Came across this article on Medium. Enjoy (or not!)
What the Effects of Brexit Will (Really) Be
Is Brexit the Most Bafflingly Self-Destructive Act in Modern History?
umair haque
Dec 18, 2018
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Will Brexit be the dawn of a resurgent, proud Britain? Or is it something closer to the most bafflingly epic act of self-destruction committed by a nation in modern history? Are either of these hyperbole? Will it just be not much — yawn — at all? From the beginning, the “debate” on Brexit hasn’t been much of one — it’s been a minefield of disinformation, folly, and utopian daydreams, peddled by third-rate thinkers, ideologues, ignoramuses, and outright con artists. So I’m going to make my thinking crystal clear for you to follow. My goal isn’t to persuade you or convince you or preach to you — it’s simply for you to think for yourself about it with clarity, accuracy, and focus. You can be the judge of my success or failure.
A No-Deal Brexit will set off a chain reaction. Not because I say so. But because logic and reason do. (Any Brexit with any “deal” will set off the same reaction — only less so.) What I want you to understand is that there is no uncertainty about it whatsoever. None, zero, absolutely nada. This chain reaction is as sure as gravity pulling an apple earthwards The only uncertainty is the magnitude — will it be breathtaking, or merely spectacular? The sequence of events making up this chain reaction are a) predictable b) inescapable and c) unalterable. Once this chain reaction is set off, like an avalanche, like dropping a bomb, it is unstoppable. No matter what anyone — the central bank, the Treasury, the government, you and I — tries to do, nobody will be able to change it much, if at all. It will be too late. The moment that Brexit occurs, all of the following is already written into history’s stars.
The very first thing that will happen is that the pound will crater. Why? Because the people that make markets in currencies are advised by good economists, who know what I am about to tell you next. You probably don’t, maybe, because most of the British media has failed spectacularly at doing its most basic job, which is informing you of reality. That’s this, at first: t the pound will crash — easily reaching parity with the dollar, probably falling below it — as people who hold currencies, anticipating the next steps in the sequence below, will dump pounds.
The next thing that will happen is that prices will rise — there will be skyrocketing inflation. Basic goods — beer, cheese, wine, bread, and so forth — will rise tens of percent. So will everything else, from cars to gasoline to energy to water. Why? Inflation will skyrocket for two reasons. First, the pound will be worth significantly less — at least twenty to thirty percent. Britain imports everything from the chemicals used to process its drinking water to its energy to its food — so Brits will pay vastly more for the very same things.
Transaction costs will also be far higher. It’s not just that tariffs and levies and whatnot will raise the prices of wholesale goods — it’s also that simply obtaining them for businesses will become more time-consuming, costly in terms of paperwork, more onerous and arduous. That means that inflation will skyrocket — as a simple result of supply and demand, as a result of tariffs and levys, and also as a result of currency devaluation. It’s a triple-whammy of the kind we haven’t seen outside Latin American meltdowns. Unfortunately, this one’s barely even beginning.
As inflation soars, the central bank will be forced to raise rates. Both to buoy the pound, and to “cool down” price rises. Do you worry about paying your mortgage every month? What if it were ten percent higher? Thirty? Fifty? That’s what a rate rise of maybe seven percent means. That is what’s on the cards — and combined with higher prices for basic goods, the average Brit, already struggling, income lower than a decade ago, will be utterly wiped out. Do you think people who’s incomes are already flat can afford to pay thirty percent more for mortgages, food, water, and energy? I didn’t think so. Hence, people will lose their homes, along with their savings.
But not all inflation is created equal — the above will be “price” inflation, not “general” inflation, which includes people’s incomes rising. Peoples’ incomes won’t rise. Why not? Because of the next link in the chain. There will be a massive wave of bankruptcies. Mostly of small and mid-sized business. Many of them will have nobody left to sell to — whether in Europe, or in Britain, where people are struggling to make ends meet, thanks to sharply higher prices and rates. Many, many businesses will not be able to afford to pay the steeply higher costs of a Brexited economy, in terms of paperwork, personnel, imports, duties, tariffs, and simply buying the same goods at higher prices due to a lower pound — and still earn a minimal profit. Wham! They will simply disappear. But what happens as a result of a wave of small and mid-sized bankruptcies?
Mass unemployment does. The unemployment rate will skyrocket — because these small and mid-sized businesses are still the largest employers in many cities and towns. But when they go out of business, they will take jobs with them. Yet at this point, people will already be desperate and struggling — remember, their basic goods all cost more now. So people will be out of job en masse, at precisely the moment they need an income most — to pay for bills, whether for mortgages, food, energy, cars, or gasonline, which are all inflating rapidly in price, in tandem. Does that sound tolerable to you? Or does it sound like a recipe for social implosion? Bang! Middle class implosion. The ranks of the new poor swell. Welcome to ending up like America.
Still, we’re not done. What happens when people suddenly get poorer — by a significant degree? They have less money to pay taxes, don’t they? The necessary consequence of Brexit will be, therefore, a sea change in the British political economy. With less money to invest in themselves, Brits will see all their major public goods axes. The NHS will wither. The BBC will struggle. Parks, libraries, greens, transport systems, education systems — all these will either close, have to raise prices, too — or be sold off to the lowest bidder.
Who’s that likely to be? An American hedge fund. They’re the ones that have bought up most of America’s most profitable businesses, “rolled them up” into giant monopolies, which then charge American eyewatering, absurd, gruesome, insane prices — like $1000 a month for the insulin that Brits currently pay 8 pounds for (if that ). How do you think you’d feel about paying what Americans pay for healthcare? Do you even know how much it is? It costs $30,000 to have a child. Healthcare for a family of four costs costs $30,000. LOL — are you seeing my point yet? Nobody can afford that — and so increasingly, American’s don’t. That’s why they’re having less sex, less babies, fewer relationships — and dying younger. These things aren’t abstractions, my friends — they’re your life.
But when you cannot afford to fund your public healthcare, education, transport, housing, and retirement systems — then they must be auctioned off. Yet nobody in France, Germany, or Italy is interested in buying them — only Americans are, because only Americans are foolish enough to think these crucial social systems should be privatized in the first place. But when you sell a business to American predatory capitalism — guess what — you end up as prey.
Now the true effects of Brexit will begin to reveal themselves. They’re this. Britain will become Americanized. It’s the utopia many Brexiters already envision openly. But have Brits really thought about what it means for them? Let me make it clearer. Americans have to choose between healthcare for their kids or themselves, and their mortgages. They beg strangers online for money for insulin — or simply die. The majority of Americans live paycheck to paycheck, and can’t raise $500 for an emergency — no matter how much money they ever make. If you fall through the cracks in America, you die on the streets like an animal: there’s nothing there, really, to save you.
Brits enjoy — at present — a vastly superior quality of life — that much is in the statistics. They live longer, happier, healthier, richer lives — by a long way. But a decade or so after Brexit, their lives will be like Americans’ — impoverished, desperate, broken, exploited, full of fear and rage and grim despair. Their life expectancies will have fallen, their middle class imploded, their peace of mind shattered. (And if you think Brexit’s a place of fear and despair, then I invite you to spend a few days in America — where mass shootings and Nazis in the government barely even make headlines anymore.)
Still, we’re not done. Now imagine that you’re this kind of country — suddenly poor, desperate, broke, beleaguered. You approach various other countries for new trade deals. That’s the Brexiters’ fantasy, isn’t it? What do you think the response of other countries is likely to be? They’ll be all too happy to take advantage of your weakness, of your desperation, of your folly, won’t they? So when Britain does go to the global negotiating table — it will be from a position of profound weakness. Every concession imaginable will be extracted — and then some — precisely because at that point, Britain will need whatever dribs and drabs of trade it can muster, from wherever, much more than those dribs and drabs will need it. What kinds of concessions? Do you see the way that oligarchs have raped Russia, or various Central Asian countries? Imagine that sort of thing. Tax breaks, subsidies which a poorer nation can ill afford, special privileges, monopolies, and so on. So not only will the country’s public goods be auctioned off — it will become a haven for the worst kind of people around the world, profiting in the most repugnant ways, too, all too happy to advantage of a foolish nation in dire and desperate straits. (And by the way, even that will be a late reprieve — “new trade deals” don’t magically appear overnight: they take years, about five at least, to happen. Signing dozens? At the precise moment of your greatest weakness? Don’t make laugh.
Does that sound like a happy ending to you? LOL. Good luck, my friends — you’re going to need it.
What is Brexit, then, really? It is a fatal cocktail, made of three things. One, it is the precise equivalent of a permanent austerity program heretofore unseen in the history of rich nations, except in America. Two, because that is what America did to ruin itself — decades of underinvestment in its very own people, to the point that they don’t have healthcare, retirement, unions, affordable education, transport, and so forth — it is a recipe for becoming Americanized, for British standards of living to plummet down to the abysmal, shocking levels Americans suffer. Three, it is a permanent change.
The question was: will the net effect of Brexit, especially a No Deal Brexit, be positive, negligible, or negative? The result — and I invite and encourage you to think about it for yourself, not to swallow the nonsense I’ve heard repeatedly in the British media for the last year or so now — should be clear to any thinking person, anyone with even a bare modicum of reason left. Brexit, especially No Deal Brexit, will set off a chain of events that are nothing short of modern history’s greatest self-imposed catastrophe. These events are inescapable, unalterable, and maybe most ironically of all, emienently predictable. The moment the trigger is pulled, the future is set in stone. It will not be able to be unwritten. Then will be too late. You cannot stop a bomb from falling.
No, not because I say so — but because logic does. Please — think about it. As I said, I’ve made my reasoning as clear and straightforward as I can. It is not beyond anyone’s capability to follow, should they wish to.
Imagine losing a great and terrible war. That’s the only level of catastrophe that comes close to these kinds of staggering costs, which then mount on and on. Nations recover from great earthquakes, even tsunamis, from foolish Presidents and even more foolish ideas — but Brexit is forever. It’s far beyond natural calamity, far beyond upheaval, far past a temporary mistake — Brexit is in its own universe of ruin entirely. There is simply nothing in the modern history of rich nations that comes close to how destructive it will be — not just for “them”, but for the average Brit.
Look. I get the sentiment behind Brexit. I really do. Decades of spectacular socioeconomic mismanagement have caused incomes to stagnate, inequality to soar, and lives to stagnate — all while the rich get richer. I’d be disgusted — and furious — too. But burning the house down is not a good answer to not liking the people upstairs, when you yourself live in the basement. The flames are only going to char you, first The right answer to the anxieties of impoverishment, isolation, mistrust, and abandonment which fuel Brexit is stronger investment in the opposite of all those things, which might create the good jobs, plentiful careers, thriving industries, and next-generation organizations — the sense of hope and optimism, strength and togetherness, which is missing for too many today.
Brexit is slowly being revealed to be what it has always been: modern history’s greatest, most ruinous, most epic self-made catastrophe, existing entirely on its own plane of folly and self-destruction. It will be remembered as, in a grand, amusing irony of history, something like the final war of folly and ignorance that turned Britain into a collapsing America’s 51st colony — and history will shake its head, before laughing in bemused horror.
I’m fully aware that having been so misled for so long, some of you will call this “scaremongering” or “Project Fear” and whatnot. You should think of me simply as a doctor. Somebody who has no real interest beyond health itself — the health of nations and societies. When your doctor tells you you have cancer, and you’d better go get treatment, right now, or else — the only thing that bitterly calling him a fearmonger and shaking your fist does is make death smile, watching you turn to dust.
Umair
December 2018^