CBS broadcasts discussing the Brexit Leave vote on Sunday and Monday went to economic "experts" whose "analysis" betrayed partisanship and both feigned and real ignorance.
On Sunday on Face the Nation, max 2015 Hillary contributor (as usual, not disclosed to viewers) Mark Zandi of Moody's Analytics predicted that that the UK economy "is going down the rabbit hole" as the result of the Leave victory, and that the European union, based on being "bigger," is in better shape to hand the fallout. This defies 40 years of history — both two decades before and two decades after the EU formed a single market in 1993 — during which the British economy has significantly outperformed its continental brethren. Then on Monday's CBS This Morning show, Obama bundler Mellody Hobson absurdly told viewers that the EU is like "the United States of Europe which came into being after World War II."
Zandi, who has been making failed predictions that the U.S. economy is going to reach a decent level of economic growth, aka "escape velocity," for over six years, has suddenly become an expert at predicting recessions. He has claimed that presumptive Republican presidential nominee Donald Trump's economic plan will lead to two years of recession and, as we'll see in the video's opening segment, that UK voters' decision to leave the EU will lead to a likely recession there in the next 6-12 months.
The video's second segment shows Hobson, whose main job is heading an investment firm which manages over $10 billion in client assets, claiming that "here (in the UK) they're acting as if a recession is a foregone conclusion," while making the aforementioned absurd comparison of the EU to the U.S.:
Transcript (bolds are mine throughout this post):
Segment 1 — Face the Nation, June 26
HOST JOHN DICKERSON: The fallout from this. What do you think’s going to happen immediately?
MARK ZANDI, MOODY'S ANALYTICS: Well, uh, I think the U.K.’s going down rabbit hole. I think this is going to be really tough for them. I think a recession is likely, um, over the next 6-12 months.
For the European Union, this is going to hurt, but I think they can digest it. I mean, the EU’s a big place. The U.K.’s big, but I think the EU's big enough to take it down and not go into recession.
Segment 2 — CBS This Morning, June 27
MELLODY HOBSON: You could call it (the EU) the United States of Europe. It came into being after World War II.
And people didn't really understand what it means to undo this. This is a gigantic divorce. Estimates of over 100,000 pages of treaties in countries around the world that have to be amended.
The British government is going to be focused on this for two years. I don't know how they'll get anything else done.
HOST CHARLIE ROSE: So what will be the impact? Let's assume it goes through, and let's assume it goes through as quickly as some members of the European Union would like to see it go through, uh even though, uh (the) Chancellor of Germany she want's them to act not so rapidly. Assume it goes through and reasonably quick. What will be the impact on the global economy?
HOBSON: Well, I think the best thing is to understand that we're in an unprecedented scenario here. The impact is not probably — we, we can't fully anticipate it. I think initially the thing I'm going to be watching to see is slowing economic growth, not only in the UK but in broader Europe and ultimately does that catch on to the rest of the world.
Initially, you might see a recession here. Here, they're acting as if a recession is a foregone conclusion, that this economy will slow down ...
So much rubbish, so little time.
Zandi's "analysis" took on more than a little arrogance when he contended that the EU is somehow big enough to handle economic headwinds, while the UK is less able to do so. This defies history he should know quite well.
Here are comparisons of the growth seen in the "EU 15," the UK, and the USA during selected time periods during the 41 years from 1974 (i.e., using the end of 1973 as the starting point) and 2014 (note that the figures presented are not rounded in the background, so attempts to replicate the results from these tables will not be exact):
Keep in mind that the UK is part of the EU 15, meaning that the true differences between the UK's economic performance and that seen in the other 14 core EU members is a bit larger than what is shown above.
- Considering the figures seen in the highlighted boxes, when one takes the UK out of the EU15, it's quite likely that the other 14 haven't yet collectively recovered the GDP losses seen during the 2008-2009 recession.
- The UK has outperformed EU in every period noted.
- Growth throughout the Western world in general has seriously faltered in the past seven years. We can thank Keynesian economics for that and central bank quantitative easing for that.
- The only reason the USA looks better than the other two entities listed during 2008-2014 is that the others have done so poorly. Compared to the other time periods presented above, US performance during the past seven years has been historically awful.
- (not seen in the above table) From 2012-2014, the UK grew by an average of 1.82 percent per year, while the EU 15 grew by just 0.16 percent per year (and remember, the EU 15 includes the UK). That's another example of where taking the UK out of the EU 15 might cause the remaining result for the EU 14 to go negative.
- More recent data indicates that the UK finished between US and EU15 once again in 2015.
I'm hitting this matter hard because it's amazing that Mark Zandi can pretend to be so certain that the UK is "going down the rabbit hole," while being virtually certain that the underperforming and arguably not even recovered from the previous recession rest of the EU isn't is serious danger. Hogwash. It sure appears that the EU needs the UK far more than the UK needs the EU, and it's hard not to sympathize with people who would rather not have their country support a collection of relative laggards.
Zandi's prediction that the UK is "going down the rabbit hole" appears to be influenced by his partisanship. Democrats Barack Obama and Hillary Clinton were firmly in the Remain camp. Donald Trump wasn't. Ergo, Zandi is trying to talk down the UK economy, because Britons will have to pay for their stupidity. Zandi has to know about the EU's historic underperformance, but chose to completely ignore it, instead claiming that because they're big, they'll be okay. That near-guarantee doesn't pass the stench test, let alone the smell test.
As to Hobson, she must have missed the days her history classes spent time on Europe when she was in school, or she was badly misled by those who taught the subject.
The EU's countries are in no serious way analogous to the states of the U.S. — yet. Though the authoritarians in Brussels are reportedly considering changing the situation, EU member states still have their own mostly independent governments, their own standing army, and their own criminal code. A state governor in the U.S. has nowhere near the power the President of Poland has — again, for now.
Ms. Hobson's frame of reference could arguably be 1973, when Britain joined the UK. That's a full 28 years after World War II ended, and four years after the U.S. put a man on the moon. More properly, she should really be concerned about 1993, when the UK became a single market. That's so distant from World War II that it was Bill Clinton's first year in office, and only one year before the 50th anniversary of World War II's D-Day.
In theory, the EU single market should have made life easier for everyone. Instead, overzealous regulators in Brussels have worked unceasingly to make doing business in the EU more, not less, difficult, and have put myriad restrictions on industries of all types, more than offsetting the potential gains from a mostly common currency and from easier travel between member states.
Note that Hobson also played the "gosh, those people are ignorant" card so many other media members have pulled out. I would argue that of course Leave supporters know that the UK can't just snap its fingers and be gone, but they're also judging that the extrication effort will be worth it. As to the "over 100,000 pages of treaties," here's a suggestion: Find the treaties from 1973 and 1993. Change the dates. Start the negotiations from there. It shouldn't be all that hard. Bureaucrats are extraordinarily adept at churning out hundreds of thousands of pages of regulations. Surely they can work expeditiously on revising treaty pages without monopolizing the entire government's time and attention, as Hobson fears will occur.
Hobson is also worried about slow growth. As noted earlier, there's a lot more to worry about in what's left of the EU than there is in the UK.
Investor's Business Daily had pertinent observations about the economic performance of the EU in a Monday editorial:
... Britain isn't the only malcontent: No one is happy these days with the EU, which has been an utter failure.
As recently as 2000, the EU boldly vowed it would "leapfrog" the U.S. in growth, living standards and productivity within a decade. It didn't come close.
As we noted here before, the 28 nations that now make up the EU 40 years ago made up 36% of the global economy. Today, that share is 17% and shrinking. By comparison, the U.S. still makes up nearly 25% of global output. (The "EU 15" predominantly consists of Western European countries. The other members of the "EU 28" are largely former Iron Curtain countries. — Ed.)
Beset with a massive influx of unwanted immigration from northern Africa and the Mideast, heavily indebted governments, costly overregulation, a lack of entrepreneurialism and job growth and, in what can only be described as a demographic death spiral, the EU is not a club that any mature nation would want to join today.
That's correct. Not only that, the EU is a club many of its member-states' citizens would like to leave. It's hard to blame them for feeling that way.
Both "experts" CBS used on Monday are in reality partisan shills who are either breathtakingly ignorant of the subject matter over which they allegedly have expertise, or are deliberately spouting nonsense they know is false or unreasonable to further causes they favor. In the current establishment media environment, those traits are considered desirable. The public is clearly being poorly served.
In related news, as of the stock market's close on Wednesday, the Dow Jones Industrial Average had gained back two-thirds of the losses incurred Friday and Monday (632 of 948 points) after Leave voters prevailed in the UK. Tuesday's close was above the close on June 17. The hysteria over the Brexit vote's result seems largely unwarranted at this point — but that won't stop the press from continuing with it as long as it seems to have leftism-advancing value.
Cross-posted at BizzyBlog.com.