The Brexit: A Voluntary Relinquishing of Network Power
A very important concept in class this semester has been the idea of power within a network. Nodes with many connections are seen as powerful when interacting with others as the opportunity cost of them leaving a specific relationship is much lower because they have other close connections that they can turn to. More isolated nodes are weaker due to a lack of options that they have for alternative interactions. An everyday, common application for this is within the realm of international trade: specifically the relative value of currencies which directly affects the cost of trade for various global powers. Special trade unions exist in the global economy which facilitates trade between specific groups and essentially lowers trade costs between all parties: a fact that has been reaffirmed by the recent Brexit from the European Union.
June 23 of 2016 marks the day that the British voted to exit the European Union–an act that was subversively meant to cut of the UK from immigrants and refugees that have been flocking to Europe–and since then, the British pound has been rapidly depreciating in the world currency market. It has increased the cost of trade for the British, not only within Europe, but also with the rest of the world as their currency continues to decrease in value. This depreciation of currency makes foreign goods much more costly to the Brits in terms of their own less valuable pound which is the beginning stage of a potential economic hot mess. In terms of power structures, the Brits cut themselves off of a very powerful trade network, and they are now facing future economic turmoil as holding their essentially worthless currency will no longer be attractive to buyers because they are much weaker than they were previously.
In Peter S. Goodman’s New York Times article entitled, “For Britain’s ‘Brexit’ Bunch, the Party Just Ended”, Goodman outlines the current situation and highlights just how badly the Brits messed up with their decision to isolate themselves in the world economy. Obviously the UK is still affluent and is doing fine economically at this point in time; however as its currency continues to depreciate–an occurrence that is happening solely due to its exit from the European Union–it will become less and less attractive for outsiders to invest in them. The idea of power within a network also ties back to the idea of embeddedness: the more embedded within a network a node is, the more its interactions with other nodes matter, but the fact of the matter is a node that is embedded will still have interactions. If a node (for example, the UK) breaks free of a network, the rest of the network has no need to interact with it; therefore it will be worse off than it was when it was still in the network.
Article: http://www.nytimes.com/2016/10/08/world/europe/for-britains-brexit-bunch-the-party-just-ended.html?ref=business