On June 23, the United Kingdom held a referendum on whether it should stay in the European Union or become independent from it. The people voted to leave by a margin of 17,410,742 (51.89%) to 16,141,241 (48.11%). Seven observations on this event follow.
1. Neither polls nor bets are reliable means of predicting elections. Leading up to the vote, almost all polls indicated a Remain vote. Bettors, who frequently predict election results better than polls do, were even more in favor of a Remain result. Yet Leave was victorious. This, along with other polling mishaps both recently and historically, calls into question the usefulness of polls for measuring public support for issues and candidates.
2. Leftists favor democracy until people vote against leftist goals. Following the Brexit vote, a petition to hold a re-vote was started, which has since gained over 2.5 million signatures. This is par for the course for leftist elites, who pay lip service to democracy while trying to undermine it for their own ends. Whether they put their thumbs on the scales through election fraud, demographic displacement, or simply re-voting until they get their desired result and then stopping re-voting, democracy is only a means to an end for the left. The impact is best summarized by Hans-Hermann Hoppe, “Democracy has nothing to do with freedom. Democracy is a soft variant of communism, and only rarely in the history of ideas has it been taken for anything else.”
3. When one side of a debate uses facts and the other side uses fear, the side with facts is correct. The Leave campaign consisted primarily of a reasoned case for why the UK would be better off independent from the European Union, while the Remain campaign consisted mostly of fear-mongering. The use of scare tactics in an argument is a sign that the user has no rational case to make, otherwise one should be expected to use logic and evidence. We may therefore conclude that the Leave campaign made a superior case.
4. This is only the beginning of a long process. The referendum was advisory, meaning that it is not legally binding. In theory, the British Parliament could choose not to implement Brexit and deal with the wrath of voters in response. It is also possible that a two-thirds majority of MPs could call for a general election in which a party campaigns against Brexit. If that party wins, then they could claim that their election result counters the referendum.
If Brexit goes forward, the UK must invoke Article 50 of the Lisbon Treaty, which specifies how member states may leave the European Union. The UK will then have two years to negotiate its withdrawal, at which point it will be removed from the EU regardless of whether said negotiations are concluded. During this process, the UK will be subject to EU treaties and laws but will have no say in its decisions.
5. This is likely to be only the first secession of many more to come. While England and Wales both voted for Leave, Scotland and Northern Ireland both voted for Remain. In response, there are calls for another vote for Scotland to leave the UK in order to stay in the EU. (One such vote was held in 2014; Scots voted 55.3% in favor of remaining in the UK.) There is also talk of Irish reunification (Northern Ireland leaving the UK) for the same purpose.
The successful vote in the UK has resulted in calls for similar referendums in Denmark, France, Germany, Greece, Italy, the Netherlands, and Sweden. It is quite possible that one or more of these nations will also leave, throwing the very survival of the EU into question. There is also a recent history of secessionist movements within European nations gaining traction, such as the Catalan independence movement.
6. This is an excellent buying opportunity for investors. Upon news of the Brexit vote, world financial markets tumbled. The Dow Jones Industrial Average lost 610.32 points (-3.39%), the NASDAQ lost 202.06 points (-4.12%), the S&P 500 lost 75.91 points (-3.59%), and the Russell 2000 lost 44.68 points (-3.81%). British and Chinese markets fell slightly less, while German and Japanese markets lost a larger percentage. Gold gained $59.30 per ounce (4.69%) as investors fled to safety, while the British pound fell to $1.35, its lowest exchange rate since 1985. But nothing has really changed to warrant such a selloff. Business will continue as usual for at least the next few months, and the UK will not be fully independent until late 2018 at the earliest. The downturn is more emotional than substantial, and therefore presents an excellent buying opportunity for anyone sitting on the sidelines holding capital.
7. Leftist cries of racism and xenophobia will backfire. Predictably, leftist elites have yet again failed to engage in any self-reflection concerning their policies, which have enriched themselves at the expense of the common person for at least a generation. Their immigration policies have depressed wages, endangered safety, and eroded cultural identities. Their foreign policies have contributed to terrorism. Their domestic policies have led to increasing police statism. But rather than acknowledge that they have done wrong, the leftist elites have decided to deride the voting public as racists and xenophobes. Not only does this misunderstand what motivates most people to vote against the establishment, it will only serve to throw gasoline onto the fire. There is a proverb in the Deep South of the United States, “If you knock on the devil’s door long enough, someone will answer you.” At some point, the common people will conclude that if they will be accused of racism and xenophobia, then they might as well embrace those ideas. To some extent, this has already happened with the rise of the alt-right, but that movement has plenty of room to grow and newly fertile ground in which to do so. A reaction of openly racist people is coming, and matters will get ugly.