Brexit: Seminal event or secular disaster?

Peak oil, when the maximum rate of extraction, followed by decline, is reached, keeps getting pushed back but does the Brexit vote suggest peak globalisation – the progressive breaking down of barriers to global free trade – has been reached or perhaps faces a significant pause?

Economists have been worrying about a slowing down in the process for some years and their fears will certainly have been given momentum. Even before Brexit the signs were there in a slowing down in merchandise trade compared with the two decades leading up to the financial crisis of 2008. China, the export industries of which have been the driver behind the rapid growth in trade since the 1990s, has slowed down and is seeking to re-orient its investment towards the domestic market; and trade deals such as the Transatlantic Trade and Investment Partnership (TTIP) have become more difficult to negotiate in the face of opposition from trade unions and others in Europe. They fear further marketization of the European economy, including cherished sectors such as healthcare.

Following the June 23rd vote Britain now needs to negotiate its own trade deals outside the EU in a world where multilateral organisations set up to promote freer trade, such as the World Trade Organisation, have been losing their potency and becoming increasingly side-lined by the spread of bilateral deals. Across developed economies the impact of austerity is, too, continuing to be felt with some economies, such as Italy, unlikely to reach pre-crisis levels and hence consumer demand for internationally traded products until the 2020s.

How could this threat to what has seemed an inevitable progression have come about when so many people across Europe, including Britain, have benefitted greatly from freer trade? The price of those two human necessities – food and clothing – has fallen in recent years, helping to keep inflation at near record low levels. The previously inexorable rise in the price of running a car or a vehicle fleet has dropped as a result of an oil glut. Every imaginable commodity can now be summoned to the door with a few computer keystrokes from the mega-warehouses deployed across the Continent by Amazon and its competitors. In recent months British airports have been reporting record numbers of Britons flying away to take advantage of cheap flights and accommodation. Are we now be entering a period when barriers could creep up again?

Britons, albeit with a small majority, appear to have rejected the very instrument that has brought about these trading benefits – the EU. Why? Is there not a safety net for those poorer areas that have suffered from the global economic transformation brought about by the interaction of two factors – the standard shipping container and information technology, the combination of which lies behind today’s almost instant servicing of consumer needs and desires? What about all those blue signs proudly crediting the EU for the roads, bridges, arts centres and other projects in Britain’s poorer regions?

All true but if the British public has shot itself in the foot (and if some in other Continental nations are tempted to do the same) it could have done so in the true sense of the expression rather than the one in which it is now usually used. Like the World War One soldiers who carried out this act, it could be because they actively wanted to avoid something worse (going into battle in the case of the poor bloody infantry) rather than as an act of unintended self-harm. It could be that in rejecting the EU market vision, they are saying they also want a different kind of Britain.

At a recent finance conference in London in the immediate aftermath of the Brexit vote there was a sheepish acceptance on the part of several speakers that while Joe Public had indeed sprung an unwelcome surprise, the elite classes as represented by the overpaid denizens of the City of London had in large measure brought it on themselves. One admittedly pro-Brexit speaker at the FT’s Festival of Finance suggested neo-liberal policies as favoured by the EU had been oversold, with promises made that we would be moving into a period of permanent prosperity. The medicine globalisation would force on ordinary citizens would, like castor oil, taste horrible, they had been told, but it would be good for them in the end.  

Instead, it had proved hard to swallow and had not made most feel any better. Wages for many people, including the middle classes had stayed the same or got worse; houses had become unaffordable and young people were unable to leave home to set up on their own; neighbourhoods where individuals had grown up and where parents and grandparents had lived before them now seemed unfamiliar as a result of large numbers of migrants moving in; schools with scores of languages being spoken were making people feel uncomfortable about the impact on their children’s educational prospects; moreover, austerity policies as a result of the financial crises of 2008 and its consequences had torn away large parts of the social security safety net on which the poor relied.

In a perceptive piece written four months before the Referendum vote the left-wing commentator John Harris writing in The Guardian could see what was coming, declaring that, although a Remain supporter himself, he had respect for the Leavers. On the Conservative side David Cameron had famously described UKIP as “fruitcakes, loonies and closet racists”, and one of his colleagues saw them as “mad, swivel-eyed loonies”. On the left, Harris noted, millions of Britons were seen as “gullible, if feeling charitable; as nasty and bigoted, when things turn cruel”. Harris had visited parts of Britain – the small towns of the agricultural East -where free movement was a reality, and where as a result, he argued “people had a feeling that huge and rapid social changes had been imposed on them by a power beyond anyone’s reach”.

In other parts of the country, too, there has undoubtedly been a feeling in older working class areas for some time that the system was rigged against them. The Brexit vote was a way of saying enough was enough. Literally billions have been spent in the south east on shiny infrastructure projects – Crossrail, Thameslink 2000, a £900m new station at Reading, with Heathrow’s new runway or some alternative still to come. Wales, by contrast, struggles to put together the funding to finance a relief road around Newport to remove M4 bottlenecks without breaking the budget, or to create a modest metro system on existing rail-tracks to better connect Cardiff with the poorer valleys that surround it.

People have tired of being told that spending on Heathrow, Crossrail or wherever will really benefit them 200 or 300 miles away because of some long-promised but never-delivered trickle-down effects. Nor is there much confidence HS2 will make Britain less centripetally focused on London. Yet, the concentration of infrastructure spending in the southeast has been rendered necessary because of a heavily over-stimulated finance sector much of which has largely detached itself from the rest of the British economy in order to service the needs of the multinational corporations central to global capitalism.

Other examples of unfairness can be cited. Agonised discussions over ways of relieving the pensions liabilities at Tata as a means of saving the company’s British jobs contrast powerfully with the sweetheart tax deals that British Governments over recent years have offered multinationals such as Google and Amazon, the latter itself responsible for changes in retailing that have destroyed thousands of jobs on British High Streets.

And, of course, there is the issue of executive pay. UK chief executives, backed by self-serving remuneration committees have become the beneficiaries of absurdly high pay packages and bonuses which often seem to bear no resemblance to performance. At the same time to reward shareholders, companies have chosen to retain profits and hire cheaper labour rather than share the benefits with their employees or invest in new technology that would help to boost Britain’s poor productivity record. Trade unions and many of their members have begun to realise that the vastly bigger labour market which employers could choose to dip into is not, as they had hoped and been promised, going to produce a one-off jolt to workers in industries across Britain but a permanent and long-lasting negative impact on their wages and their prospects.

To this extent the momentous decision taken by a small majority of the British people is not anti-immigrant per se or anti-Europe but a sign that sometimes ordinary people can see more clearly than their “betters” and, called upon to speak, have said, “All this is wrong. You promised us that globalisation/EU membership would bring prosperity but where we once made goods or delivered services we could be proud of we now despatch orders for products made half way around the globe to wealthy customers from an Amazon warehouse where our every activity is tracked and monitored.”

It will be argued that these examples of unfairness felt by ordinary people up and down the country could all be put right within the existing British political structure while retaining EU membership. After all, Government can still, despite the EU, legislate on executive pay, choose more broadly where to place infrastructure spending, and impose higher taxes – particularly on excessive rewards – to fund more generous social security payments. It has not, however, happened.

Likewise, if there are aspects of the EU that we find unacceptable – its lack of accountability, its overweening bureaucracy, or perceived democratic deficiencies – we should, it will be argued, stay in and press for reform. The counter to this, however, is that campaigners have been calling for reform for most of the 40 years Britain has been a member with few tangible results. This in itself is hardly surprising, given that agreement has to be achieved on every occasion among 28 members, possibly to be joined by others in the years ahead. It is not hard to argue that the EU has become just too unwieldy for its own good or that even more importantly that it can never resolve its serious internal economic problems unless it proceeds to full political as well as economic union – a process Britain has always resolutely opposed.

Though the EU has always muddled through, this fundamental structural weakness was identified a very long time ago and has been repeated many times since. Writing in the London Review of Books in October 1992 before the introduction of the Euro, the economist, Wynne Godley pointed out: “What happens if a whole country – a potential region in a fully integrated community- suffers a structural setback? So long as it is a sovereign state it can devalue its currency. It can then trade successfully at full employment, provided its people accept the necessary cuts in their real incomes. With an economic and monetary union this recourse is entirely barred and its prospect is grave indeed, unless federal budgeting arrangements are made which fulfil a redistributive role …There has to be quid pro quo for giving up the devaluation option in the form of fiscal redistribution…If a country or region has no power to devalue, then there is nothing to stop it suffering a process of cumulative and terminal decline, leading in the end to emigration as the only alternative to poverty or starvation.” One example of the distortions EU policies are creating will suffice. In 2016, as The Guardian reported a few weeks back there are 25,000 Greek doctors in Germany. Surely Greece did not unwittingly train 25,000 more doctors than it needed? The talented in the EU move swiftly to the richest countries which themselves over-specialise in certain goods and services – the 500,000 individuals working in financial Services in the City of London and the dominance of Germany in engineering being classic examples.

It is some of these central issues relating to the EU, international capitalism and globalisation which the public in their wisdom have grasped well ahead of their politicians. So it is interesting that in her manifesto ahead of winning the job Theresa May the new Prime Minister made tackling one of these – executive pay – one of her first promises; called for employee and consumer representation on boards; spoke up for the defence of important industrial sectors; and made the moral case for taxation. Following her appointment, she has gone further, declaring her government will be driven not by the interests of the few but by those of ordinary people. Implementation – and there will be many opponents in business and elsewhere –  must follow but if it does they are changes that could bring reality to the previous pledges made by Governments of all hues to tackle imbalances and inequalities in society.

It will only become apparent over a period of time whether Brexit will prove a turning point for globalisation as a whole, with other countries looking to adopt an as yet largely ill-defined British model, much as privatisation swept the world in the era when neo-Liberal policies were gaining ascendancy in the 1980s. As the days pass, however, it is starting to look more like a seminal event and perhaps not the secular disaster many had predicted.

Rhys David is the author of Tell Mum Not to Worry and A Welsh Soldier’s World War One in the Near East

20 thoughts on “Brexit: Seminal event or secular disaster?

  1. For most people who voted to leave the EU, it was a vote for free trade not against.

    The Single Market was indeed an instrument for free trade when it was first established but for some years it has become obvious to those of us who follow such things that free trade among member states has been at the expense of protection relative to the rest of the world.

    It was in fact the likes of Amazon, mentioned in the article – and in particular the discovery that many products could be bought more cheaply direct from Amazon.com outside the EU – that opened the eyes of a lot of people to the possibility that free trade was possible without an additional layer of government.

    Many ‘Remainers’ are still in a psychological state of shock from their defeat and are trying to cobble together a pseudo-sociological explanation. According to this narrative, ‘Brexit’ was the revolt if those who felt disenfranchised by globalisation.

    This version ignores the fact that the ‘Leave’ vote cut across class divides. Although it was the closest we will ever see to an uprising of the working class, like most such uprisings it was organised mainly by the middle class. Big business tended more towards remain, but small business became increasingly anti-Brussels, precisely because we want free trade to cover more than 5% of the global population.

  2. Please correct my last comment. It should read ‘ to the fact that free trade was possible’ not ‘to the possibility that free trade was possible.’

  3. @ John Winterson Richards
    “For most people who voted to leave the EU, it was a vote for free trade not against.”
    Would this be your attempt at a “pseudo-sociological explanation.”

    There are lots of explanations around for the Brexit vote but given the diversity of views and circumstances of the voters involved I’d be surprised if the result could be attributed to any one explanation in particular even if all concerned could agree on the précis definition of that explanation.

    In may be more productive to consider the outcome based on aspects of the referendum that are not themselves a matter of conjecture. For example, unlike pretty much every other occasion when the UK electorate put a cross on a ballot paper in the EU Referendum every voter’s vote counted.

  4. Are we in danger of overthinking these things – many reasons for voting Brexit, but simple messages won the day for enough people to swing the vote. Immigration and getting our country back from the control of Johnny foreigner – nothing more complicated required to sway the vote. Our kids will be free to play conkers now without having to wear safety goggles, restaurants won’t need to have different coloured chopping boards and we can weigh our fruit in pounds and ounces again. We will be able to look forward to a rosy world now with long hot summers, the return of the village bobby who can give youths a clip around the ear when they deserve it and everyone can smile happily while the kids are playing football in the streets again. Happy days.

  5. CapM, as you are doubtless aware, there is a difference between psephology and pseudo-sociology!

    Personal insight into the motivation of those who voted ‘Leave’ comes from two sources:

    (1) actually being one of them – unlike most of the commentariat; and

    (2) paying attention to what people were really saying rather than to the polls – again, unlike most of the commentariat.

    Thus it came as absolutely no surprise that Wales voted ‘Leave.’ We come back to the basic problem that the political and media classes are increasingly in a little world of their own, completely out of touch with what most people are saying and thinking. If this is not addressed, we need only look across the Atlantic to see what comes next.

  6. @John Winterson Richards
    Not only do I know the difference between psephology and pseudo-sociology I also know the difference between psephology and “personal insight”.
    In psephology I don’t think “actually being one of them” counts for much.

  7. Aledf agree the vote wasn’t about economics or jobs, it was about immigration and racism. Not everyone who voted leave was a racist of course, but every racist voted leave. Yes England now have their country back, but outside the EU who can they blame now for all the UKs problems, Scotland, Wales and Ireland?

  8. Mr Smith, polls like Ashcroft’s are interesting but of limited value because – and CapM was right on this point – how any individual votes might depend on a number of complex factors.

    For example, speaking as one of those who, if pushed to name a single factor, would have cited ‘Sovereignty’ rather than trade, the weighting of the factors changed over time for many in the small business sector. Many of us who have always been concerned at the loss of Sovereignty were nevertheless prepared to compromise a bit in the 1990s because we thought the Single Market was worth it. Since then, the loss of Sovereignty has increased while, at the same time, the likes of the WTO and NAFTA have demonstrated that free trade can expand without a similar level of loss of Sovereignty. Thus Sovereignty as a prime concern does not mean unconcern with trade or immigration, etc.

    This, CapM, is how personal insight is relevant to psephology. It certainly proved a more reliable tool than the polls in both this year’s referendum and last year’s General Election.

  9. @ John Winterson Richards
    This I what Psephology is –
    Psephology uses historical precinct voting data, public opinion polls, campaign finance information and similar statistical data. (Wiki)

    You have your “personal insight” just as everyone else has but because your “personal insight” matched the Referendum result (let’s face it effectively a 50/50 call) you shouldn’t extrapolate from it to conclude that your “personal insight” provides the correct explanation for why the result happened. That’s unscientific and as such is not a part of the science of psephology.

  10. CapM, the moral of this story is that the claim of psephology – and ‘political science’ in general – to be an actual science is very tenuous.

    Yet if we consider it as the art, rather than the science, of studying how people vote and why, it remains a useful and fascinating subject.

    The referendum was never a 50/50 call. The bookies’ odds were against ‘Brexit’ all the way from the start of the campaign until about 0300 on 24th June, and it was difficult to find any of the professional talking heads in Wales predicting that the Welsh would disobey their masters. Yet it was clear to anyone with his ears open – there is no claim to personal brilliance here – that things were a lot tighter than official psephology was implying and that they got tighter as the campaign progressed. It was not that the official ‘Leave’ campaign was winning – it was an embarrassment – but that ‘Remain’ was losing, because it was not listening. The depressing thing is that the powers that be – ‘Remainers’ for the most part – are still not listening. They are throwing the pseudo-sociological explanations at each other instead of engaging with the actual majority and what they feel.

  11. @John Winterson Richards
    You equated your “personal insight” with psephology. If you now choose to describe psephology as having a very tenuous claim to be actual science that’s fine by me. It just backs up my original point that your analysis of the reasons for voting Leave was as much a “pseudo-sociological explanation” as you accused the author of making.
    So around in a circle in a day and a half, you might like to look for a moral there.

    Regarding not listening, my experience before the referendum of talking with dozens of Leave supporters was that it was the Leave supporters who weren’t listening. Pretty much every fact they presented to me was inaccurate or wrong and even when given proof absolute to the contrary they chose to deny or ignore it. It felt more like trying to discuss evolution with religious fundamentalists than a discussion of the merits of membership of the EU.
    Was this something that was present throughout the Leave vote?

  12. CapM, what you say about ‘Leave’ supporters in your second paragraph applies word for word to the more hard-line ‘Remainers,’ the people who are now having such difficulty accepting the result. It would be absurd to make the blanket generalisation of saying it applies to all who voted ‘Remain’ – many of whom were influenced by ‘Project Fear’ – but there was a core of Europhiles for whom the EU was an object of almost religious veneration and who would not listen to any criticism of their ‘faith.’

    To repeat, there is no claim here that any of this is a ‘scientific’ explanation. On the contrary, you will note that the last comment was effectively a disclaimer. Nor has any pseudo-sociological theory so far been advanced to counter the ones doing the rounds.

    However, here is the beginning of one which seems at least as good as the ‘alienated by globalisation’ one…

    The ‘Remain’ campaign lost the vote because it lost the argument. Saying this is not simply repeating that we were right and you were wrong. No, it is worse than that. You lost the process of the debate. This is not boasting but a statement of fact. Debating contests often have votes before and after the debate in order to quantify how the debate has shifted opinion and therefore who was the better debater. In the case of the EU Referendum, there is little doubt that, had it been possible to hold the vote on the day it was called, ‘Remain’ would have won handily – it would not have been called otherwise – but in the weeks that followed it lost the lead as the debate progressed. They lost the argument – ‘Leave’ did not win it; ‘Remain’ lost it.

    This is an enormous blow to the collective ego of the ruling class. A great deal of their self-esteem is wrapped up in their self-image as being somehow intellectually and morally superior. Indeed that exaggerated sense of entitlement came through in the ‘Remain’ campaign and was one of the things that alienated swing voters most – again, speaking from personal experience, as one who was in the ‘persuadable’ category.

    It has come as a deep psychological shock to them that the majority do not see them as they see themselves. This leads to one of two conclusions – either they are not as clever as they thought or everyone else is stupid. A lot of them seem to be going with the latter option, because it is less of a blow to the core of their self-perception, but also because it drowns out the nagging doubt that suggests that the former might be true. After all, if they were so clever, how come they misread the campaign so badly from the start, and lost both the argument and the vote, despite having begun with every advantage?

    The real issue may not be the alienated masses but the alienated ruling class!

  13. @John Winterson Richards
    “The ‘Remain’ campaign lost the vote because it lost the argument.”
    That’s a tautology.
    We all know, even those who have no interest in politics, that in what is basically a popularity contest the better contestant doesn’t necessarily win. It might be singers competing on a TV talent show or in this case ideas on the involvement of the UK in the EU.
    What’s irrefutable is that leaving the EU was the more popular idea with voters.

    Your choice won but it would be unrealistic to think those who voted differently would then cease commenting especially as many still think that their idea was better and the vote was quite close anyway.

    You make a big deal about the “ruling elite” and voters giving it to them. I don’t doubt that for many leave voters this was a reason, perhaps you yourself got a thrill from this while casting your ballot. However you can’t escape the fact that nearly 50% of voters voted with the “ruling elite”. I don’t think these represent supporters of the “ruling elite”and there just can’t be that many members of the “ruling elite” can there. Perhaps for various reasons many of the 48% saw beyond the “ruling elite” and their antics to the idea of EU membership itself.

    PS Boris Johnson man of the people or one of the “ruling elite”?

  14. CapM, you are right on one point: there is a substantial difference between ruling class and ruling elite. They would be far less objectionable if they were an actual elite! That said, while this might indeed have given some a pleasant anti-Establishment frisson as they voted ‘Leave,’ it was not the decisive factor with most. That decisive factor was, as you point out yourself, simply that – for whatever reason or reasons – they disliked being members of the EU.

    You are wrong, however, about there being no difference between winning the vote and winning the argument. As the previous comment tried – and obviously failed – to explain, victory in an argument can be quantified by the shift in opinion during the course of the argument. This can be measured by guaging opinion before and after the argument – on this point, contrary to what was said earlier, psephology can be strictly scientific.

    While elections can indeed be popularity contests, the same cannot be said of the referendum. Nigel Farage is popular among his own supporters but not generally. By contrast, President Obama remains popular in the UK but his misjudged intervention was a vital boost for the ‘Leave’ campaign at a crucial moment. The same might be said of Bob Geldorf.

    It is, of course, accepted that not all of the 48% are members of the ruling class. Like the 52%, they had diverse and complex motives. In particular, it should be noted that many, perhaps most of them had as low an opinion of the EU as those who voted ‘Leave’ but were frightened by the predictions of an immediate economic disaster on 24th June.

  15. @ John Winterson Richards
    It’s apparent that we define “argument” differently, the result is that we can both be right as long as we stick to our own definition.
    You’ve misunderstood “popularity”, it applies only to the popularity of the two ideas on the ballot paper – the UK being a member of the EU and the UK not being a member.
    You might remember a few years ago on the TV show Britain’s got Talent the winner was a dog that walked on its hind legs. I like many others thought the Glanaethwy choir was better but we have to accept that the dog act was more popular with voters. You might see this as the dog act having had the better “argument” though.
    Despite not having the special insight afforded by “actually being one of them” you’ve now fallen to the temptation of assigning motives to those who voted Remain as well as those who voted Leave. Excuse me but I’m not going to join you on another turn of the psephology/personal insight/pseudo-sociological explanation roundabout.

  16. CapM, the point made in the last comment about the complexity and diversity of voters’ motives was actually an endorsement of what you said in your very first comment.

    You will be missed on the roundabout. It is still difficult to find ‘Remainers’ willing to talk intelligently about what happened.

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