Ishan
Institute of Management & Technology, one of the top PGDM colleges in Delhi
NCR had last week brought to you a detailed account of the history of Great
Britain and a summary of the economic achievements of the country. In this week
we look straight at the economics of BREXIT, the run up to the divorce of Great
Britain from European Union, the mistakes committed by European Union leaders,
the corrective measures that governments in Great Britain and European Union
can take in the short and long run and finally the winners and losers of
BREXIT. The analysis is based on
extensive data collection from the best sources that have critical acclaim and are
known for unbiased research in the fields of macroeconomic policy thought and
international finance. Take a look.
The Road to BREXIT; Mistakes that
Piled up Misery on EU
European
Union has not succeeded in reaching this sorry state of fate in one day. Rome was
not built in a day. Neither was Rome destroyed in a day. There has been a
series of judgmental, governance and policy errors that has led to this fate. First,
Great Britain did not have a strategy in place to address issues of global
economic imbalances that arise out of trade deficit. Great Britain had long ago
lost its competitive advantage in international trade and could not keep up
with Joneses in verticals like Information technology, software, ecommerce and
outsourcing when emerging economies began their dominance. Second, Great
Britain has used some of the most shocking austerity measures in the recent
past. These austerity measures that have been hailed by British policy makers
as recovery packages are essentially reflections on the British political
economy and harsh treatment meted out to British citizens in the forms of wage cuts;
salary cuts end even job cuts. The result is there for everyone to see. Third, bailout
packages and golden parachutes for corporations have been used randomly at the expense
of the British ex-chequer. The iron hand of law has been active with citizens
engaged in retail crimes and surprisingly conspicuous by absence in the case of
defaulting corporations and private banks. Umair Haque, the Director of Havas
Media Labs and one of the top management gurus to be put up on the Harvard
Thinkers 50 list has put it brilliantly as social splintering. We at Ishan
Institute of Management & Technology, one of the top PGDM colleges in Delhi
NCR could agree no less with him.
The Fallout of BREXIT on Global
Political Economy
It
makes enormous good sense to use the language of Nobel laureate Paul Samuelson
of Massachusetts Institute of Technology, “the importance of being unimportant.”
Unfortunately the phrase is apt for Great Britain in the aftermath of BREXIT.
There was an article in Harvard Business Review a few days back that put up the
global political economy in context very neatly. United States of America has
had a very warm and cosy relationship with Great Britain in the aftermath of
the Second World War. All through the Cold War time and in the last two decades
through the trials and tribulations of the War on Terrorism, Great Britain has
been a great ally for United States of America overtly and covertly. In the
aftermath of the BREXIT referendum, Great Britain runs the risk of turning
obsolete in world politics and economy for the first time.
With
the BREXIT referendum, one can unfortunately expect that the worst is yet to
come. The worst that we are referring to is the complete dissolution of the
United Kingdom of Great Britain with an impending referendum on Scottish
independence. All the 32 members of Scottish Council voted “remain” in the
BREXIT referendum meaning that the probability of Scotland separating from
Great Britain gets higher. The reason is simple. The next choice for Scottish
voters shall be between remaining in European Union Vs remaining in the United
Kingdom of Great Britain. Whenever the referendum happens the results shall be
just too easy to predict. No bookie will place his bets on this one. The
disintegration of Great Britain shall come at a great price. It shall set in
motion a process of relocating resources, population and offices, reorganizing the
economic establishment and even the defence systems. Let us not forget that a
large chunk of Great Britain’s nuclear deterrence is stationed in Scotland. A Great
Britain with reduced military and nuclear capabilities is likely to spin off
the U.S-U.K. foreign relation like a non-performing asset. With Donald Trump
doing the rounds in the U.S. Presidential campaigns with a crystal clear,
unambiguous and unapologetic “USA First” is unlikely to invest time, efforts
and thoughts into a lost diplomacy asset. Moreover with financial regulations
to follow on the caps of FDI and FII, it is expected that many banks, insurance
companies, brokerage firms, investment banks are likely to shift base from
London to Dublin. Yes, this is an audacious statement on our part at Ishan
Institute of Management & Technology, one of the top PGDM colleges in Delhi
NCR but we choose to go with this prediction.
In
the final diagnosis, it is only an understatement to lament the state of
affairs that Great Britain finds itself in. From here and onwards, only a
British parliamentary Veto can cross swords against the results of the REXIT
referendum to ensure that Great Britain stays in the EU. Even if that happens
the democratic institutions of Great Britain shall be made a laughing stock and
reduced to shambles. It is not
fashionable to bring Karl Marx on the platter for academicians of a business
school, not even for the sake of satire or plain humour. But the truth remains that
Marx had once said “History repeats itself once as tragedy then as farce.” Is
BREXIT the farce after the tragedy of the disintegration of erstwhile USSR? We
end it with the words of the legendary American poet Ogden Nash: “hoping
against hope”.
