Humpty Dumpty has fallen, and none of Europe’s horses or men can put him back together now.
Many believe the much-reported exit of the United Kingdom from the European Union, its so-called “Brexit,” is merely the first of a 28-nation set of dominoes to fall. It seems a sure bet that the United Kingdom will not be alone in leaving the EU within the next five years.
First, let’s examine the European Union, officially formed on Nov. 1, 1993, and comprised of 28 countries – which will become 27 with Great Britain’s exit.
The precursors to the European Union extend back to the late 1940s and early 1950s, and its formation was framed as part of an effort to stave off potential catastrophic global – read, European – wars in the future after the devastation World Wars I and II brought to Europe’s shores.
The theory giving rise to the formation of the EU was that it was imperative to have European economies linked so that no member country would gain from its actual or its economic destruction.
By way of background, I served as a U.S. Commerce Department official in Washington, D.C., during the administration of the Honorable William Jefferson Clinton and as California’s Undersecretary of Business, Transportation and Housing. Further, I was a managing director in two separate Wall Street firms.
The people of Europe are acting more and more like those who support both the Occupy and Tea Party movements in the United States.
Regular rank-and-file folks are fed up with trusting their fate to the smarty pants of London and Washington and have, through their vote on Brexit, spoken with a loud voice in opposition to the continued empowering of their political leaders to set their collective fate.
At this moment, Britain is in turmoil. They have been shown the door by their EU colleagues and told to withdraw “with all deliberate speed.” Further, the British currency market is in shambles.
It has come to light that this year’s men’s and women’s Wimbledon champions, each of whom is paid 1 million pounds in prize money, already have realized a reduction in value of their prize by one-third with the sliding value of British pound sterling.
The only thing British leaders could do to make matters worse for themselves would be to blatantly disregard the will of their own citizens and disregard the recently completed Brexit referendum.
Some have pointed out that as a matter of law, the recent referendum was not binding, meaning that Parliament could technically disregard the will of the people expressed by their vote to leave the EU.
To do so would be a catastrophic mistake that might win the immediate economic “battle” Britain’s currency is experiencing but lose the overall war relative to maintaining its integrity in the eyes of the British people – and the world.
To have any sense of how this may play out, one must be clear on what really has transpired by examining the geopolitical and economic conditions giving rise to it.
The original advocates for the formation of the European Union failed to realize the level of political and economic disruption in places such as Ukraine and Syria by having their refugees literally wash up on the shores of adjacent EU countries.
Countless waves of unanticipated immigrants have disrupted local economies and caused significant strain to social infrastructure.
The distance between the “haves” and the “have-nots” on a geographic basis is very close.
Remember, the only country standing between Syria and the main countries of Europe is Turkey.
Each EU member country has attempted to retain political control while ceding other essential controls to the governing body of the EU.
This tactical structural mistake by the original architects of the EU allows for xenophobic blowhard politicians in each of their home countries to cast votes inconsistent with the best interests of the EU on the whole.
The result of the creation of this geopolitical mutant known as the European Union has led to short- and long-term economic catastrophe for some EU member nations. Greece, Italy, Portugal and Spain have been near financial and economic collapse at various times recently in some measure attributable to their membership in the EU.
Even a nation’s attempt to exit the EU, as we’ve now seen, is fraught with sudden and substantial currency destabilization and financial market disruption.
We are witnessing the implosion of the EU in real time. While experts are unsure of which member nation may next pull out of the EU, most agree there will be more “exits”; as the dominoes continue to fall.
Mark T. Harris, J.D., is a continuing lecturer, Management and Business Economics Core Faculty, Entrepreneurship Hub and Entrepreneurship Lab at the University of California, Merced.