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Earlier this week, the Financial Stability Oversight Council (FSOC) removed GE Capital from its list of systemically important financial institutions (or SIFIs).  How big a deal is this?  Big.  And not so big.  And a little bit scary.  Let’s back up a bit to see why.

FSOC is a new entity created by Dodd-Frank.  Its members are the heads of the federal financial agencies, with the Secretary of the Treasury serving as Chair.  In comparison to other similar bodies, which only advise the president, FSOC has broad authority to act.  Chief among its tools is the ability to designate an entity as a SIFI, and to impose stringent oversight and regulatory requirements on it thereafter. 

The SIFI designation and attendant oversight have been promoted as a means to end Too Big to Fail.  Many people, myself among them, have questioned how labeling entities as systemically important and putting them under greater oversight can possibly end Too Big to Fail.  Isn’t a SIFI designation essentially the same as slapping a big “TBTF” label on the thing?  Well, here’s where GE Capital’s story gets scary.

Aside from concerns about having a SIFI designation at all, the greatest critique of the designation has been the process itself.  Dubbed the “modern day Star Chamber” by SEC Commissioner Michael Piwowar, its deliberations and the criteria it uses to decide if an entity is a SIFI have been notoriously opaque.  FSOC has defended its processes by asserting that “much of the discussion in a designation process involves reviewing internal information.” FSOC has issued some guidance on how it makes its decisions, but it has had difficulty even sticking to those very minimal guidelines.  The insurance company MetLife was designated a SIFI in 2014 and filed suit to challenge the designation.  It won at the trial court level, garnering a scathing opinion from District Court judge Rosemary Collyer who found that FSOC “focused exclusively on the presumed benefits of [MetLife’s] designation and ignored the attendant costs.”  Until GE Capital’s de-designation this week, MetLife was the only company to have escaped SIFI status.

This is unsurprising.  Because entities don’t know why they have been designated SIFIs, it’s been very hard for them to get de-designated.  There is no roadmap for a company to follow.  As others have pointed out, this makes no sense if we want to end Too Big to Fail.  The TBTF concept assumes that there are companies that are so big that their demise could bring down the whole economy because they are, in short, systemically important.  If you want to end TBTF, don’t you want to help companies understand how to become less systemically important?  To help them get de-designated as SIFIs?

Apparently, this is not what FSOC wants.  And so companies like GE Capital who want to shed the SIFI label have had to cast about and find by trial and error what will satisfy FSOC.  This is what is scary.  Instead of providing companies with a clear plan for how to eliminate just those things that make them SIFIs, retaining everything else, including any efficiencies gained by being a large company, it encourages them to shed everything.  GE Capital shed about $260 billion of assets since 2014, including $160 billion in commercial loans and a $26.5 billion portfolio of commercial real estate investments, as part of a massive downsizing project it has named “Project Hubble.”  And now it has been de-designated as a SIFI.

Does this mean that other companies can simply follow GE Capital’s lead? is this now a roadmap?  No.  First, GE Capital is unlike many other companies in that it has GE itself standing behind it.  Most other companies with SIFI status do not have such a wealthy and powerful parent to act as backstop.  Second, and most important, GE Capital had strong business-based incentives to shed these assets.  According to Wharton Professor of Management Emeritus, Lawrence Hrebiniak, GE CEO Jeff Immelt is “betting on the future of industrials with greater margins and greater returns. This will increase the valuation of the company.”  GE Capital was fortunate in that what was good for business was also good for SIFI de-designation.  For other companies, such downsizing would not be advantageous.

It’s important that at least one company has achieved de-designation.  This shows that designation is not a life sentence and that, under certain circumstances, FSOC is willing to remove a company from the list.  That’s all to the good.  But because GE Capital downsized so substantially, it is impossible to tell which of its actions convinced FSOC to de-designate it.  There is no roadmap.  The only thing we know is that, when it comes to SIFI designation, smaller is better.  But there is no reason to think that this is universally true for our economy as a whole.  There are in many cases great efficiencies to be gained from consolidation and increased size.  Unfortunately, FSOC’s current tack simply encourages downsizing for the sake of downsizing without any consideration for what such downsizing may do to productivity and growth.

In this post, I will stray a bit from monetary issues but not too far.  The British people voted last Thursday (June 23rd ) to exit the European Union.  How should that decision be viewed by classical liberals?  Do Americans have a stake in the outcome?

The political classes on both sides of the Atlantic are appalled at the voters’ decision.  The peasants have risen up in revolt and their decision cannot be allowed to stand.  There are already calls for a political mulligan in the form of a second referendum.  Others have called for the British Parliament to nullify the vote.  Both suggestions reveal the low regard for democratic decision making among Britain’s and Europe’s political elites.  No one can predict the outcome at this point.

Let us pause for a moment and consider what the vote’s outcome says about the prescience of the ruling class in Britain, on the Continent and, yes, over here.  (President Obama interjected himself into the vote and appeared dumbstruck last Friday when British voters rejected his advice.)  Political leaders pretend to be wiser and better able to look into the future and discern what is best for the people.  But almost to a person, they were unprepared for the referendum’s outcome.  That speaks both to their distance from the people they claim to represent and their ability to forecast events even 24 hours in advance.  So much for the wisdom of the elites.

(I am perplexed by just how surprised political and business leaders were.  I was in Europe the weekend before and was briefed by a veteran British MP, who was firmly in the Remain camp.  He called the election too close to call.  He said that victory by the Leave side was entirely possible.)

What was at stake in the election?  The leaders of the European Union portray it as promoting free trade and economic liberalism.  It is far from that.  The bureaucracy in Brussels has created an overbearing regulatory super-state, against which the British voters rose up.  To classical liberals, since the demise of the Soviet Union, the European Union is the last bastion of central planning.

As is always true, there were multiple motivations to those wanting to breakaway.  One group certainly felt that Britain could be more economically free out than in.

Immigration was an important issue there, as it has become here.  Voters opposed an immigration policy imposed from afar.  Additionally, Britain as an island had heretofore been largely immune from the mass migration from the Middle East, North Africa and elsewhere.  It appeared that would no longer be true.  Again, there is an echo in the United States in the debate over accepting Syrian refugees.  Being emotion-laden, immigration can be the leading edge of popular discontent.

One thing not at stake in the election was the hoary issue of the currency.  That issue had already been decided soon after the euro’s introduction as a currency on January 1, 1999.  There was a move for Britain to adopt the euro, but it was strongly rebuffed.  I am not usually an advocate of floating currencies.  Faced with a monetary straightjacket of the euro, however, Britain wisely chose the flexibility of keeping the pound sterling.  I helped make that case in Britain, and history has shown it to be a good decision.  The pound was a monetary safety valve for Britain.  But the political differences remained and eventually boiled over in this vote.

The core monetary issue is that no monetary policy could be the correct one for countries as economically diverse as those comprising the European Union (now numbering 28).  The area did not meet the criteria of being an optimal currency area.  Given those facts, Britain was better off conducting its own monetary policy.[1]  There are now a total of nine countries within the EU that do not use the euro.[2]

Prime Minister Cameron was the architect of the referendum and, hence, his own demise.  He advocated remaining in the EU but wanted to end the debate over the issue within the Conservative Party.  He did not even consult his own Cabinet over the decision.  For Cameron, it was a massive political blunder.  He compounded that blunder by announcing his resignation, effective in October, at a news conference the day after the referendum.  That rendered him the lamest of political ducks.

But the method by which the referendum got on the ballot put supporters of an EU exit at a profound disadvantage.  They had no strategic economic plan in the event the referendum passed. That is why there is such extreme political and economic uncertainty.  No one has exited the EU before.  Neither the yet-undecided new British Prime Minister nor the EU leaders know what comes next.  That is a situation of extreme economic uncertainty, which markets hate.  We see this in the volatility in financial markets.  Blame not British voters, however, but Cameron’s political stunt.

Fifteen years ago, two colleagues and I first proposed a global free trade association.[3]  It would be a coalition of the willing, the most free-trading countries in the world.  Some, but not all members of the EU would have qualified.  That created the very problem now facing Britain: how can it trade more freely with the rest of the world and also trade preferentially with EU countries.  The answer we eventually hit on was that Britain (and other qualifying EU members) could move from membership in the EU to membership in the broader European Economic Area (as Iceland, Liechtenstein and Norway are today).

The key point was that Britain would have had a plan and first have negotiated with the EU.  Only then would it (and possibly other countries) have exited as members of the EU.  Had it been done in that fashion, we would not be facing the global turmoil we are right now.  It would have been Brexit with a plan.

We are where we are, however, and Britain’s new leadership must make the best of it.  Assuming they honor the vote, they need to try to negotiate the best possible deal with the EU.  It would be in Europe’s economic interests to negotiate the closest possible economic relationship.  Financial markets have signaled that Continental European countries have more potentially to lose than does Britain.  Some EU leaders have suggested, in effect, that Britain be punished for leaving.  German Chancellor Merkel has called for calm and a sensible negotiating position.  One hopes her good counsel prevails.

If the EU hotheads prevail, they will be cutting off their noses to spite their faces.  As with all trade barriers, Britain’s “punishment” will inure to the harm of their own citizens as much as Britain’s.[4]  I personally believe that Britain will prosper with or without a special relationship with the EU.

The divisions within the United Kingdom of England, Wales, Scotland and Northern Ireland were not created by the Brexit vote, but have been exacerbated by it.  Scotland voted heavily to Remain, and Northern Ireland somewhat less heavily so.  There is a move afoot for Scotland to hold a second referendum on its independence so it can join the EU on its own.  I offer no opinion on whether Scotland will or should enter into disunion with the rest of the United Kingdom.  If the union no longer benefits the British peoples, I wish them peace and prosperity as they chart their own courses.  It would be difficult for an American of Irish heritage to say otherwise.

I conclude by answering my three questions.  First, classical liberals should always applaud when a people chooses its own political future.  This is especially so when they do so peacefully.  Second, the United States has a special relationship with Britain, and it is in our interest to maintain that whether Britain is inside or outside the EU.  Doing that may be complicated, and I only wish that the Obama administration had drawn up contingency plans for a Brexit vote.  Finally, Britain’s choice to retain the pound is a test case for advocates of floating currencies.  There are some problems they can address, but they are not a panacea.

_____________

[1] The Bank of England always had the option to track the monetary policy of the European Central Bank.  Some countries outside the euro effectively peg to it, which means they are importing ECB monetary policy.

[2] Besides the United Kingdom, they are Bulgaria, Croatia, the Czech Republic, Denmark, Hungary, Poland, Romania and Sweden.

[3] See Chapter 3, “The Free Trade Association: A Trade Agenda for the New Global Economy” by John C. Hulsman, Gerald P. O’Driscoll, Jr., and Denise H. Froning in 2001 Index of Economic Freedom, Gerald P. O’Driscoll, Jr., Kim R. Holmes and Melanie Kirkpatrick, eds.,(Washington, D.C. The Heritage Foundation and The Wall Street Journal, 2001): 43-62.

[4] One argument to punish Britain is to make it an example to others who might exit the EU. It is a curious position to take by those claiming the EU is a good deal for its members.

[Cross-posted from Alt-M.org]

Despite a constant barrage of stories portraying rising atmospheric carbon dioxide (CO2) as a danger and threat to the planet, more and more scientific evidence is accruing showing that the opposite is true. The latest is in a paper recently published in the journal Scientific Reports, where Lu et al. (2016) investigated the role of atmospheric CO2 in causing the satellite-observed vegetative greening of the planet that has been observed since their launch in 1978.

It has long been known that rising CO2 boosts plant productivity and growth, and it is equally well-established that increased levels of atmospheric CO2 reduce plant water needs/requirements, thereby improving their water use efficiency. In consequence of these two benefits, Lu et al. hypothesized that rising atmospheric CO2 is playing a significant role in the observed greening, especially in moisture-limited areas where soil water content is a limiting factor in vegetative growth and function. To test their hypothesis, the three scientists conducted a meta-analysis that included 1705 field measurements from 21 distinct sites from which they evaluated the effects of atmospheric CO2 enrichment on soil water content in both dryland and non-dryland systems.

According to the authors, the meta-analysis revealed that “increasing atmospheric CO2 to between 1.2 to 2.0 times the ambient CO2 level has a positive effect on soil water content” (Panel A, figure below). What is more, the CO2-induced increase in soil water content was found to be greater in drylands (17%) than non-drylands (9%) (Panel B, figure below). Lu et al. also note their analysis showed “no evidence for any significant effects” of soil texture, vegetation type, land management practices or climate regime on soil water content under elevated CO2 conditions. Given as much, they conclude that considering the inherent water limitation in drylands, the additional soil water availability brought about by rising atmospheric CO2 concentrations over the past half-century is “a likely driver of observed increases in vegetation greenness” during this period.

Figure 1. (Panel A) Sensitivity of the soil water response ratio to CO2 enrichment for the entire data set, calculated as the soil water content under elevated CO2 divided by the soil water content under ambient CO2. The closed circles are the observations, with the solid black line providing a linear regression. The red lines represent the 95% confidence intervals of the observations and the dashed grey lines represent the 95% confidence interval of the model. (Panel B) Enhancement of soil water content under elevated CO2 for dryland versus non-dryland regimes. Adapted from Lu et al. (2016).

Here is yet another study indicating rising atmospheric CO2 is benefiting the biosphere, rather than harming it.

 

Reference

Lu, X., Wang, L. and McCabe, M.F. 2016. Elevated CO2 as a driver of global dryland greening. Scientific Reports 6: 20716, doi:10.1038/srep20716.

A recent Washington Post analysis has argued that political events as diverse as the Brexit and the rise of Donald Trump can be explained by a “revolt” of the world’s economic “losers.”

Before proceeding, it is important to keep in mind that all income groups in the world have seen gains in real income over the last few decades. That said, some have gained more than others. Between 1988 and 2008, for example, the lowest gains were made by people whose incomes fit beteen the world’s 75th to 90th income percentiles. That includes much of the middle and working class in rich countries.

The Washington Post calls the people in this group the bitter “losers” of globalization. But, are they?

There are at least two problems with characterizing such people as “losers.” First, it seems to suggest that income growth rate matters more than absolute income level. Yet a person in the 80th income percentile globally would not want to trade places with or envy someone in the bottom 10th percentile, despite the latter’s much higher income growth rate.

Consider real GDP per person, adjusted for differences in purchasing power, in China and the United States. Between 1988 and 2008, China’s per person GDP grew by over 340 percent. America’s per person GDP, in contrast, grew by “only” 40 percent. China may be making gains more quickly, but it would be wrong to argue that the United States was a “loser,” for American GDP per person in 2008 was $52,704 and China’s $8,104.

Poor countries are seeing faster income gains partially because their starting point is so much lower—it’s a lot easier to double per person GDP from $1,000 to $2,000 than from $40,000 to $80,000.

The second problem is that the Washington Post piece suggests that the incredible escape from poverty that has occurred in poor countries during my lifetime has come at the expense of the middle classes in the developed world. (This is a fascinating reversal of the more popular, but equally inaccurate, opinion that the Western riches came at the expense of poor countries).

Thus, the Washington Post piece claims, “global capitalism didn’t always work so well for workers in the United States and Europe even as—or, in some cases, because [emphasis mine]—it pulled hundreds of millions of people out of poverty everywhere else.”

Fortunately, prosperity is not a zero sum game.

When trying to understand the “winners” and “losers” of globalization, it is important that we do not compare income growth rates over the last few decades with some imagined ideal. Instead, we should compare income growth to what would have happened in a world without globalized trade. In such a world, hundreds of millions of people would have remained in extreme poverty. And the middle class of the developed world would also have made fewer gains. Just look at the amazing reduction in price of consumer goods that we have collected at HumanProgress.

A few individuals in select industries would benefit from protectionism, like the U.S. sugar industry does now. But on average everyone would be poorer, just as in 2013 Americans collectively paid 1.4 billion dollars more for sugar than they would have without protectionism. (The U.S. manufacturing industry, it may be worth noting, would not be among the “select industries” to benefit—most manufacturing job losses have come from mechanization rather than outsourcing, and have been offset by new jobs in other sectors).

Thanks to trade and exchange, people in all income percentiles have made real gains, and living standards for the middle class in advanced economies have soared in ways not captured by looking at income alone. America’s middle class is getting richer, and the people in the world’s 75th to 90th income percentiles are also winners.

A group of State Department officials recently sent a confidential cable chiding the administration for not adding another war to America’s very full agenda. The 51 diplomats called for “targeted military strikes” against the Syrian government and greater support for “moderate” forces fighting the regime.

One of the architects of current policy, presumptive Democratic presidential nominee Hillary Clinton, also has turned against the administration’s more disengaged approach. She urged creation of a no fly zone, an act of war, as well as greater support for insurgents.

The conflict is horrid, of course, but no one has explained how U.S. entry into Syria’s multi-sided civil war would actually end the murder and mayhem. Nor has anyone shown how America making another Middle Eastern conflict its own would serve Americans’ interests.

Despite the repeated failure of social engineering at home, Washington officials believe that they can transcend culture, history, religion, ethnicity, geography, and more and forcibly transform other peoples and nations. Those who resist America’s tender mercies via bombs, drones, infantry, and special operation forces are assumed to deserve their fate.

This interventionist impulse is particularly inappropriate for a devilishly complex conflict like Syria. Unfortunately, Washington’s early insistence on Bashar al-Assad’s overthrow thwarted hope for a negotiated settlement.

The claim that the U.S. could have provided just the right amount of assistance to just the right groups to yield just the right outcome is a fantasy, belied by America’s failure get much of anything in the Middle East right. Even when Washington seemingly enjoyed full control in Iraq the U.S. did just about everything wrong, triggering the sectarian conflict which spawned the Islamic State.

Military action would be even more dangerous today given Russia’s involvement. Syria matters much more to Russia, which has a long relationship with Damascus, enjoys access to the Mediterranean from a Syrian base, and has only limited influence elsewhere in the region.

No fly proponents blithely assume that Moscow would yield to U.S. dictates, but America would not surrender if the situation was reversed. A no fly zone would not bring peace to Syria but would risk a military incident with a nuclear-armed power.

The State Department dissenters argued for limited strikes on Syria. What if such attacks failed? What if Damascus deployed Russian anti-aircraft systems? What if Moscow escalated against U.S.-supported insurgents? Would Washington concede or double down?

In fact, no one has a realistic scheme to put the Syrian Humpty-Dumpty back together again. Ousting Assad would effectively clear the way for the Islamic State and other radical factions.

So far supporting so-called moderate insurgents has done little more than end up indirectly supplying ISIL and al-Nusra, an al-Qaeda affiliate, with recruits and weapons. Turkey is at war with the same Kurdish fighters America supports.

While horror is the appropriate reaction to Syria’s civil war, the U.S. has no solution to offer. The U.S. should adopt a policy of first do no harm.

As I argue in National Interest: “Stay out of the conflict. Don’t add to the tragedy. Accept refugees fleeing for their lives. Provide humanitarian aid to those within reach. That would be an agenda of which Americans could be proud.”

Echoing concerns I expressed last week, Reason’s Peter Suderman notices a problem with House Republicans’ new plan to replace ObamaCare:

As it turns out, the health care policy that Republicans might pursue looks, well, a lot like Obamacare—except, possibly, worse.

Although the plan starts by repealing the health care law in its entirety, it ends up replacing many of its central components with similar provisions: preexisting coverage rules, subsidies for the purchase of insurance, and even an (implicit) mandate. Rather than offer ObamaCare-lite, Congress should repeal ObamaCare and then make health care better, more affordable, and more secure by moving toward a market system.   Sen. Jeff Flake (R-AZ) and Rep. Dave Brat (R-VA) have introduced legislation that contains the building blocks of such an approach.
This week we are introducing a new feature on the blog where we provide links to the day’s latest polls and public opinion studies available:   HuffPost/YouGov June 27, 2016 Republicans Are Totally In Favor Of Brexit
  • 59% of Republicans approve of #Brexit; only 17% of Democrats and 32% of Independents agree
  • 43% of Democrats agree free trade agreements are “good thing” for US; 28% of Republicans agree
  Morning Consult  June 27, 2016 Clinton Gains in Polls, but Voters Favor Trump to Grow Economy
  • 45% of registered voters said Trump would be better for the economy, 38% said Clinton would be better for economy.
  NBC/Wall Street Journal June 27th, 2016 Poll: Majority of Republicans Prefer Someone Else to Trump
  • 52% of Republicans say they’d prefer a nominee other than Trump, 45% are satisfied with Trump. Republicans felt similarly about John McCain in 2008 (52% preferred someone else, 44% satisfied)
 

Gallup June 27, 2106 Clinton, Trump Gaining Favorability Within Parties 

  • Trump favorability 20 percentage points lower than any prior recent GOP candidate among Republicans in early summer. Favorable= Trump (64%), Romney (82%), McCin (88%), W. Bush (94%), H.W. Bush (88%)
  • Clinton favorability (71%) nearly 20 percentage points lower than Obama (87%) and Kerry (87%) among Democrats.
  Gallup June 28, 2016 No Immediate Brexit Effect on U.S. Economic Confidence

 

Pew Research Center  June 27, 2016 Report: On Views of Race and Inequality, Blacks and Whites Are Worlds Apart 
  • 88% of African-Americans say the country needs to continue making changes for blacks to have equal rights with whites. 43% are skeptical changes will ever occur, 42% are optimistic that the country will eventually make changes needed.

 

Rasmussen  June 28, 2016 Voters Favor GOP Plan To Sell Health Insurance Across State Lines
  • 66% say employers and individuals buying health insurance be allowed to buy insurance plans across state lines.

 

Rasmussen

June 27, 2016 Health Care Law 
  • 60% say more free market competition between insurance companies would do more to reduce costs, compared to 27% who thought that this would be best done by more government regulation.
  The Texas Tribune June 27, 2016 TEXAS: UT Poll: Trump Leads Clinton by 8 in Texas        Talk Business & Politics-Hendrix College June 26, 2016 ARKANSAS: TB&P-Hendrix Poll: Trump holds lead over Clinton in Arkansas     Sign up here to receive Cato’s upcoming digest of Public Opinion Insights and public opinion studies.   Sam Henick contributed research to these polling links.

With the arrival of President Hugo Chávez in 1999, Venezuela embraced Chavismo, a form of Andean socialism. In 2013, Chávez met the Grim Reaper and Nicolás Maduro assumed Chávez’s mantle.

Chavismo has not been confined to Venezuela, however. A form of it has been adopted by Rafael Correa – a leftist economist who became president of a dollarized Ecuador in 2007.

Even though the broad outlines of their economic models are the same, the performance of Venezuela and Ecuador are in stark contrast with one another.

The most telling contrast between Venezuela’s Chavismo and Ecuador’s Chavismo Dollarized can be seen in the accompanying chart of real GDP in U.S. dollars. We begin in 1999, the year Chávez came to power in Venezuela.

The comparative exercise requires us to calculate the real GDP (absent inflation) and do so in U.S. dollar terms for both Venezuela and Ecuador. Since Ecuador is dollarized, there is no exchange-rate conversion to worry about. GDP is measured in terms of dollars. Ecuadorians are paid in dollars. Since 1999, Ecuador’s real GDP in dollar terms has almost doubled.

To obtain a comparable real GDP for Venezuela is somewhat more complicated. We begin with Venezuela’s real GDP, which is measured in terms of bolívars. This bolívar metric must be converted into U.S. dollars at the black market (read: free market) exchange rate. This calculation shows that, since the arrival of Chávez in 1999, Venezuela’s real GDP in dollar terms has vanished. The country has been destroyed by Chavismo.

 

Venezuela is clearly in a death spiral. The only way out is to officially dump the bolívar and replace it with the greenback.

The European Union’s leaders said they wanted the United Kingdom to remain in the EU. But Brussels offered only minimal concessions to British Prime Minister David Cameron, undercutting his effort to sell the benefits of continued EU membership.

Now the Eurocrats who dominate EU policy are attempting to push the UK out the door. London should slow down the process and maximize its leverage.

The vote to Leave shocked Eurocrats across Europe. Even many Brexit advocates believed that Remain would carry the day. The British government is not prepared to announce a Brexit program.

However, EU leaders almost immediately began pressing London to act. They want the UK to trigger Article 50, which begins a two-year process to renegotiate a departing member’s relationship with the EU.

Once taken the decision cannot be reversed. And if no agreement is reached within two years the country is unceremoniously defenestrated without any special access to the European market.

But the UK need not hurry. The British government should hold off until it is ready.

First, the situation is chaotic. The prime minister is resigning. The opposition leader might be forced to resign. Scotland might again vote for independence. No one is ready to discuss Brexit terms.

Second, with both leading parties in flux, waiting would allow a new government and opposition to emerge. How to implement the vote remains to be decided. A new government should be in office first.

Third, the Eurocrats have split between those determined to impose punitive terms in order to discourage other states from leaving and those who prefer to be generous and maximize continued cooperation. Better to let passions cool.

Fourth, when the Brexit trigger is pulled is a political, not legal issue. The referendum was advisory. No enabling legislation has been passed. Effective negotiations won’t be possible until a government, backed by a stable majority, is prepared to act.

Fifth, waiting would increase London’s bargaining power. The Eurocrats understand that accelerating the process would put greater pressure on London to make concessions, since a shorter deadline would threaten to leave the UK outside of the EU without any special access to the European market. However, Britain can play the same game by delaying.

Sixth, as passions cool the desire to exact revenge—to punish Britain to discourage other exiteers—likely will fade. While punitive measures might provide emotional satisfaction for some, failing to reach an agreement with the world’s fifth and Europe’s second largest economy would hurt everyone. Continued commercial links between the UK and continent are too important to sacrifice in a fit of pique.

Seventh, slowing the process would give Washington more time to play a positive role. As I wrote in the American Spectator: “It should start by indicating its willingness to begin negotiations with the UK over a free trade agreement as soon as the Brits are ready. The U.S. also should indicate that a smoother UK-EU divorce would improve the chances of a U.S.-EU trade pact.”

Eighth, holding off on the official trigger creates at least a possibility of rapprochement between the UK and EU. Brexit just might shock Europe’s leading powers toward serious reforms. Donald Tusk, one of the EU’s many presidents (of the European Council) admitted that “ordinary people, the citizens of Europe, do not share our Euro-enthusiasm.” The EU will have to work to regain public trust and support. If successful, the EU might even change attitudes in the UK.

The ultimate impact of Brexit remains to be seen. All parties should allow the passions political battle to cool. In fact, slowing down the process would benefit Europe as well as the UK. A hasty, angry negotiation would serve no one. The British vote could change the EU for the better. There’s no need to hurry the Brexit. 

It was an odd and sad year at the Supreme Court. Most years, reporters and pundits devise a “theme” that’s mostly an artificial construct driven by the vagaries of the docket: “The Court moved left/right/minimalist/unanimous …” But this year there actually is a real theme: the loss of Justice Antonin Scalia. Justice Scalia’s passing “deflated” what would otherwise have been yet another blockbuster term in many ways, defusing several high-profile cases as well as removing the most quotable pen on Earth from media coverage these last weeks of June.

In practical terms, however, Scalia’s absence was felt in ways different than most people assume. For example, of the major cases, only Friedrichs (worker rights) came out the other way, affirming the lower court by a 4-4 vote that would’ve been a 5-4 reversal with Scalia. United States v. Texas (immigration) would’ve been a 5-4 affirmance of the lower-court injunction instead of a 4-4 affirmance. Fisher II (affirmative action) would’ve been a 4-4 affirm instead of 4-3. Zubik (contraceptive mandate) would’ve been 5-4 reversal instead of a weird 8-0 decision to vacate that effectively forces a compromise that the challengers can accept. Whole Women’s Health (abortion) would’ve been a 5-4 reversal instead of a 5-3. To be sure, there would’ve been interesting nuances from the opinions in Scalia’s presence – which may have set precedents for, say, future executive actions – but the direct results wouldn’t have really changed except in Friedrichs (which was a big deal, don’t get me wrong) and a handful of lower-profile cases.

Also, this was a term of very few surprises; the conventional wisdom was borne out in every case that I followed except Fisher II. I still can’t figure out what Justice Kennedy was doing there, reversing himself from Fisher I regarding deference to administrators and voting to uphold a use of racial preferences for the first time ever. Maybe he was just tired of the case. Indeed, both Fisher and Whole Women’s Health, while making national news due to their fraught subject matter, are minimalistic and sui generis, dealing with very specific government policies.

But regardless of the good, bad, and ugly, when the dust cleared, there was one aspect of continuity that’s particularly gratifying to me: Cato continued its successful streak in cases in which we filed amicus briefs. While not as dominating as two terms ago, we still managed to pull off a 4-4 (or 3-3-2, as I’ll explain shortly) record.

Here’s the breakdown, in the order the opinions arrived:

Winning side (4): Luis v. United StatesU.S. Army Corps of Engineers v. HawkesZubik v. BurwellUnited States v. Texas (4-4 affirming our position).

Losing side (4): Evenwel v. Abbott; Fisher v. UT-AustinTyson Foods v. BouaphakeoFriedrichs v. California Teachers Association (4-4 affirming position we opposed).

But regardless, we still pipped our main competition, the U.S. government, which went 13-14 on the term, including a record 10 unanimous losses. This administration is easily the worst performer of any to have come before the Court in modern times (and probably ever, though it’s more relevant to compare Obama to Bush, Reagan, and Kennedy than, say, Benjamin Harrison). There are three basic reasons for this: expansive executive action, envelope-pushing legal theories, and Justice Kennedy acting like a libertarian on close cases.

I’ll have more to say on this in future commentary, but if you’d like to learn more about all these cases/trends and the views of Cato-friendly scholars and lawyers, register for our 15th Annual Constitution Day Symposium, which will be held September 15 to review the term and look ahead to next year. That’s also when we’ll be releasing the latest volume of the Cato Supreme Court Review, the editing of which will consume much of my summer.

Here are links to the latest polls and public opinion studies:   CBS/YOUGOV June 26, 2016 WISCONSIN, NORTH CAROLINA, FLORIDA, COLORADO — Poll: Donald Trump, Hillary Clinton in tight races in battleground states
  • CBS polls of likely voters show Clinton narrowly leading Trump across a number of key states of Florida (44 to 41 percent); Colorado (40 to 39 percent); Wisconsin (41 to 36 percent) and North Carolina (44 to 42 percent). North Carolina has flipped back and forth between the parties in the last two elections.

ABC/Washington Post
June 26, 2016
In new poll, support for Trump has plunged, giving Clinton a double-digit lead

  • Two-thirds of Americans see Trump as biased against groups such as women, minorities, or Muslims. Sixty-four percent of respondents say Trump is unqualified to serve as president, a new high, and 34 percent say he is qualified. 

Wall Street Journal/NBC
June 26, 2016
Hillary Clinton Holds 5-Point Lead Over Donald Trump, Latest Poll Finds

  • Half of registered voters (50 percent) said they were concerned the government would go “too far” in curtailing the people’s right to own guns while 47 percent said they worry the government would not do enough to regulate the ability to get guns. Forty-two percent of those polled had a positive image of the NRA, while 36 percent viewed the group negatively. 

American Enterprise Institute:
June 23, 2016
Report: Public opinion on affirmative action
Karlyn Bowman and Eleanor O’Neil

  • Americans generally support “affirmative action” in employment and education, but oppose “preferential treatment.”
Gallup
June 27, 2016
Trump Not Yet Generating Evangelical Republican Zeal
  • Highly religious white Protestant Republicans are no more likely to view Trump favorably than are white Protestant Republicans who are moderately or not religious. In contrast, while he was still in the race, former candidate Ted Cruz’s appeal was significantly higher among highly religious members of this group than among those who were less religious.

Gallup
June 24, 2016
In U.S., Slim Majority Confident About Financial Future

  • Fifty-three percent of respondents were “very” or “somewhat” confident about financial future compared to 46 percent who report feeling at least somewhat insecure about their financial future, including 17 percent who feel “very” insecure. Lower-income Americans report being the most financially insecure: 37 percent of those making below $30,000 a year reported feeling “very insecure.”
Public Policy Polling (PPP) June 24, 2016  NC Governor’s Race Remains Tied; HB2 Still Unpopular
  • Only 28 percent of voters think HB2 (also known as the Charlotte Bathroom Bill) is helping North Carolina, whereas 52 percent think it’s hurting the state. Voters feel the law it’s having an adverse effect both on the state’s economy (49 percent say it’s having a negative impact, only 10 percent say it’s having a positive one) and on the state’s national reputation (50 percent say it’s having a negative impact, only 19 percent a positive one.)

Rasmussen
June 27, 2016
Most Voters Don’t See Love As Answer to Terrorism

  • Fifty-three percent of Americans disagree with Loretta Lynch that love is the best response to terror incidents like the one in Orlando.

Portland Press Herald
June 25, 2016
MAINE: Charts: Portland Press Herald/Maine Sunday Telegram poll results

  • Governor Paul LePage suffers from low favorability. Just 36 percent or respondents view him favorably whereas 59 percent hold unfavorable opinions.

PRRI/Brookings
June 23, 2016
Report: How Immigration and Concerns about Cultural Change are Shaping the 2016 Election | PRRI/Brookings Survey
Betsy Cooper, Ph.D., Daniel Cox, Ph.D., E.J. Dionne Jr., Rachel Lienesch, Robert P. Jones, Ph.D., William A. Galston

  • The general public is evenly divided over whether American culture and way of life have mostly changed for the better (49 percent) or changed for the worse (50 percent) since the 1950s. White working-class Americans (62 percent) and white evangelical Protestants (70 percent) are among the most likely to believe that American culture and the American way of life has changed for the worse since the 1950s. Approximately eight in ten Republicans (79 percent) and Trump supporters (83 percent) believe the values of Islam are at odds with the American way of life. This view is shared by a majority (54 percent) of independents and less than half (42 percent) of Democrats. A majority (55 percent) of Democrats say Islam does not conflict with American values.
Pew Research June 22, 2016 Partisanship and Political Animosity in 2016
  • For the first time in surveys dating back to 1992, majorities in both parties express not just unfavorable but “very unfavorable” views of the other party. And today, sizable shares of both Democrats and Republicans say the other party stirs feelings of not just frustration, but fear and anger. More than half of Democrats (55 percent) say the Republican Party makes them “afraid,” while 49 percent of Republicans say the same about the Democratic Party. Among those highly engaged in politics – those who say they vote regularly and either volunteer for or donate to campaigns – fully 70 percent of Democrats and 62 percent of Republicans say they are afraid of the other party.
 Sam Henick contributed research to these polling links.

 

 

 

 

Today, The Supreme Court issued a unanimous ruling on the closely watched corruption case concerning former Virginia governor, Robert McDonnell. McDonnell and his wife were charged with a Hobbs Act violation and honest services fraud. The McDonnells had accepted $175,000 in loans and gifts from the CEO of Star Scientific, a nutritional supplement developer. Merely accepting gifts is not a crime, however. Under the honest services statutes and the Hobbs Act, a government official must have exchanged “official acts” for those gifts. The crux of the case boiled down to what, exactly, constitutes an “official act”.

The prosecution argued that McDonnell made five official acts, all in furtherance of getting Star Scientific’s new supplement, Anatabloc, tested by Virginia’s public universities, which would greatly assist the FDA-approval process. The acts included sending aides to view and take notes at meetings between the CEO and others, hosting events where he encouraged state universities to conduct studies on Anatabloc, contacted other officials within the governor’s office to encourage the same studies, allowing the CEO to invite business partners to events at the governor’s mansion, and suggesting that Anatabloc be a part of the state healthcare plan.

Another “official act” was an email saying “pls see me about Anatabloc issues at VCU and UVA.”

Jonnie Williams, the CEO, failed in his attempts to get state universities to conduct his studies, but according to the prosecution, it was the intention to influence the process which triggers the corruption charges.

The situation does look suspicious on its face, but a problem stems from the fact that if the government construes the term “official acts” this broadly, it could criminalize many actions which officials take in order to make government function more smoothly for any and all of its constituents. If the prosecution succeeded in its argument (and it had succeeded in two lower courts before making its way to SCOTUS), it could punish any official who sends or forwards an email to a slow-moving bureaucracy urging them to remedy the problems of an aggrieved citizen. It could punish any official who invites business leaders to an event. It could punish any official who attends an event which is promoted by business leaders. And it could punish an official who asks any of his subordinates to take notes at any of these meetings. During oral arguments, Justice Breyer said, “For better or for worse, it puts at risk behavior that is common.”

Seventy-seven former attorneys general from a variety of states agreed with these fears and reiterated them in an amicus curiae brief. “McDonnell’s acts were ‘assuredly ‘official acts’ in some sense,’ but they ‘[were] not ‘official acts’ within the meaning of’ the federal bribery statutes. United States v. Sun-Diamond Growers of Cal.” Lastly, from page 5 of the same, “And when they ask their legal advisers, ‘Does this violate the law?’ too often the reply will be, ‘We really don’t know.’”

Here’s an excerpt from the ruling:

[C]onscientious public officials arrange meetings for constituents, contact other officials on their behalf, and include them in events all the time. The basic compact underlying representative government assumes that public officials will hear from their constituents and act appropriately on their concerns—whether it is the union official worried about a plant closing or the homeowners who wonder why it took five days to restore power to their neighborhood after a storm. The Government’s position could cast a pall of potential prosecution over these relationships if the union had given a campaign contribution in the past or the homeowners invited the official to join them on their annual outing to the ballgame. Officials might wonder whether they could respond to even the most commonplace requests for assistance, and citizens with legitimate concerns might shrink from participating in democratic discourse.

This concern is substantial. White House counsel who worked in every administration from that of President Reagan to President Obama warn that the Government’s “breathtaking expansion of public-corruption law would likely chill federal officials’ interactions with the people they serve and thus damage their ability effectively to perform their duties.” Six former Virginia attorneys general—four Democrats and two Republicans—also filed an amicus brief in this Court echoing those concerns, as did 77 former state attorneys general from States other than Virginia—41 Democrats, 35 Republicans, and 1 independent. [internal citations removed]

Chief Justice Roberts made it clear that the underlying facts were distasteful (the McDonnells exercised extremely poor judgment), but the Court had to consider the implications of the government’s “boundless interpretation” of the federal corruption statutes.  By its unanimous vote, the Court has sent a powerful signal to both the U.S. Attorney General and the lower federal courts: Stop stretching the laws to cover grubby politicking; only crack down on old-fashioned bribery.  Lastly, the Court noted that due process requires that people have fair notice of what conduct is criminal and what conduct is lawful.  When the government urges broad interpretations of the criminal statutes, due process is threatened.  To avoid that danger, courts should generally embrace a more confining view of the statute and thus federal prosecutorial power.

It may appear abstract, but look at what happened today.  Prosecutors asked that Robert McDonnell be imprisoned ten years for his conduct.  Today, he remains a free man because it is not obvious that his conduct was unlawful.  There might still be a retrial, but the prosecution’s theory was unanimously rejected by the Supreme Court.

Related item here.  

 

Smithsonian leaders have revealed that renovating the Air and Space museum in Washington, D.C. will cost almost $1 billion. That’s the equivalent of an army of 10,000 workers earning $100,000 each for a year to fix it up. Geez, government projects are expensive!

My letter in the Washington Post today proposes that rather than hitting taxpayers, museum visitors should pay for the renovation:

Regarding the June 23 Style article “Estimate for Air and Space facelift closes in on $1 billion”:

About $250 million of the ballooning makeover costs for the National Air and Space Museum will come from private donations, leaving a $750 million bill for taxpayers.

But rather than burdening taxpayers, how about charging visitors? The Post noted that the museum gets 7 million visitors a year, so a modest $5 fee would raise $35 million a year and pay back the makeover costs over 21 years.

Aside from the greater fairness of charging users rather than taxpayers, fees would limit demand and thus improve the visitor experience at the overcrowded institution. User fees for Air and Space — and other Smithsonian museums — would also help level the playing field with private D.C. museums, such as the International Spy Museum.

There is one more advantage of user pays. The Post notes that the estimated cost of the renovation has already skyrocketed from earlier figures of $250 million and $600 million (a common pattern). If the museum were required to fully cover renovation costs through voluntary donations and user fees, Smithsonian executives would have a strong incentive to find design savings and control construction costs.  

Where did Hillary Clinton’s campaign get the “I’m with her” slogan that Donald Trump criticized last week? I saw this in the Washington Post:

Ida Woldemichael, a designer who came up with “I’m with Her” for the Clinton campaign,…is a graphic designer who worked for the Clinton Foundation before joining the campaign about a year ago.

Not that the Clinton Foundation is any kind of tax-exempt, dictator-supported, $2 billion advance team for the Clinton campaign.

Back in January, I blogged about TransCanada taking legal action under NAFTA-related to the rejection of its Keystone XL pipeline permit application. It is now being reported that TransCanada has taken the next step in the process. This is from Canada’s Financial Post:

TransCanada Corp. made good late Friday on its threat to challenge President Barack Obama’s rejection of the Keystone XL pipeline, filing a request for arbitration under the North American Free Trade Agreement (NAFTA) to recoup US$15 billion in damages from the U.S. government.

In the 42-page document, TransCanada claims the U.S. government “ultimately denied Keystone’s application, not because of any concerns over the merits of the pipeline, but because President Obama wanted to prove his administration’s environmental credentials to a vocal activist constituency that asserted that the pipeline would lead to increased production and consumption of crude oil and, therefore, significantly increased greenhouse gas (“GHG”) emissions.”

TransCanada further claims that the U.S. administration knew “those assertions were false” and that in fact, “the State Department had issued five environmental impact statements between 2008 and 2015, all of which concluded that the Keystone XL Pipeline would not result in a significant increase in GHG emissions.  The State Department reiterated that conclusion for a sixth time when it denied Keystone’s second application in November 2015.”

As I noted in January, these cases take a long time:

Keep in mind, also, that these investment cases are not quick. We’ll have a new president long before the NAFTA case is completed. If the new president is a Republican, he/she will likely approve Keystone (if TransCanada files a new application). That should end the NAFTA lawsuit (although TransCanada could still claim damages from the delay). If it’s President Clinton/Sanders, though, who both oppose Keystone, we could see a ruling in the case.

Let me amend one aspect of this, however, to take into account Donald Trump. Trump says he would approve Keystone, but only under some absurd conditions:

Donald Trump’s vow to resuscitate the Keystone XL oil pipeline in exchange for a share of its profits has a glaring problem: It risks running afoul of laws against government takings of private property. And even supporters of the project warn that it risks hurting relations with Canada, the nation’s No. 1 oil supplier.

The presumptive Republican nominee has repeatedly pledged to revive the Canada-to-Texas pipeline, a long-standing cause for Republicans in Congress, but Trump has brought a twist. He wants U.S. taxpayers to get a slice of the project’s revenue.

“I want it built, but I want a piece of the profits,” Trump said May 26 before delivering an energy speech to an oil-industry audience in North Dakota. “That’s how we’re going to make our country rich again.”

Trump’s suggestion of taking “a piece of the profits” would likely mean that TransCanada’s claim will go ahead, but with a slightly different factual and legal basis.

The United Kingdom will exit the European Union. The shock waves first hit Scotland. The secession-minded government plans to hold another independence vote. Next time a majority of Scots may see no reason to stay.

Both the Conservative and Labour Parties face bitter, internecine strife. Calls already have been made for the resignation of opposition leader Jeremy Corbyn. Prime Minister David Cameron announced his intention to resign and the rest of his government is likely to be swept away as well.

The UK and EU must plan a process never before undertaken. Most important will be early negotiations over London’s future economic and political association with the rest of Europe.

However, some Eurocrats, who dominate Brussels, have threatened to retaliate against the British vote by making the UK’s departure as difficult as possible. For no obvious reason President Barack Obama took a similar position, telling the British people that they would end up at “the back of the queue” for free trade negotiations with Washington. Yet turning post-Brexit negotiations into a punitive expedition would harm everyone involved.

The impact of the vote will radiate across the continent. Some Eurocrats imagine that dissatisfaction with the EU is a uniquely English phenomenon. It actually is much more.

Observed Raoul Ruparel and Stephen Booth of London-based Open Europe: “a number of other states attempted to piggy-back on the UK’s reforms, but this was resisted by others for fear of ‘reform contagion’.” Reform may be harder to resist in the future, however.

Cato’s Marian Tupy pointed out that “the EU is undemocratic not by accident but by design.” Thus, the British are not the only Europeans desiring to escape from the EU’s smothering embrace.

A majority of French and Italians and plurality of Danes and Swedes told pollsters that they want a similar vote. And strong pluralities in most states polled favor returning more powers to national governments.

Moreover, populist and nationalist parties are likely to make EU membership an issue in upcoming elections. France, Germany, and Italy will hold elections within the next two years. Recently the hard nationalist right barely missed winning the presidency in Austria. Economic hardship also has elevated Euroskeptics of varying degrees on the left.

Although there will be no mass exodus from the EU, the departure of even a couple more nations would further diminish the reality of the “European Union.” Moreover, other governments are likely to push to regain authority or at least resist any further accretions of power to Brussels. The continent is fracturing, not uniting.

Some European leaders remain oblivious. There was strong resistance in Brussels to Cameron’s reform proposals as well as other nations’ attempts to win similar concessions. Yet ever fewer Europeans appear to desire the existing union.

In contrast, Donald Tusk, who heads the European Council, admitted that “ordinary people, the citizens of Europe, do not share our Euro-enthusiasm.” France’s ambassador to America, Gerard Araud, argued: “Reform or die!”

What the EU desperately needs is a true “reform contagion.” Painful as it would be to Brussels in light of Brexit, the EU should move “in a ‘British’ direction,” argued Vernon Bogdanor of King’s College London. At least the organization could allow multiple levels of integration, with different requirements for different states.

Most important, I argue on Forbes online: “instead of attempting to circumvent the public, Eurocrats should make their case for change and abide by the voters’ decisions.” For today “the specter of a breakup is haunting Europe,” warned Tusk.

Once again the British have lived up to their reputation. Average folks rejected expert opinion and economic special pleading in order to better govern themselves. Just as America’s forefathers did against the British Empire so many years ago.

The final panel of last week’s foreign policy conference continued the discussion of the political obstacles to restraint and provided further details on what such a strategy would look like today. Cato’s Emma Ashford kicked off the discussion by explaining how U.S. involvement has undermined U.S. interests in the Middle East, recommending instead that the United States adopt an offshore balancing approach to the region.

John Mueller, also of Cato, used his time to downplay the many commonly cited threats to U.S. security, including rising powers, proliferation, and terrorism. He also cast doubt on whether our large, powerful military is well-suited to deal with these minor threats, most of which are exacerbated by the use of force.

Ben Friedman discussed why primacy enjoys so much support in Washington, despite its flaws. U.S. safety and wealth, he argued, insulate most Americans from the consequences of foreign policy, making them indifferent to it, and enabling special interests that benefit from primacy dominate policy-making. He discussed policy reforms that would heighten appreciation of primacy’s costs in order to increase support for restraint.

The conference’s final speaker, Jacqueline Hazelton of the Naval War College, challenged those who seek a more restrained U.S. foreign policy to develop a plan to bring make it a reality. Picking up on that point, panel moderator Trevor Thrall brought the conference to a close by noting: “Our work is not done.”

The conference’s hosts, Cato’s Ben Friedman and Trevor Thrall are editing a book featuring chapters by the experts who presented at “The Case for Restraint” conference. For more information on the book, please email tevans [at] cato.org.

You can watch full discussion from final panel below.

 

House Republicans have released a proposal for major tax reform. Kudos to Ways and Means chairman Kevin Brady for stepping up to the plate and planning ahead for 2017. Brady and his staff did extensive outreach to think tank experts and the GOP caucus, and they have come up with a blueprint that focuses on savings, investment, simplification, and economic growth.  

The GOP plan would cut the top personal income tax rate from 40 percent to 33 percent, while consolidating the bracket structure from 7 rates to 3. The plan would reduce the top tax rate on small businesses to 25 percent, and it would repeal the estate tax and alternative minimum tax.

The corporate tax rate would be cut from 35 percent to 20 percent. That would be the single most important thing that the next Congress could do for the U.S. economy. Corporations build factories, buy equipment, and hire workers to earn after-tax profits. Slashing the marginal tax rate by 15 points would substantially increase the after-tax profits companies could earn on new investments, and they would respond accordingly. More capital investment would mean more job opportunities and higher wages for American workers.

The GOP plan would allow businesses to immediately write off capital investment, which would further boost after-tax returns on new investment and simplify the tax code. The plan would adopt a “territorial” approach for foreign business income to make America an attractive place to headquarter multinational corporations. The lower tax rate, territorial approach, and capital expensing would generate a large inflow of real investment and paper profits to our shores, rather than repelling them as our current tax system does.

The GOP plan would expand individual saving opportunities as well. In particular, it embraces the Brat/Flake proposal (H.R. 4094/S. 2320) for creating Universal Savings Accounts (USAs). After the big success of such accounts in Canada and Britain, I’ve long argued that USAs are a no-brainer for tax reform in the USA.

House Speaker Paul Ryan has championed major tax reform for years. If Donald Trump wins the White House, the GOP could well move swiftly on tax reform early in 2017. Ryan and Brady are smart to put a detailed plan out there now and rally support for bold changes.

Last night, the British people voted to leave the European Union. When Britain joined the European Economic Community in 1973, the EEC was little more than a free trade area. Over time, the EEC evolved into a supranational entity that at least superficially resembled a federal state. The European Union has its own flag, anthem, currency, president (five of them, actually) and diplomatic service. It is governed by an overpaid and arrogant bureaucracy in Brussels that is unelected and unaccountable. It was, therefore, perfectly reasonable to give the British electorate an opportunity to reflect on the changes that have taken place in Europe over the last 43 years.

Moving forward, there is no reason why nations committed to entrepreneurship and free trade should not prosper outside of the EU. Switzerland has done so in the past and Britain can do so in the future. By showing the rest of Europe that it is possible to live in prosperity and peace outside the suffocating confines of the EU, Britain will lead the way for other nations – including Denmark, France, Holland and Sweden – that wish to regain their sovereignty and chart their own course. Yesterday was Great Britain’s Independence Day. There is now a reason to hope that one day, freedom will return to the rest of Europe. 

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