Wednesday, January 16, 2019

Something to Know

Walt Handelsman Comic Strip for January 15, 2019

I pass this on for your consumption of educational articles.  It has been extracted from a listserv that college students use to keep in contact and discuss various issues.  The discussion here is about the Brexit issue, as of yesterday.   The writer is of the class of 1964, who is a retired corporate attorney, who lives in Brussels.  He is responding to a question of how the Brexit kerfuffle is playing out and reflects on present history.  Enjoy:

(name deleted by editor)>
My pleasure.  It is perhaps more scrutable to me because it's closer.  My son lives in London, and complains that this absurd Brexit farce has meant that the pound has dropped some 15 %, and as he works for an English company, this means the value of his pay has dropped.  Since none of Stella McCartney products are made in the UK (most are made in Italy or France, both in the Eurozone), this means that costs of production rise, which puts pressure on profit margins, at least if you postulate some limits to pricing power in the luxury sector.  This impacts his variable remuneration, i.e. bonus, which is most of his income.  Cherry on the cake, he says London house prices have dropped, though the FT recently reported that prices in London are up 2% since Brexit, albeit with a reduced number of transactions.  In short, I get it up close and personal.

In the end, if Brexit happens, the duties, etc., will not be the real problem.  It is the loss of convenience.  It means that English diplomas will no longer qualify holders to work in whatever field is involved in the EU.  Work permits and visas will be required to go live in another country, for the first time in 45 years.  English products (and EU products going to England) may have to be inspected and determined to meet EU standards--so-called non-tariff barriers to trade.  English companies may not have the right to engage in certain EU activities.  This will be of particular importance for the financial services branch.  In short, as always, the devil is in the detail, the things about which not much gets said in the political debate.

I think the heart of the matter is that if in 1992, with the disappearance of the Soviet Union suggesting that a major impediment to progress had been removed, the result in the victorious West 25 years later is disappointing to say the least.  The US, UK, France, Italy, etc., are a shambles, and virtually ungovernable.  Look all around the world.  It's not much better, at least if you exclude the seemingly inexorable rise of China.  I think their placing a rover on the back side of the moon is quite symbolic.  Anyone who thinks China is just cheap consumer junk has it wrong.  Today, many   products are made there because the most modern factories are there, and because they have the technology.  The process is analogous to what we have previously seen in Japan and Korea.  Remember when we were kids, and "made in Japan" was a joke?

Despite all the rhetoric, the English are just taking more steps toward the discovery that in the overall scheme of things they don't matter much.  In the 16th century, it was commonly said that the sun never set on the realm of Charles V of Spain.  The same was said of the British Empire in the 19th century.  Time to move on.



"Yes, yes, but I bring that out in people. I do. I'm not saying that's an asset or a liability, but I do bring that out. ...I bring rage out. I do bring rage out. I always have."
- Candidate Donald J. Trump in April, 2016

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