Empirics Theory(ish)

Christmas, Brexit, regulation, and how ‘good’ and ‘bad’ uncertainty is fundamentally the same

As a child, during the Christmas season, gifts greatly determined the activities for the holidays. If the gift was a soccer ball, one spent the holidays playing football. If the gift was a remote control car, one spent the holidays driving that car up and down the street.

In my case, my parents never told me what they would give me. It was always a surprise.

I was always excited, of course. I knew I was going to receive something, and that was enough. However, without the information about what I would get, I could not have predicted precisely how the holidays would go. Therefore, Christmas was a time of uncertainty. ‘Good’ uncertainty, but uncertainty nonetheless.

At the time of writing this post, regulators in the United Kingdom are facing a challenge that has created great uncertainty, ‘Brexit’.

Regardless of whether one supports the idea of ​​leaving the EU or not, it is agreed that the consequences of the uncertainty that has accompanied Brexit have been, so far, negative. Therefore, and at least thus far, Brexit has generated ‘bad’ uncertainty.

So, it needs to be clear that the Brexit situation is different to the dilemmas one has as a child during Christmas; Brexit is more serious, and much more worrisome.

However, there is a similarity. Without knowing what Brexit will bring, British regulators can not commit to any given plan of action for their post-Brexit strategies. They know that when Brexit arrives, the task will be great, but it is impossible for them to say precisely what they will do after Brexit.

And so…

Uncertainty can be good or bad. It can cause emotion or anxiety. It may be present in seemingly trivial situations or in very important matters. However, if one is to draw partial and incomplete conclusions from the above, deep down below all uncertainty seems fundamentally the same.