Into The Unknown
Avoiding uncertainty is the one thing policy makers worldwide agree on. They’ll fight it tooth and nail to keep things as they are, at all costs.
To them, uncertainty breeds volatility in the markets. If the world were more certain the economy would be doing much better. If you think about it, this is a pretty backward assumption. Certainty is what was bred in the old USSR and in modern-day North Korea. Economies like these downplay being flexible, the ability to choose and, frankly, freedom.
In paradox, the capitalism of a free market economy is absolutely built on uncertainty. It’s that uncertainty that helps drive markets and more so, innovation.
Of course, not all certainty is a bad thing. Growth can come through being industrious/inventive when there’s the reliability one’s property rights/patents will be respected by peers and the government. This is the kind of certainty which is good. Another good brand of certainty is when a government respects the rule of law, minimizes corruption and maximizes the risk/reward system which helps lift the standard of living for everyone.
But more so than certainty, it’s about faith. When it comes to entrepreneurs, workers and investors all operate within the spectrum of faith their government will protect freedoms and strive to provide a boost of economic growth.
This is why last week’s vote by the residents of the U.K. to leave the European Union is not the impending doom that some folks think. The fine people of Britain, in short, had enough of the growing list of (sometimes ridiculous) rules which didn’t even come from their own ruling, elected body. They came from Brussels!
There are a couple of examples that proved to be too much to bear for the Brits. The first, EU rules required the British government to treat immigrants seeking welfare similarly to British citizens seeking welfare, basing that to give them different treatment would supposedly be an infringement on the right of people to travel in the EU. The second was outlawing electric tea kettles. Thus, the mutiny was on.
The next few weeks will probably be a crunch and a lot of Chicken Littles screaming the sky is falling due to an uncertain future. However, a more free (and independent) Britain will gain self control of its collective destiny. This will surely bring back a level of responsibility and prosperity not seen in the U.K. in decades.
Another bright spot will be the U.K.’s ability to expand free trade with us here across the pond. Something the E.U. made entirely too difficult.
Equities that were recently sold off after the Brexit vote should be viewed as a great buying opportunity. The Brits can now take the position of Switzerland and Norway (but with more leverage), allowing for better trade and not being held to the mercy of those in Brussels. The bureaucracy brewed by the E.U. has unequivocally made being a member not worth the benefits for regular citizens. By contrast, politicians love entities like the E.U.\
Luckily for all of us, the people have spoken with Brexit. And we all should soon reap its rewards.
* – All data and numbers courtesy Brian Westbury, http://bit.ly/295wyGI.