wars and terrorism in the Middle East have driven out large segments of the population of such countries as Syria. There is a fear that these immigrants are taking away jobs from many of the citizens of the EU countries. This seems to be the spark that started the Brexit Movement in Britain.
Did, the Brits who objected to the status-quo by voting separation with Europe, realize the forces they were unleashing? Probably not. Did they object to the status-quo? Very definitely.
In the first two days after Brexit was passed in England by a 1.8% majority the DOW in the United States dropped 900 points. A point represents an average of one dollar of the 30 stocks that make up the DOW. The stock market, as has been stated, also dropped significantly in Great Britain and the rest of Europe. In Asian countries there was also a large decrease. The pound sterling and the Euro also dropped significantly in value. After two days and nothing specific happening the markets tended to go up again and gradually the value of the euro and the pound also increased.
Nothing specific happened. Each side called upon the other to begin the process of separation. Presumably the process of separation will begin with Britain’s invocation of Article 50 of the 2007 Lisbon Treaty. Up until Monday, July 11, 2016, there was no one in the British government who could say when or if that would happen, mainly because there was no functioning government. On Monday, of the above date, there was news that a new leader of the Conservative Party will become Prime Minister on Wednesday, July 13th.
This person, Theresa May, the former Home Secretary, has stated that Article 50 of the Lisbon Treaty will be applied and the process begun at the end of that week or the next one. Cameron will leave office on Wednesday, July 15 and a new government will begin functioning. In point of fact Britain will have a government at this point. The British Government will have reorganized and the new Prime Minister will have emerged and begin the process of separation.
If we wonder what will happen, there are numerous possibilities. The one I like best goes back to the historical period just before the Constitution was adapted in the early United States. After the 13 colonies defeated Great Britain in the last quarter of the 18th Century and they became 13 separate states they incorporated under the Articles of Confederation and set up their new government. The problem here was that no state gave up any of its sovereignty and the Congress could pass laws but there was no way to enforce them if any state or states wanted to disregard them. This is similar to the EU today. Consequently, even though each state was represented, the Central Government had very little actual power. This was remedied by the Constitution of the United States which was mainly written by members of the upper class and made the central government paramount. This government existed until 1861 when the Union was finally torn apart over the issue of slavery. The Union was brought together again in 1865 at the end of the Civil War. The principle promulgated then was that the Union was indissolvable or irrevocable and ultimate power rested with the national government.
Obviously Britain isn’t going to go to war in order to separate from the European Union. But it does have a central government and if the remaining 27 member states were to give up a certain amount of their nationalistic feeling and think of themselves as a part of a single whole existing for the common good then they would all be better off. Twenty-seven distinct states will always have some disagreements.
Another distinct possibility is that when a new government is formed in Britain, then the new government can hold another referendum; they can always argue that the first vote didn’t count because they, the new government, didn’t hold it.
I am again reminded of an incident in early U.S. history. After the Constitution was written it had to be approved by nine of the thirteen states before it came into legal existence. Of the states that had to pass it New York was primary because it separated the new states into two separate halves, northern and southern, being then in the middle of the 12 other states. A number of states had passed the Constitution and then it was New York’s turn to vote. The initial vote was a rejection of the Constitution. After promising to add a Bill of Rights and a very active campaign to get it passed, a second referendum was held in New York. It passed. Later James Madison would write twelve amendments to the Constitution. Of these ten were ratified by nine or more states and became the first ten Amendments to the Constitution. They were and still are called The Bill of Rights.
Technically the referendum was only advisory, and Parliament, which is heavily pro EU, still has the last word whether or not to leave the Union. During the election there was a great deal of misinformation, distortion and false promises made. Most of this was revealed in the immediate aftermath of the vote.
On Thursday, July 7, 2016, 330 Conservative members of Parliament voted to choose a new Prime Minister. David Cameron, the former Prime Minister abstained; his was the only Conservative abstention. The top winners in this Parliamentary vote were two female officials in the Conservative Party.
Theresa May, the Home Secretary, with 199 votes and Andrea Leadsom, the Energy Minister, got 84 Conservative ballots cast in her favor. May campaigned for Britain to remain in the EU and Leadsom wanted to leave it. Five Conservative members of Parliament had originally put their names in the running to succeed David Cameron.
One of the three losers, who had far less than 84 votes, commented that “Whoever the next prime minister of this country will be it will be a female prime minister and a female prime minister who has formidable skills.”
Ordinarily the Prime Minister is chosen by the majority party in Parliament. He/she is their leader and becomes Prime Minister. But in this case we have the issue of Brexit. Britain does not do referendums. David Cameron did one to reaffirm his leadership as Prime Minister. He guessed wrong and resigned after the country repudiated his leadership.
The British were not about to hold a general election. Instead they would hold an election by Conservatives only within the United Kingdom. Those registered as Conservatives only would vote by mail. A vote for May will be a vote to remain in the EU and a vote for Leadsom will be a vote to Brexit.
It was an interesting and unique approach to the problem. It had never been done before. And keep in mind that British history goes back to Roman times, about 2,000 years.
What has happen is that on Monday, July 11th Andrea Leadsom withdrew from the contest, thus destroying the idea that the British Conservatives would resolve the issue. Theresa May, the Home Secretary, will be the new Prime Minister. She has stated that she will bring the country together again and also grapple with the immigration issue. Even though she opposed Brexit in the election she will now enforce it. And perhaps it is time to deal with the economic issues, the totally unequal distribution of the GDP.
Will this solve the problem that now exists in Great Britain? The probability is high that it may; but only for a time. And should Britain actually leave the European Union on the basis of 1.8% of its popular vote?
Perhaps the government will deal with the problem that brought about the plebiscite vote, the totally unequal distribution of the national income, the GDP. A simple solution, which was first suggested by a Member of Parliament in the 1940s, was the Negative Income Tax.
The major difficulty in solving this problem is that money is still thought of in historic terms, as something of value. Money today is paper printed by the National Government. It has no real value except within the country that prints and uses it. Money is an instrument of exchange; it provides goods and services for the person using it. The transfer of money allows productivity to occur within the nation. Its distribution allows for maximum employment and the maximu m distribution of goods and services. Full production also enables the maximum collection of taxes.
The use of a Negative Income Tax would be a simple solution to the problem. It would not ensure massive tax changes. The government could print money as needed. The gage for this would be the inflation rate. If it began to rise rapidly the government easily reduce and reverse this operation. This was done in the United States by the Federal Reserve in the early teens of the 21st Century, under Chairman Ben Bernanke with positive effects in terms of reducing unemployment and increasing tax collection with no negative effects to the economy.
I suspect the basic immediate issue facing the new Prime Minister, Theresa May, is how to enforce Brexit without really enforcing Brexit. All the advantages of belonging to the EU will have to be done by treaty agreements after Britain leaves the EU. Whatever happens, it should be interesting. The changes could start any day now after Britain enforces Article 50 of the 2007 Lisbon Treaty.