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comment by kleinbl00
kleinbl00  ·  2834 days ago  ·  link  ·    ·  parent  ·  post: Brexit looks likely.

Minus the apocalyptic soothsaying by both parties:

What basically has to happen now is the UK and the EU have to re-negotiate how they wish to do business. This is likely to both take a while and increase the standing of the UK in the EU. Meanwhile, it's looking like Scotland and Northern Ireland are also seeing this as a cue to attempt their referenda again, thereby miring the UK in particular and the EU in general in how, exactly, they choose to do business and conduct law.

It's possible/likely that other countries will make similar moves, thereby essentially forcing the EU to redefine the EU, which is going to take a while. It's going to make it a lot harder for the EU and its member states to trade in an agile fashion for a while.

The world will not end. Dogs and cats will not sleep together. HOWEVER a whole bunch of people who firmly believe they have better shit to do are now going to have to burn a shit ton of blood and treasure on treaties and trade agreements and boring shit like that while the rest of the world aren't.

Chances are good that whatever Europe looks like in ten years, it'll be ten years behind the rest of the world.

Make of that what you will.





illu45  ·  2834 days ago  ·  link  ·  

    HOWEVER a whole bunch of people who firmly believe they have better shit to do are now going to have to burn a shit ton of blood and treasure on treaties and trade agreements and boring shit like that while the rest of the world aren't.

I highly doubt that Brexit will set the EU back ten years compared to the rest of the world. The EU has always been intensely bureaucratic, and negotiations about trade and immigration are pretty routine. Even if the vote had gone the other way, I expect that the UK would have wanted to renegotiate some of its agreements with the EU. While EU bureaucracy is likely to be focused on signing new agreements with the UK for the next little while, I doubt that the EU will actually become significantly more bureaucratic as a result. It may even become less bureaucratic in the long run if members see Brexit as a sign that the EU needs to be more agile.

kleinbl00  ·  2834 days ago  ·  link  ·  

You miss the point: the EU won't become more bureaucratic, it'll suck down time and energy getting back to the level of bureaucracy it already has.

Trade agreements don't happen overnight. Look at it this way - EuroCorp has a problem. The Anglophile's Union has just voted to strike. EuroCorp must now renegotiate its union contract with Anglophile or else it gets no fish'n'chips, Monty Python or bomber parts. Worse than that, the Anglophile's Union is talking about busting up Local 101 into two locals, both of which will need to renegotiate, and the Irish Spring contingent is talking about joining O'Shaughnessey's.

That's just to get back to zero.

Meanwhile, Le Victor Hugos have noticed that the Anglophile's Union are renegotating their contract, maybe they should? Las Tortillas and the Cannolis have been threatening to bolt for half a decade and the Spanikopetas almost walked out of the building a half-dozen times last year. They might not be under renegotiation now, but neither were the Anglophiles this time last year. So while that isn't erupting, it isn't settled, either.

Uncle Sam Corp across the street? None of these issues. The Tandoori Oven? Ascendant and devoid of union problems. The Argentinian Steakhouse has different problems and the bikini waxers just north are about to be under new management but those issues don't have the time horizon of collective bargaining agreements and restructuring.

Will it take ten years? I have no better idea than anyone else. It'll take a while, though, and it won't be good for increasing Europes competiveness on the world market in the meantime. After? Well, that's the point - making Europe more competitive while also providing better living conditions for the people doing the work.

I've been through a few strikes. They take forever and nobody ends up happy.

illu45  ·  2834 days ago  ·  link  ·  

I agree that there will likely be some new bureaucracy created by Brexit, but I don't think its impact is likely to be all that significant in the grand scheme of things because:

A) The EU already has tons of bureaucracy. Compared to all of the meetings on migration, the environment, food safety, transport, inter-EU trade partnerships, non-EU trade partnerships, Antici/Mertens meetings etc. etc. the meetings with the UK will unlikely be a significant additional burden on the EU. They may be a more significant burden on the UK, but it's difficult to know for sure.

B) There likely would have been new bureaucracy regardless of how the vote went. Given how close it was, I'm sure that there would have been efforts by Cameron and co. to shift the UK's role within the EU, which would have similarly led to new meetings. The meetings are probably going to be more numerous than they would have been if Remain won, but they might actually be more efficient due to Brexit, since both parties want to limit uncertainty and the fastest way of doing that is to get new agreements signed ASAP.

Your strike analogy implies that all UK-EU trade and production is going to suddenly cease until new agreements are in place. EU-UK trade today is pretty much the same today as it was yesterday. Will EU investment in the UK will decrease until new agreements are in place? Probably. But it's not like factory workers walked out of a job. The workers will keep working, trucks/ships will keep trucking/shipping, and bureaucrats will keep on bureaucratizing. This isn't your employees going on strike. This is your employees deciding they want to switch to a different union in a bargaining year. Sure, you'll have to negotiate a new contract, but you likely would have had to do that anyway.

EDIT: As for comparisons to other countries, they all have bureaucratic trade deals and coalitions, from the TPP and NAFTA to BRICS and the SCO. All of those require a significant amount of bureaucratic upkeep, and each of them was created without setting member states back a decade in terms of trade.

kleinbl00  ·  2834 days ago  ·  link  ·  

You aren't paying attention.

Yes, the EU has tons of bureaucracy. But now, instead of slowly phasing some out and phasing some in, now they've all been challenged and the agreements between the EU and UK are about to be cancelled.

It's the difference between "we can work this out" and "we're re-negotiating everything."

EU-UK trade today is the same as it was yesterday. But when they push the button on Article 50, it won't be. And meanwhile, every other member state is going to fight this very battle.

I didn't say they were striking. I said they voted to strike. A strike authorization is where bureaucracy gets really ugly. Meanwhile, work continues apace.

Do you understand now?

illu45  ·  2834 days ago  ·  link  ·  

    You aren't paying attention.

No... I am paying attention. I just disagree with you. Let's keep the condescension out of this, okay?

    But now, instead of slowly phasing some out and phasing some in, now they've all been challenged and the agreements between the EU and UK are about to be cancelled.

The EU-UK trade agreements are unlikely to be cancelled until new ones are put into place. It wouldn't benefit anyone.

    EU-UK trade today is the same as it was yesterday. But when they push the button on Article 50, it won't be

Article 50 isn't a Big Red Button that suddenly nukes all trade agreements. In fact, it's a fantastically vague section of a treaty, which means that exactly how Brexit will work after Article 50 is invoked (whenever that happens) will be up to the UK and the EU, and I doubt that either side is going to go for an option that causes a sudden drop in trade between them, considering that both sides benefit from that trade.

    And meanwhile, every other member state is going to fight this very battle.

Maybe. Maybe not. Undoubtedly separatist/nationalist parties will get a bit of a boost for a while, which may or may not continue on depending on how exactly Brexit pans out for the UK. But referenda take a long time to put together, and the UK was arguably much better-positioned for an exit than a lot of other member states. It remains to be seen if the extra boost actually gives other member states the kind of momentum that they would need in order to get to a referendum of their own, much less to vote Leave.

    A strike authorization is where bureaucracy gets really ugly. Meanwhile, work continues apace.

You've been arguing that the first sentence is key. I have been arguing that the second sentence is much more important than the first. Work will continue apace, despite the new bureaucracy. Will the bureaucracy get ugly? Possibly. As I said, Article 50 hasn't even been invoked yet, so I'd say it's a bit premature to make calls on how the logistics will play out in the long run.

snoodog  ·  2834 days ago  ·  link  ·  

    I didn't say they were striking. I said they voted to strike. A strike authorization is where bureaucracy gets really ugly. Meanwhile, work continues apace.

Good analogy. I didn't catch that in your previous post.

goobster  ·  2834 days ago  ·  link  ·  

I disagree. The only thing Britain gave the EU was a financial hub. Now that the British economy is tanking (and 40% of Britain's total value is the land in and around London), the Brits have nothing the EU needs.

The next problem is the Spanish election in two days... do the voters take the Brexit path, or do they double-down on the enormous benefits they have reaped from their recent economic turnaround, and keep the incumbents in place?

This is the "tipping point" domino for the EU, in my mind.

kleinbl00  ·  2834 days ago  ·  link  ·  

https://www.uktradeinfo.com/Statistics/OverseasTradeStatistics/Pages/OTS.aspx

5 billion pounds of imports from Germany alone, just last month. World's 5th largest economy. It's not as simple as you want it to be.

The "next problem" could be any one of a dozen things, and it's absolutely the "tipping point" for the EU in nearly everyone's mind... but Europe has to trade with itself and with others and whether you call that the EU or CheeseEaters Inc. is going to be a lengthy and expensive process that Europe is now required to go through.

snoodog  ·  2833 days ago  ·  link  ·  

According to KB's link major export of nuclear reactors, train cars, pharmacy, aircraft and photo equip.

goobster  ·  2833 days ago  ·  link  ·  

True... none of which the Brits are known for, nor do they produce a markedly superior version than others on the market.

Now put a trade wall in between your British supplier of train cars, and no trade restrictions between you and a potential Hungarian supplier... and see how quickly people move their money onto the Continent, and away from Britain.

And nations within the EU give priority to fellow EU nations, before going "offshore" for their suppliers, and...

I just don't think Britain holds any cards. At all. They bluffed, the players fanned their cards on the table, and the Brits were holding a Queen against the EU's Full House. Bam.

goobster  ·  2834 days ago  ·  link  ·  

I think the opposite.

The EU needs to make leaving as painful as possible for Britain, to dissuade other member states from considering similar referenda. And, now that the British economy is crashing, Britain has nothing the EU needs. The EU can be as punitive as they want to be. They gain nothing from being nice to Britain, or making things go smoothly for them.

By leaving, Britain threw away the only cards they held: Member Status.

Now they are another Moldova... a country on the edge of the EU with little to offer, and everything to gain.

But yes... I do believe the EU will go through an internal process house-cleaning, and take dramatic steps to increase their agility and responsiveness to member states' complaints.

illu45  ·  2834 days ago  ·  link  ·  

In terms of having a say in trade agreements, the UK's trade with EU members is a much more significant bargaining chip than its member status. The UK hasn't stopped producing goods and services, nor has it suddenly ceased all trade with the EU. EU-UK trade is beneficial for both parties, and it will almost certainly continue in one form or another despite yesterday's vote.

As for being punitive, undoubtedly there will be some petty politics, but from a pragmatic perspective, neither the UK nor the EU benefit from drawing out the negotiations. Investors don't like uncertainty, and there's going to be uncertainty until new deals are signed.

goobster  ·  2834 days ago  ·  link  ·  

The EU gains nothing from letting Britain off easy, and has everything to lose. Making it easy for Britain to leave and maintain all their existing trade agreements with EU partner states simply emasculates the EU and everything it stands for and is trying to accomplish.

The EU hasn't even existed for a generation yet. And the real benefits won't be felt for two more generations. You need people BORN in the EU - and their kids - before you have the cultural identity established, and treasured, by those who live within it. When separate states is an inconceivable state for those commuting to work every day.

If the EU is going to live through this, they have no choice but to run Britain through the wringer, and make them jump over every possible hurdle they can conceive.

Otherwise this amazing experiment dies before it even reaches puberty.

illu45  ·  2834 days ago  ·  link  ·  

    The EU gains nothing from letting Britain off easy, and has everything to lose. Making it easy for Britain to leave and maintain all their existing trade agreements with EU partner states simply emasculates the EU and everything it stands for and is trying to accomplish.

You may well be right. Ultimately it's hard to say how individual states will react. Juncker was fairly testy in calling it "not an amicable divorce", although Hollande was more positive and Merkel mainly urged caution as well as reportedly stating that relations with the UK would be "close and based on cooperation".

Personally, I think that money talks, and the EU will want to continue to have access to UK markets and vice-versa, so future agreements will have to be somewhat beneficial to both sides (although I'm sure compromises will be made on both sides, as well). There is some danger of other states wanting to leave (thus threatening the integrity of the EU) but, as I mention in another reply, referendums take time to organize, and in some ways the UK was better positioned for an exit than a lot of other members. It's difficult to say how many countries will actually even put together referendums, much less leave, but I think it's a bit premature to claim that the EU is in serious jeopardy, even if the UK's exit is smooth/beneficial.

Personally, I'm hopeful that future agreements between the UK and EU are drawn up with cool heads and based on sound economic principles, rather than being predicated on the idea of punishing the UK or on a fear of being 'emasculated'. Ultimately only time will tell, though.

goobster  ·  2833 days ago  ·  link  ·  

    and in some ways the UK was better positioned for an exit than a lot of other members.

The EMU, for one.

Those who have taken on the Euro would need to develop an entirely new currency if they chose to leave. And implementing a new currency from the ground up - design, minting, etc - is phenomenally expensive. That right there will keep the smaller countries around.

I do miss the Dutch Guilders. Prettiest currency ever made.

snoodog  ·  2834 days ago  ·  link  ·  

One of England biggest products is its banking services sector. Im sure other countries would be happy to take a piece of England baking pie and will maneuver to create uncertainty for English banks. As for trade it may be more difficult for England to negotiate for its own interest now that it has threatened to leave. Carve outs for English businesses and industries may be ignored because hey they are leaving anyway so why bother.

goobster  ·  2834 days ago  ·  link  ·  

Watch all the Arab money move to Switzerland now. I expect a flight of finance from London. With the hit property has just taken in the last few hours, investors are going to be sprinting away from the City of London.

Complexity  ·  2834 days ago  ·  link  ·  

    HOWEVER a whole bunch of people who firmly believe they have better shit to do are now going to have to burn a shit ton of blood and treasure on treaties and trade agreements and boring shit like that while the rest of the world aren't.

    Chances are good that whatever Europe looks like in ten years, it'll be ten years behind the rest of the world.

This is, as usual, the KB point of insight that no-one else is talking about.

Everyone is already arguing about immigration status, market volatility, whether any other nations need a referendum. The medium is the message; our attention has already strayed.

ButterflyEffect  ·  2834 days ago  ·  link  ·  

Can you or veen or somebody answer the following for me? I think I'm missing something fundamental.

Great Britain is leaving the European Union, which is a politico-economic union of states, correct? The EU is supportive of the WTO and open and free trade. Would it be unfair to say that their single market is the next step up (and government driven...) from things such as NAFTA / TPP / other international trade agreements?

If this is the case, then is there not cognitive dissonance in the outcry over a British exit of the EU when compared to opposition to the trade agreements listed above?

kleinbl00  ·  2834 days ago  ·  link  ·  

There's a lot of tribalism in politics. There's also a lot of false equivalency. For example, a referendum on EU membership does not, will not, and can not have anything to do with a Trump presidency no matter how much some people may want to draw parallels. NAFTA and TPP have benefits for some people and drawbacks for others, just like EU membership.

The benefits trumpeted for the EU drew primarily on the agility and collective bargaining powers of a single currency. The UK, for example, thinks it's all that but from a population standpoint it's California, Oregon and Washington. From an economic standpoint it's California plus Washington. Meanwhile, the US from a population standpoint is... well, the phrase I like is that there are more honor students in China than there are students in the US and India will be bigger in a few years.

That matters if you're a national corporation. If you're a weaver or a die maker or a cobbler or a haberdasher it matters fuckall.

Post-war Europe was shaped primarily by the Marshall Plan and secondarily by the Non-Aligned Movement. In other words, in service to and then in defiance of the United States. The current political upheaval in Europe is due to citizens realizing that the past 20-odd years since the formation of the WTO hasn't really worked out as well as they'd like.

The emotion driving the Brexit? It's what fueled the Sanders campaign, not the Trump campaign. Be careful whenever someone says "X is just like Y" because it means they don't want you to think about X and they don't want you to think about Y.

snoodog  ·  2833 days ago  ·  link  ·  

    The emotion driving the Brexit? It's what fueled the Sanders campaign, not the Trump campaign

I dont know if I agree there. The demographics dont match very well for one. A lot of the brexit momentum was fueled by the economic migrants coming from Syria, Iraq, and potentially Turkey but there is also common ground with the sanders side with isolationism to fund the NHS. There is just a lot of frustration to go around from both sides and any movement that can hit enough of those frustrated voters has potential to take pretty drastic changes.

veen  ·  2834 days ago  ·  link  ·  

The way I understand it is that trade agreements like TTP mean that the lowest common denominator is used, whereas the EU strives for regulations that are above the average of most of the countries involved. For example, much of the EU nature policies are modeled after the Dutch policies that were one of the leading environmental policies back in the day, so the EU enforced that level of nature protections across all of Europe. TTP could mean that products that do not live up to EU standards could still be sold here, a double standard which many deem unfair.

veen  ·  2834 days ago  ·  link  ·  

What kind of standing do you expect to come out of it? The analyses that I've read point to the EU either playing hardball to scare off other countries from leaving, or focusing on pragmatic / consensus solutions like some sort of half-exit.

kleinbl00  ·  2834 days ago  ·  link  ·  

The more economic theory I read, the more I'm reminded that macroeconomic theory has few data points. I don't know. I don't think anybody knows. I think there are a lot of opinions and the ones that will turn out to be right will trumpet it from the rooftops and the ones that turn out to be wrong will dissemble.

I think it's noteworthy that much of economics right now is being driven by central bankers, and this vote puts them on notice that centralization is falling out of vogue. The Rationalists have been arguing that the disintegration of the EU has been a foregone conclusion since its inception... but they've been saying that since its inception.

I'm thankful to be an American today, that much is certain.

snoodog  ·  2834 days ago  ·  link  ·  

I guess I would bet on Hardball because the guys in Brussels want a stronger union not a weaker one. If they can force England to change their mind it might keep other nations from trying to same thing. If things get bad enough for Britain after the vote the EU may even end up with a more integrated Britain and not less.

veen  ·  2834 days ago  ·  link  ·  

My bet's also on a hardball strategy, at least for starters.

Admitting defeat and handing back more sovereignity than they had, however, seems like such an un-British thing to do though.