Maybe Brexit, Maybe Not

A number of serious people are worried about the consequences of Brexit.  Nouriel Roubini (aka, "Dr. Doom") and Niall Ferguson come to mind.  Their opinions should be taken seriously and their predictions may well turn out right, but they are not necessarily right.  In other words, their foreboding of doom will prove right if everybody behaves in the worst possible way, but there are strong reasons to think that will not happen.

First, the Rump EU will have to behave itself, politically.  There is already strong and growing anti-EU sentiment in France (the National Front), Germany (Alternative for Germany), The Netherlands (Dutch Party for Freedom), Austria (the Freedom Party), Greece (Golden Dawn), and I don't know where else.  These "nativist" political movements are already much encouraged by Brexit, and Brussels Bureaucrats Behaving Badly would only make things much worse---for the bureaucrats. The EU is already at serious risk of dissolving entirely, Nouriel Roubini's major point, and trying to punish Britain will not go well for the Bureaucrats.

Niall Ferguson makes a strangely personal argument, saying that even if Britain is out of the EU it will have to abide by most or all of the rules that already apply.  This is the Norway model.  Maybe, but maybe not.

Though considerably richer, with a population of 5.2 million Norway is smaller than NYC.  Norway can be bullied.  Britain, on the other hand, is the largest economy in the EU, second only to Germany.  Not so easy to bully Britain.  And, with the political strains already noted, the EU is in no position to bully anyone, right now.  With some trepidation, I think Ferguson is wrong.

Economically, everyone, and I mean everyone, wants to keep on doing business.

So, assuming the divorce goes smoothly, Britain will take a position quite like Norway's, Switzerland's, America's, Japan's, etc.  If all these other countries, can trade with the EU to everyone's satisfaction, so too Britain.

Frankly, it is the EU that will be transformed by Brexit.  Roubini is more likely than Ferguson to be right, and the EU will dissolve.  If that does not happen, it will be because of serious reforms in the EU, itself, the kind of reforms to mollify the National Front, Alternative for Germany---and, maybe, even Britain's UKIP (Nigel Farage's party).

If that happens, if the Brussels Bureaucrats are cut down to size and the EU comes to more closely approximate its original incarnation, the European Common Market, even Britain may elect to not exit.

So, either Britain exits the EU, and it will not matter much, or the EU will be structurally reformed, and Britain may not, in the end, exit.  Either way, the sky is not about to fall, but it will be an interesting couple of years.  And for that alone I am grateful to "BoJo" (Boris Johnson) and Nigel Farage.