So let’s have a chat about Brexit. What’s that you say? It’s the vote taking place tomorrow that will determine whether the British stay in the European Union or leave. Who cares you say? Well, this vote has far reaching consequences, economic and political. I watched “Brexit: The Movie” so you would not have to. This composition should give you enough information to sound like you are in the know.

First let’s deal with the politics. The EU is a political creation formulated over the past 30 with several political objectives in mind. The first premise is that a common currency (the Euro) will be the cement that binds the union. So how’s that worked out? Mixed. The Euro has survived the duration but I would submit that regional and national interests still outweigh allegiance to the Union. This has been exacerbated by the acceptance of an overwhelming number of immigrants from the middle east and north Africa. The Euro has eliminated a mechanism that allows for adjustments to recognize the efficiencies and inefficiencies in different country ‘s economies. When the world’s financial markets freaked out in 2011 over Greece, one of the primary causes of the crisis was the inability for the Euro to operate as an efficient currency for both Greece and Germany. Greece had borrowed incredible amounts of money from banks within the EU denominated in Euros over decades based on misleading and fraudulent economic results. This all came to a head in 2011 when the banks who lent the money in good faith wanted it back. These banks were German and French. All sorts of weird and wonderful mechanisms were enacted to “force” the Greeks to act responsibly and pay back their debts. This did not happen. Sanctions were imposed, deadlines came and went and at the end of the day the Greek economy to this day is in shambles. A far more efficient process would have allowed the Greek Drachma to float down against the French Franc and the German Mark. If you examine the economic consequences to two dishonest countries and in particular the valuation or their currencies Venezuela and Zimbabwe, you can see how this should have played out.

So the currency has been a bit of a bust but there are other reasons to stay in the EU aren’t there? There’s trade and trade deals. The EU has been very big on these but they have made very little difference in the volume of trade. In fact, some of the world’s largest economies do not have trade deals with the EU. China, the USA, India and Brazil to name a few but goods and services from these countries are everywhere in England. So there has been little economic value derived from these trade deals.

The most obvious problems in the EU are low economic growth and high unemployment. The latter is particularly acute amongst individuals under the age of 30. It averages more than 21%. Some member countries like Spain are at 45%. These numbers are tragic and catastrophic both from an economic and social perspective. It is when you are young that you start a career, acquire a home, start a family and begin the journey up the economic ladder. One young person in five is denied this opportunity. In Spain it’s one in two. SO the equation is why has this happened? Simply put it is the over regulation that is strangling the economic life out of the EU. There are a staggering number of regulations that impede the formation of new enterprises and prevent existing ones from innovating. Some established companies like regulation because it prevents and eliminates competition but it also provides an environment where uncompetitive and inefficient entities survive and dominate. This is precisely what has evolved over the past 30 years.

So the EU has a bust for a currency, no value added trade deals and a regulatory environment that is killing the economy. I know how I would vote if I was a member of an organization like this. The latest polls show a virtual tie. I am wary of polls because their methodology is rooted in a 1970’s world. Pollsters used to be able to phone your house phone and get the responses to their questions with a degree of certainty because the sample size was very large. Things have changed. House phones are disappearing. People are skeptical of polls and pollsters. A lot don’t answer or simply lie. There have been a lot of “unanticipated” results when compared to the predictions.

So my take, I think the vote is close but I think the Leave side will prevail. Not because of the things I have already mentioned but because of the immigration policies that are creating no go zones and fear among the population. AS James Carville said in 1992 “It’s the economy stupid.” But now I think that should be revise to reflect the economic results and political consequences of an ill-conceived immigration policy. “It’s the economy and your new neighbor, Stupid.”