Monday’s Brexit events mean that we don’t actually know much of anything. We don’t know whether it will take place on Oct. 31, whether it will take place at all, and we certainly don’t know the terms under which Brexit will take place if it ever does happen. Moving up a step of abstraction, though, we can at least identify what is happening.
The British establishment (not the “Deep State,” as that implies secrecy and this is blatant and open) have decided that the British people should not have voted for what they voted for, and should not have what nearly every political party promised in its manifesto at the last election. That is, that despite the referendum result and the promises made about it, the establishment says Britain should not, in any meaningful sense, leave the European Union.
What we’re really talking about here is secession, an argument the U.S. had in 1860 — at which point the answer was “heck no” and war ensued. If it had happened in 1810, closer to the comparable timeline here in Europe of the EU’s formation, then perhaps, whatever its merits, secession from the United States would have been allowed. What we are getting, though, is that significant resistance, by any means possible, from those who oppose the result of the plebeian populace. We really did ask the country, with an open vote with a simple “leave” vs. “remain” answer, should Britain leave the EU? The answer being, by a plurality of the eligible population and a majority of those voting, “Leave.”
In a democracy, that should be that. Except we keep having these rearguard actions, the point of which being that eventually we’ll all get so bored that we’ll just answer “Yeah, whatever” and drop the subject.
You’ll have heard about court cases, and acts to demand a request for a delay, and so on. These are all details, simply skirmishes in the greater overall battle. The latest of which is that the House of Commons wasn’t allowed on Monday to vote on the precise deal to leave. The argument is that the government cannot put the same motion again. This is a form of double jeopardy: You get the one chance at it and if you fail, well, propose something else. Don’t browbeat and bribe people to change their votes.
What now happens is that Prime Minister Boris Johnson and his government will try other ways of getting the same deal through parliament. Maybe they’ll succeed, and maybe they won’t.
Attempts will be made to add riders and amendments to the current deal agreed between the U.K. government and the EU. The problem with all of those is that by changing the deal in Parliament, then it’s not deal the government agreed to with the EU. If Parliament does manage to pass a deal, back it would have to go for consideration all over again by the EU.
Who is going to win here? Absolutely no one knows. The actual current default in law is that if no deal is agreed and no extension asked for then Britain leaves, with no deal, on Oct. 31.
I’m part of the significant minority who positively desire that to happen. The vast majority of the establishment doesn’t desire that. The unfortunate thing from their point of view is that there is no agreement upon what should replace it. There’s actually a political majority against any specific deal — there is no such majority in favor of any single leave arrangement. Which, when the default is crashing out with no deal at all, doesn’t seem to be concentrating minds sufficiently.
I can’t give you any predictions about what is going to happen. But I can tell you the method to use to predict.
If Britain isn’t going to leave at all, then the value of the pound sterling will rise, sharply. If we are to leave without a deal at all then it will fall from current levels, again sharply. The closer any negotiated deal ties us into trade deals with the EU then the more it will rise. The more we are to end up as just any other foreign country, the more it will fall.
As we know, markets are forward-looking, thus things that will happen in the future to prices happen now to prices. Markets are also the best distillation of the balance of views we have. So, to get the best estimate we’ve got of how things are going, according to all current knowledge, just look to the price of sterling. This is what Eugene Fama got his Nobel Prize for, the efficient markets hypothesis. All knowledge is already in prices — so, look to prices to tell us what people know.
Sterling rising means the “federasts” are winning in tying us into the EU, sterling falling means we’re on the cusp of liberty and freedom from the EU’s foolishness. It’s as good a sign of how it’s going as we’re going to get.
Tim Worstall (@worstall) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is a senior fellow at the Adam Smith Institute. You can read all his pieces at The Continental Telegraph.
