The Conventional Wisdom About Brexit is Wrong

The media is full of disaster mongering now that Brexit has passed, In fact, even some Brits have been horrified by their own behavior in the referendum and are wishing they could take it back.

The conventional wisdom is that Brexit will be a disaster for economies. Depending on whose publication you are reading, this ranges from Britain’s economy to the EU (those who remain), to the world (see The Economist), to corporations if one can stretch to believe a company can be an economy (in miniature I’m sure). But economists have a spectacular record – of incorrect calls. In fact, on big items like Brexit, it is a rare economist who gets it right. We were particularly annoyed to hear Alan Greenspan – who really ought to crawl in a hole and never come out – predict doom and gloom. Frankly, hearing him issue a negative prediction is almost enough on its own to make me believe the opposite.

It may be that economies hesitate for a bit while the effects of the vote sink in. But it’s going to be hard to tell whether any of those effects are due to Brexit, or something else. Let’s not forget that some were predicting a slowdown in Britain before Brexit. In the US, the labor market is flashing a warning, and spending at restaurants – which has been robust – is slowing. Our election environment is partially to blame for softness on these shores. In the EU, slow has been the operative word for years now.

So before believing the dire scenarios pumped by the media, engage in a bit of watchful waiting and remember that in fact, most of the world is not partĀ of the EU, and many of those economies are performing at least as well as the EU.