The Brexit vote underscores how economically knit together our world is today. Several smaller manufacturing firms in Wisconsin, for example, were directly impacted by the vote as the result of their ties to English companies. Imports and exports will be affected either for the worse or for the better depending upon the direction of trade in each instance. We have a tendency to think that somehow we are insulated from actions taken thousands of miles away from our shores, but we are globally-connected, like it or not.
Ripples from this decision will flow through the world’s markets for some time to come if comments from affected U.S. businesses and economists are to be believed.
There is a very real ‘global’ economy. We have witnessed companies moving headquarters from the U.S., from Wisconsin in fact, to elsewhere in the world due to the economic impact which certainly also includes more favorable tax situations. Those moves, while justified from a stockholder perspective, have impacts on our own employment numbers. We lose or gain jobs based upon the economically-driven actions of employers trying to satisfy their stockholders.
Many are prone to decrying these kinds of actions by employers, but those very actions are necessary if the management is to deliver the best outcomes for its investors. Tax climates, here vs. elsewhere, are often at the heart of decisions taken on the movement of headquarters, facilities, etc. Too often, some in our political ruling class are ignorant, intentionally or unintentionally, of the actual impacts that will occur from their votes in Congress. Just as those votes impact the rest of the world to one degree or another, votes such as that taken on the Brexit question impact us.
The further impact of the Brexit vote will only be seen several years from now. There is almost certainly going to be a political impact in Britain with the Prime Minister, Cameron, already saying he was done in October since he led the charge for Britain staying in the European Union (EU); that political impact will affect us in ways we cannot begin to imagine since we don’t know the ultimate shift in political direction this might indicate for Britain, and for other EU countries.
Our other international relationships are also subject to things such as this election. Russia will make whatever hay it can while the Brexit sun shines. China will certainly exploit any areas it sees available and given our debt load which China holds a significant share of, that Brexit impact could be substantial, as well.
Some days we are the driver and other days we are the passenger. In many ways, we are along for the ride as passengers in this situation as much as we’d like to think we’re in control.