Withdrawal From The World: Brexit And Other Efforts To Reject Reality

by: John M. Mason


Well, the vote is finally here and citizens of Great Britain have the opportunity to vote to "Remain" or to "Leave".

This situation is representative of a larger movement over the past few years that reflects the discontent of many to the changes taking place in the world and its leadership.

Unfortunately, these changes are going to take place whether or not people "opt out," and leaving will only place people further behind and make it harder to catch up.

Over the past several years, the world has seen a plethora of efforts to fight off the rapidly changing modern world and return to a simpler, more idyllic, vision for the past.

We have seen national groups, like those of Marine Le Pen, president of the National Front in France, and other movements in Spain and Greece. We have seen separatists groups, like the one in Scotland, that want to break away from Great Britain. We have seen the head of populism in the United States as some individuals show a longing for an earlier, less complex, and less contentious America. And, we have seen a group like ISIS fight to return to a more idealized world of the Middle Ages.

And, as people have become more frustrated and anxious with the current world and the promises of leaders to make things better and solve all their problems, fear of the future and anger at the world have grown and the protest has actually picked up steam.

The problem with all of these efforts is that they are doomed to failure. History has shown, over and over again, that attempts to fight the present and return to a former, "gilded age" never succeed. Oh, in some cases, they may postpone the future. But, they never prevent the future.

To me the crucial, underlying movement that is taking place in the world is the spread of information.

Since the fifteenth century and the invention of the printing press, the spread of information has picked up speed and cannot be thwarted. Information technology is going to grow and spread, and there is little or nothing anyone can do about it.

Dictators can burn books and persecute those that fail to support the regime. Religious leaders can do likewise, threatening damnation or something like it to those that do not believe and hold onto irrelevant belief systems. And, others can condemn and kill those that do not think like they do. Yet, in the end, information technology improves and information grows.

Look at what has happened to the world since the end of World War II. Trade has expanded tremendously. Today more countries take part in the global economy and exchange goods and services throughout the world.

The financial structure of the world at the end of World War II was based on the Bretton Woods system, and this was a world that lived and died off of fixed exchange rates and capital controls preventing the free flow of capital in the world.

But, international trade grew so much in the 1950s and 1960s that the idea of capital controls became impractical by the end of the sixties decade, and with President Nixon moving to go off the gold system and float the value of the US dollar, the Bretton Woods system became just a piece of history.

And, globalization took off at other countries benefited from the floating exchange rate system and the free flow of capital throughout the world. Prosperity came to many.

Trading blocks grew up, as did more and more trade agreements and trade further expanded.

In the 1990s, a currency union, the European Union, formed around a single currency, the Euro, and prosperity spread within the European nations, in spite of differences in competitiveness and national attitudes. The only thing that seems to hold the EU back is the lack of a political union that can coordinate the fiscal efforts of the community and resolve common political issues.

And, with China becoming a world economic power and wanting to "play with the big boys" the need for closer relationships to unify efforts and build bridges has become more and more apparent. Then there is Japan, and India, and Canada, and Brazil, and Argentina, and so on and so on.

The point is that this growth and cooperation has been built on a foundation of growing information technology and a huge need for sharing and comparing data. The modern world is a world of networks and platforms that are, to a large extent, intangible and invisible.

It is also a world in which the pace of innovation is continuously increasing.

The economist William Baumol, in a book titled "The Free-Market Innovation Machine" (Princeton University Press: 2002) presented results (on page 76) that showed the interval between the introduction of an innovation and a competitive entry to combat the innovation.

In the period 1887-1906, Baumol estimated that the interval was approximately 33 years. In the 1947-1966 period, the interval was just under 6 years. In the 1967-1986 period, it was 3.40 years. And, think what it must be now!

This is the world that the "populists" believe that they can pull out of.

This is the world those who support Brexit believe they can protect themselves from.

In trying to pull out of such a world, the only people that will be hurt in the longer-run is their own people. The rest of the world is going to go on…and it will go on at a faster and faster pace, making it harder and harder to catch up.

Yes, it is a scary world! Yes, it is very hard to understand what is going on! Yes, it's destroying the past as we have known it! And, yes it is even going to get worse!

But, that is the world we live in. Sticking our heads in the sand or trying to take ourselves out of the mainstream is not going to work.

The only things that work in such a world is working to attain more knowledge, working to understand the technology, accepting the "creative destruction" that accompanies this type of world, and working with people - local, regional or global - to help information grow.

That is, participation with others, as difficult as it might be, is the only realistic way to exist in the world today. Cooperating with the process of information growth is the only way to "move with the grain of the universe."

For those voting in Great Britain this week, vote "Stay"!

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

About this article:

Author payment: $35 + $0.01/page view. Authors of PRO articles receive a minimum guaranteed payment of $150-500.
Want to share your opinion on this article? Add a comment.
Disagree with this article? .
To report a factual error in this article, click here