Diatribes of Jay

This is a blog of essays on public policy. It shuns ideology and applies facts, logic and math to economic, social and political problems. It has a subject-matter index, a list of recent posts, and permalinks at the ends of posts. Comments are moderated and may take time to appear. Note: Profile updated 4/7/12

29 June 2016

Brexit in World-Historical Perspective


[In two recent short essays, I tried to analyze the real popular angst behind Brexit and caution against overreaction. Like most analysts, I didn’t expect Brexit and had argued against it.

But it's never a good idea to ignore the pain and angst of a whole class of people just because it contravenes your nice, neat theories, your worldview, or your self-righteousness. That’s true even when you think that demagoguery and lies helped create the angst. To dismiss any popular uprising is to ignore reality and human striving—a dangerous thing for scientists, democrats and leaders of any stripe to do.

That’s what Britain, France, and Russia did in punishing the German people collectively after winning World War I. The result was World War II. (Our Yankee leader then, Woodrow Wilson, urged a more moderate, empathetic and sensible approach, to no avail.)

The best thing to do is to stop, think, and try to make lemonade out of the lemons, as wise leaders like Angela Merkel, Barack Obama, and John Kerry already appear to be advising. Even David Cameron, whose faulty political manipulation helped cause Brexit, appears to be doing the same thing—setting up a committee of experts to decide how to make the best out of a bad situation.

This essay takes a much broader, world-historical perspective. Oddly, I had been working on the ideas in it for months, completely independently of the risk of Brexit. Brexit just fell into its schema, seemingly fortuitously. Like the tasks ahead of Western leaders after the Brexit vote, this essay is all about taking the long view and staying flexible. For a follow-up on consequences for free trade, click here.
]

Introduction
Recent nation splitting
The failure of individual perspective
Bias toward nation-states
Economics: centrifugal forces win
Politics and culture: “solutions” so far Conclusion

    “All politics is local.” — Thomas P. (“Tip”) O’Neill, Speaker, US House of Representatives (1977-1986)
Introduction

The Brits have voted to make their “Brexit.” As a result, markets crashed, the pound plummeted, and handwringing among economic and political pundits reached orgiastic proportions.

Proponents of staying, including British Prime Minister David Cameron, predict an economic apocalypse. They note, perhaps rightly, that Britain is too small an economic bloc to have much global clout without the rest of Europe. And they assert, also rightly, that the mere fact of Brexit will create considerable economic and political uncertainty for a considerable period of time. Brexit is unprecedented, and negotiating its terms and denouement will occupy European and British leaders and diplomats for years.

The immediate impetus for Brexit was glaringly obvious. The free movement of people, goods and money across what used to be international boundaries is a core principle of the EU. Yet in recent years, the free movement of desperate refugees and economic migrants seeking a better life in Britain’s stable democracy—not to mention its free and relatively plentiful job markets—has stressed Britain’s social services and strained its social fabric.

As I have written, the EU is a political miracle. You can sit on a train and ride easily over borders, without stopping, where once armed guards and customs officials ruled, and where once bloody battles raged. This makes the EU a holy project, worthy not just of support, but of veneration.

Yet as a single economic entity, let alone a government for the most populous “nation” save China and India, the EU leaves a few things to be desired. The “austerity” that Northern Europe has imposed on Greece and other Southern members simply has not worked. It’s made Northern leaders and their people feel good (and self-righteous), but it has imposed great suffering on the South, without appreciably reducing the risk of default. Austerity has just kicked the economic can down the road, while the subject peoples suffer.

So it’s ironic, to say the least, the Britain, which is doing fairly well, is the first to leave. The camel’s back of British popular tolerance for the poor, tired, huddled masses from less fortunate and less-well-governed places has broken. Massive Syrian immigration, along with the threat of terrorism, was apparently the last straw.

A big class divide infects the Brits’ attitude toward Brexit, as it does most of the right-wing resurgences across Europe. Well-educated people with good jobs and homes in safe, exclusive zones relish the abstract attractions of porous borders, assistance to desperate refugees, and the EU’s founding principles of free movement of people and goods. They also look back at Europe’s history of endless wars—leading up to the most horrible one of all—and shudder at what nationalism and religious discord have caused.

For less well-situated and well-educated people, the abstractions don’t shine as brightly. The working class sees jobs getting scarce and more menial, and strangely coiffed and attired people—often strong, single young men—filling public squares near where they live, speaking languages they can’t understand, and generally looking menacing and dangerous. They want the influx to stop and, if possible, to reverse.

While this class war plays out in the world’s oldest democracy, it may be helpful to broaden the focus a bit. It may be helpful to note how centrifugal forces are replacing the centripetal forces that once formed the nation-states we know today, and not just within the EU.

Maybe a more global perspective will help us see the EU’s prospects more clearly. Let’s take a look.

Recent nation splitting

During the last seventy years we have seen vivid examples of centrifugal force. Pakistan left India, and Bangladesh left Pakistan. The Soviet Union dissolved. So did Yugoslavia. These events alone made major changes in the international order, resulting in twenty-five nation-states where there had been only three.

The nation splitting didn’t stop there. Today centrifugal forces are at work in Iraq and Syria, and likewise in the Kurdish parts of Turkey, Syria and Iraq. Although it voted to stay, much of Scotland wants to leave Britain. Many Basques and Catalonians want to leave Spain. Northern Ireland has stopped (for now) its gruesome sectarian wars by achieving a degree of autonomy from England. Now that the slavery question has long been settled, many Southerners want to leave the United States—a proposal that has some historic, cultural and practical merit.

So it’s worth asking generally, and not just in relation to Brexit, what’s going on. What’s the “natural state” of human affairs? Is it a steady growth of larger nation-states, with bigger populations and stronger common rules, until all coalesce in some sort of loose global EU? Will the United Nations become a real global government? Will all the nations and tribes of Man some day become a gigantic super-state, with “Kumbaya” as its anthem? Or will the postwar trend of dissolution and spinoffs continue, perhaps with greater attention to making and enforcing fairer common rules of trade, migration and human rights?

The failure of individual perspective

As we contemplate these very real phenomena, our tiny temporal perspectives as individuals cripple our thinking. Our whole recorded history as a species—about ten thousand years—is much too short for biological evolution. So neither the recent rise of centrifugal forces nor the long formation of nation-states that preceded it has much to do with biological evolution.

How could it, when we evolved in tribal clans of thirty or fewer members, and cities, let alone big nation states, have tens of millions today? The way we live now has little or nothing to do with how we evolved as primates on the African savannah, or as tribes in the colder, more inhospitable climes of Europe and Asia.

So what we are dealing with here is a matter of social evolution. It’s step-by-step evolution of the culture of cooperation, empathy and social activity that is our species’ primary biological-evolutionary advantage.

Social evolution works infinitely faster than biological evolution. It doesn’t depend on random genetic mutations and the survival of “improving” mutations over many generations. Instead, it depends on our ability to learn from our mistakes and successes and to vary our collective behavior accordingly. It depends, in short, on our collective ability to learn from history and current events.

Yet even social evolution works much more slowly than quotidian human affairs. Consider the social evolution of us Yanks since our Civil War. This April marked 151 years since the guns fell silent. But our related social evolution is still a work in progress. Barack Obama’s presidency and Donald Trump’s candidacy are both part of it. And yet more than two nominal lifetimes, and more than seven nominal generations, have passed in the meantime.

So it’s hard to see even relatively speedy social evolution from an individual perspective. It’s much more common, and more comforting, to think of the way things are during our own individual lifetimes as the natural state of affairs. That’s why so many of us believe that the way things have been during most of our lives is the way they always were and always will be. That is also why Britain’s youth were so astonished and upset at Brexit: they have grown up with the EU and before the pressures of the Euro and the Syrian diaspora.

And so it is with nation-states. Nearly everyone my age (just 71) thinks of gigantic nation-states like the US, Russia and China as the pinnacle of social evolution. Yet are they? Are they the end point, or a mere intermediate point in a larger process? Are they a consummation, or one of the frequent overshoots and excesses that appear so often in our species’ history?

To us short-lived humans, “always” is a relative term. Where’s the Austro-Hungarian Empire today? The Soviet Union? Czechoslovakia? Yugoslavia? the Ottoman Empire? Is their present state of dissolution and disappearance an unnatural deviation from the course of human history, or a sign of things to come?

Will the Kurds forever be chained and subject to the Turks and Arabs because of empires now vanished for a century or more? When the Syrian war ends and reconstruction begins (as they will, some day!), will it be the same country as before the civil war started? Will the United States forever be what it is today, gridlocked between left and right, North and South? Or will the South—with its self-evidently unique culture, so far thwarted in its repeated and increasingly radical attempts to control the rest of us and our own culture—go its separate way?

Bias toward nation-states

People of my generation, born at or just after World War II, seem to assume that nation-building is the Natural State of Man. We all learned how it took several centuries for medium-sized modern nations like Britain, Italy and Germany to come into being. So we assume that the present big-three giants China, Russia and the US—let alone the EU—are even more “advanced.”

It took a lot of pain and terror to forge modern nation-states. Recently I had the chance to read Niccolò Machiavelli’s “The Prince,” which I somehow had escaped reading in college. Two things struck me about it. The first was (apart from the flowery obeisances to nobles and patrons) how modern, direct and straightforward were its prose and tone. The second was the extreme fragmentation of the Italy in which Machiavelli lived.

It really wasn’t “Italy” at all, at least not as we know it today. It was an apparently infinite series of walled, inimical city-states, steeped in an apparently infinite series of small wars and intrigues. Every duke, city leader or prominent official, it seemed, had the desire and duty to expand his realm by war, intrigue, or treachery. Machiavelli’s small book has reports of at least two instances of substantial diplomatic delegations being massacred in whole after being lured to supposed “peace talks.”

It was a dangerous time to be alive. Britain had a similar bloody history, with its ceaseless wars among Protestants and Catholics—not to mention earlier wars among its various pre-Roman ethnic groups.

A long, agonizing churning of war and conflict formed the nation-states, like Italy, that we know today. With so much conflict, pain and suffering in their birth, one could be led to think that they must be the apex of human social evolution. Based on that model, our behemoths of today seem even more “advanced.”

But are they? The answer is a matter of social, not biological, evolution. So the choice is ours, as a species. It therefore matters how we think about the nation-building of the last four centuries and today’s centrifugal forces that are slowly turning big nations into smaller bits. We need a theory or a plan. Should we support and reinforce centripetal force, or should we give centrifugal force a chance?

Economics: centrifugal forces win

We must begin with biology. Our species is the self-evident master of our small planet because of three things: our abilities to empathize, communicate and cooperate. Individually, we are small, slow, weak and rather stupid. Collectively, we can make ourselves big, fast, powerful and smart. It takes thousands of people to make aircraft and run an airline, but with them, we can travel farther and faster than any other species, and infinitely farther and faster than we can as individuals.

So what really matters is how we work together. The particular institutions and rules that we make to govern our cooperation don’t matter nearly as much as how well the rules work, how pragmatic and flexible they are, how widely they are observed, and how few unnecessary conflicts they create.

Insofar as size goes, our experiences of the last two centuries suggest that smaller is better, at least for economic activity. Over several centuries, decentralizing “free markets” have worked infinitely better than Royal enterprise or “central command” economies. The rise of corporations was motivated, in large part, by the desires to perform economic activity in smaller, more flexible and manageable organizations than nation-states, and to shield productive activity from politics.

The most salient examples of the failure of big, command economies were the experiments in Russian and Chinese Communism. The Russian experiment lasted over seven decades, the Chinese nearly three. Both failed, and both countries voluntarily abandoned their “Communist” systems, although China still uses the name.

The lesson here is not, as many pols wrongly conclude, a failure of “left-wing” or “collectivist” government. It’s a general failure of central planning and central control of an economy, i.e., of centripetal economic forces. The very same thing happened to “right-wing” fascism in Germany, Italy and Spain during and after World War II. Their centrally-planned fascist economies failed, and they converted voluntarily to non-centrally-planned free-market economies, albeit under some foreign pressure.

Another salient example is postwar Germany. Postwar destiny created two Germanys—East and West—one centrally planned (albeit by conquerors) and the other based on decentralized free-market principles.

The postwar history of these two parts of the same nation provides a good “experiment.” It was a controlled experiment—controlled for both culture and history— because both East and West were German.

Not only did the decentralized part vastly outdo the other in progress and prosperity. When the two merged under decentralized economic governance, the once-centralized and lagging part advanced to match the happy one (and international standards) in an astonishingly short time. That rapid transformation—insufficiently remarked perhaps because expected of Germany—was one of the most convincing demonstrations of the value of centrifugal forces in economic affairs.

Venezuela provides another example, if one were needed. Its government under Hugo Chavez and Nicolas Maduro has been freely elected. The nation is hardly a totalitarian state. In fact, it’s one of the more democratic nations in Latin America.

Yet its economy has suffered from centralized political planning every bit as much as the economies of Soviet Russia and “Red” China under Stalin’s and Mao’s respective tyrannies. Inflation is rampant, economic growth is in reverse, and store shelves have nothing for consumers to buy.

What Venezuela needs most today is not a right-wing dictatorship or yet more central planning by the elite. It need centrifugal forces that liberate international trade and private business—preferably business smaller than the elite-controlled oil giant—and lets them go free like stones from a sling.

Although there are still a few outliers, this lesson is well learned. No well-educated leader today believes that central planning and central control will advance a national economy. A bit of careful central banking and capital controls—to avoid crashes and build a stable currency—is as far as wise modern leaders go. Some still try central command, reflexively, as old habits die hard. Tyrants like Mugabe and Kim just can’t help themselves. But the poorly educated Venezuelan paratrooper and his successor may be the last leaders of a modern, relatively democratic nation-state who think that centripetal forces can cure or improve an ailing economy. Free markets work.

Politics and culture: “solutions” so far

So far, so good, for centrifugal forces. But economics hardly exhausts the tasks of nation-states’ government. Perhaps even more than promoting economic prosperity, the biggest task of a modern nation-state is to make sure its people are safe and secure. That means protecting them both from foreign invaders and terrorists and from each other. It means both “national security” and human rights.

Virtually every big nation-state today has a mix of peoples of different races, languages, cultures and religions. The three great empires—the US, China and Russa—certainly do. Even the relatively isolated and homogeneous cultures of Germany and Scandinavia are developing diverse populations under the pressure of refugees from Syria and the Middle East.

So isn’t this the most pressing political problem of our age? How does a nation-state survive and prosper when it has to accommodate different people and cultures? How does it protect all equally when some fear and even hate others, sometimes with plausible reason? Does it push everyone toward the center, toward assimilation and conformity? Does it consider itself a “melting pot” and require only the most essential conformities—to law and an ability to use the dominant language? Or does it do something else?

    The three great empires
The three great empires and smaller nation-states have answered these questions in very different ways. The most centripetal, by far, is China. There are some sixty native dialects of the Chinese language, most or all of which use the same hantsu writing system. But China is forcing all its people to learn and use the official spoken lanquage, Mandarin. (By contrast, my ex-wife’s relatives, all ethnic Chinese living in Malaysia, spoke Cantonese, Hakka, and Hokkien, but no Mandarin.)

In religion and culture also, China is forcing all its residents to conform to the dominant variety, that of the Han Chinese. It tries to minimize violence, and it usually succeeds. But with relentless political and social pressure, liberal use of political trials and jailing (especially for violent resistance) and massive, planned in-migration, China is trying hard not just to suppress, but to submerge, native cultures in Tibet and its Islamic Uigur region. Its policy is pure and simple: imposing national values and a uniform national culture on its diverse people.

America’s “melting pot” is quite different, and far more centrifugal. The Yankee notion of diversity requires only that non-dominant cultures obey general laws and cope with the dominant language, English. Otherwise, they can practice whatever religion they choose, speak whatever language they want, wear and eat whatever and however they want, and follow whatever culture they inherited. Most can even use whatever language they speak in official acts, such as voting. California, for example, publishes ballots and ballot-explanatory pamphlets in thirteen languages, including Spanish, Mandarin, Vietnamese and Tagalog.

Among the three big empires, Russia occupies an intermediate place. During its Soviet phase, it was highly centripetal. Stalin deported whole ethnic minorities thousands of miles like pieces on a political chessboard. But all that stopped cold with the Soviet Union’s dissolution, when once-conquered nations and some ethnic minorities in autonomous republics split off. Today’s Russia is like the US in some respects, with a smaller number of autonomous republics than US states, in a loose federal arrangement governed from Moscow, but with more tolerance since Soviet days. So Russia has made some moves toward local governance, or “federalism,” but it makes no special official accommodation, at least in its official acts, to languages other than Russian.

    Federalism
The most salient example of federalism in a traditional nation-state is of course the United States. That’s not surprising. The United States is the only modern nation forged out of distinct political entities by negotiation and agreement, rather than through war or gradual social evolution. (Britain’s federalism, including four states, arose mainly out of war and intrigue.)

The US is a manufactured state. It arose by agreement among the thirteen original Colonies. Thirty-seven other states joined later, agreeing to the plan in the Constitution that the Original Thirteen had crafted.

At the time of Formation, all the original thirteen Colonies had their own democratic self-government. But they also had strong common interests. At first they had to secure independence from England in our Revolutionary War, at a time when England was, by far, the Western World’s dominant power. Doing that required cooperation and unity.

Later, the Original Thirteen had to secure themselves in a dangerous world and to begin expanding and occupying a whole continent. That, too, required cooperation.

But all of the Original Thirteen had different origins and cultures. And their pols, like pols everywhere, were jealous of their power and wanted to maintain it. So the nation that resulted from this necessary cooperation was an uneven wall of differently-shaped stones, each with its own culture, history, and local traditions.

In theory, federalism is a simple but powerful idea. If you can find enough common ground among distinct states or cultures, you can merge them into one nation by allowing each to make and enforce its own, peculiar local laws, in accordance with its own local culture. At the same time, you can impose general laws that knit the society together, keep the peace, and provide for defense and foreign relations.

That’s the notion on the back of every dollar bill: e pluribus, unum, Latin for “from many, one.” It’s the motto of federalism.

But as with every simple and elegant idea, putting federalism into practice can be a challenge. The original Thirteen Colonies included two strikingly different cultures, North and South, each of which each claimed several states. Northern culture was communitarian, collective, industrial and enthusiastically democratic. Southern culture was agrarian, aristocratic and slave-holding. (Today, Southern culture is also far more militaristic and far fonder of guns among civilians.) As I’ve written in analyzing the modern movement for Southern secession, it would be hard to imagine two more different cultures sharing the same language, origins and (except for slavery) general history.

The clash between those two cultures produced the United States’ most horrible single war: our Civil War. That single internecine war killed about as many of us Yanks as died in combat in all of the United States’ foreign wars, including our Revolution. The same clash of cultures today is largely responsible for our political gridlock and polarization and, indirectly, for the bizarre presidential candidacy of Donald Trump.

So federalism is no panacea for severe culture clashes. It’s possible, although unlikely, that the United States will have to resort to the Chinese solution (suppression) or the Soviet solution (breakup). More likely, the United States will continue to drift as a nation while demographic changes and in-migration to the South, with its pleasant weather, make its culture more compatible with those of the non-Southern states. (The South is only about one-third of us, in population and in GDP, so presumably it will have to do the accommodating, and not the two-thirds majority.).

    The homogeneous states
Before leaving the subject of solutions to cultural differences that modern nation-states employ, we should briefly cover a final alternative: cultural homogeneity. The two modern nations best known for this “solution” are Sweden and Japan.

In population, Sweden is a tiny nation-state, less than 25% larger than New York City. Japan, in contrast, is a large and mighty nation, with the world’s third-largest economy (after the US and China). Yet both are renowned for maintaining cultural and ethnic homogeneity.

Today both nations are cosmopolitan and fully comfortable with globalized culture. Both trade, travel and engage in diplomacy around the world. Both have had a big impact globally: Sweden (despite its small size) with its Nobel Prizes and diplomatic corps, and Japan with its massive manufacturing productivity, its concomitantly massive global trade, and its products’ reputation for quality.

But there are signs that the paths of the two nations in cultural accommodation may begin to diverge. Despite its small size, Sweden has always been cosmopolitan and accepting of foreigners. It has just accepted over half a million desperate refugees from the Middle East, most Islamic and most from war-torn Syria. Although Japan is an economic powerhouse and economic mecca, its in-migration of people below the level of corporate executives has been minuscule, on a per-capita basis, compared to Sweden’s. Apparently Japan still has a policy and culture that value the homogeneity born of its origins as an island nation with a unique spoken language. (For writing, Japan relies on simplified Chinese characters, plus its own two much simpler syllabaries.)

These two nations—Sweden and Japan—are rare in their approach to cultural accommodation. Theirs are not the models that many other nations have adopted. For that reason alone, it will be interesting to see how their respective approaches work, as Sweden tries to accommodate masses of refugees from wildly different cultures, and as Japan approaches the questions of re-militarization and cementing alliances to contain China’s influence in the South China Sea.

    The European Union
After this extensive background, we can return to the opening theme of this essay: Brexit and its significance. Like the United States, the EU is a prime exemplar of federalism.

Not only is it the lastest exemplar. It’s by far the most ambitious. It’s trying to do what the original Thirteen US Colonies did over two centuries ago: knit the fabric of different cultures and local governments into a greater whole. It’s trying to do that in about the same way, by building a superstructure of government over the individual national sovereignties and differing cultures.

In this respect, the analogy between the US and EU is a close one. But there are at least two salient differences. First, the nations the EU is trying to meld have much larger differences in history, culture and language than the original Thirteen Colonies. Second, a large part of the impetus for forming the EU was to end the seemingly infinite succession of religious and imperial wars among European powers. The Thirteen had never warred among themselves; instead, they had cooperated in the war to gain general independence from England.

Perhaps for these reasons, they EU has taken a lot longer to complete its formation than the Original Thirteen did. The Thirteen took fourteen years to forge the Articles of Confederation, see that they weren’t working, and replace them with our Constitution. The EU, in contrast, has spent about half a century working on its structure and governance, with no end in sight. A third point of difference is the infinitely greater complexity of life and governance in the twenty-first century, as distinguished from the eighteenth.

But in both cases the enterprise is essentially the same. The accommodating states must figure out what is local and what is general and how to accommodate the two. The fact that we Yanks took two tries at it—in a much simpler age when the elite had no serious competition from ordinary people and from demagogues—shows how difficult the project is.

Any such project is a work in progress, inevitably and perpetually. Why? Because cultures and peoples grow and change with time. As moral and legal norms develop and become common, an agile federalism should take them from the “local” column and put them in the “general” column. When and if significant local differences arise, an agile federalism should accommodate them, by allowing local variations and (in extreme cases only) by moving them back to the “local” column. Leaders and people can also become smarter with time and experience, as our Founders did in discovering that Thirteen Colonies, each with its own trade and foreign policy and lack of a standing army, were a recipe for weakness and collective disaster.

Europe, now at peace for seven decades (if you don’t count the Cold War), may make a similar discovery. Perhaps Putin’s adventurous Russia will motivate it.

The point is not to give up, but to keep trying. Social evolution, like biological evolution, has no end. It will keep going, and we hope keep improving, as long as our species survives.

That’s what our Founders understood when they put the words “in order to form a more perfect Union” in the preamble to our Constitution, after our Articles of Confederation had failed. That’s what Europe’s most enlightened leaders have understood as they took Europe’s unification from the European Coal and Steel Community of 1951 to the (economically) mighty and revered EU of today.

Conclusion

Despite attempts by our South to obfuscate the point, we know now that slavery was the primary cause of the United States’ most horrible war. War was unavoidable; mere federalism simply couldn’t accommodate slavery. Morally, politically, economically and socially, the gap between free states and slave states was too big to bridge. Pols couldn’t paper over the difference just by calling the issue “local,” let alone after Southern States, by diabolical manipulation of Congress, enlisted the North to hunt down, capture and return fleeing slaves.

Now slavery as a public institution (unfortunately, still not as a despicable crime) is gone, not only from America, but from all the developed world. There may never be another issue so difficult to accommodate in a federal system. The travails of the Euro and the desire to regulate the immigration of extraordinary streams of desperate refugees seem trivial in comparison.

For us Yanks, the problem now is legal. Our Constitution has no provision to let states leave. Not only that. Every state, perpetually trapped in its embrace, must have its two senators, and impliedly must suffer minority rule in both houses of Congress, perhaps forever. This is our sad Yankee fate. No matter how much things change and grow, we are stuck with this defective, frozen governmental structure, unless and until pols evolve enough to give up counterproductive power while still alive. Don’t hold your breath.

The Founders of the EU were wise enough to let states leave. They were also wise enough not to specify exactly how. They foresaw that, if any nation or nations wanted to leave, they would have to sit down and negotiate with the states remaining, just as our Founders sat down and negotiated a new Constitution after the Articles of Confederation had failed.

There are those who want to “punish” Britain for wanting to leave, if only to discourage others from leaving. That’s precisely the wrong approach. Already Europe has had dismal experience with collective punishment. It applied it to Germany after World War I, and the result was World War II. A Europe that formed its Union precisely to avoid another such horror cannot possibly be so stupid as to repeat the disastrous blunder that caused it.

Instead, the remaining members of the EU should take Brexit as an opportunity to sit down and “form a more perfect Union,” not just for Britain, but for every member and for every European citizen.

Surely today’s big problems are not insuperable. Already some members have the Euro and others have their own currency. What’s wrong with some generously taking a big stream of refugees, and some few or none at all? Should the world’s grandest and most recent project in peace, prosperity and federalism founder simply because not all nations are as generous, well-ordered, or prosperous as Sweden and Germany? Similarly, could the economic problems of Greece—and maybe Ireland, Italy and Spain—be solved by allowing a temporary reversion to local currency, while keeping the rest of Eurozone—and the EU—intact?

The central problem of federalism is to determine what’s local and what’s general. That may change with time and cultural evolution.

It may also change with circumstances, especially extraordinary ones like the Crash of 2008 and the devastation and emptying of Syria. The Syrian Civil War can’t last forever. It will end, if only when there is no one left alive in Syria but Alawites, Assad’s soldiers and Russian and Iranian “advisors.” Then the flood of desperate refugees to Europe will slow or halt. How silly would EU leaders have been, and the Brits, if they had abandoned a worthy and even holy project just for failure to stay flexible in a transient emergency?

Like any living organism, federalism survives and succeeds better when it’s flexible and adaptable. There is no bright line between the local and the general, and there never will be. Where to draw the line depends on time and circumstance, and on social evolution.

Our big Yankee mistake was to draft our Constitution as if graven in stone, and to limit amendments to those approved by two-thirds of each House of Congress and three-fourths of our states.

That’s much too high a bar to change in a fluid and evolving world. We Yanks are now paying the price in stagnation, polarization and gridlock, with no end in sight. The “popularity” of the least qualified candidate for president ever is just one unintended consequence of that gridlock.

Europe should not make the same mistake; it should stay flexible. It should do its best to keep Britain in and, at the same time, make the EU attractive enough to avoid other members leaving. Enticement, not punishment, is the most effective and most modern approach—one that’s much less likely to lead to popular and economic discontent, let alone to war.

The same goes for other centrifugal forces. If Scotland wants to leave Britain, let it. Yet Scotland would do better to await the outcome of the negotiations than to bolt out the door now. Among other reasons, Scotland could use its internal leverage as a subunit of Britain to push Britain to stay, as well as to reform Britain’s internal politics.

Similar reasoning applies to the Basques and the Catalonians. Getting them to stay in Spain may just be a matter of adjusting what’s local and what’s general. But if federalism can’t or won’t accommodate them, let them leave.

It’s not as if the two groups are barbarians or slaveholders. They have been parts of Spain for centuries and part of a united Europe for as long as the EU has existed. They share most, if not all, of the common culture, common values, and basic legal principles of the Continent on which they live. If they think that minor differences in culture, laws, or economics are harming them, and that Spain won’t accommodate their local needs, then let them go. They can always come back, with incentives, not coercion. And in the cases of a Basque nation and Catalonia, just as in Scotland’s case, they can also be part of the EU and governed by a still-higher level of federalism.

Britain is the world’s oldest democracy and a paragon of democratic rule. The EU should do what it must to keep it in. That includes bending—not abandoning—its sacred principle for freedom of movement. Maybe a temporary halt on immigration of recent refugees would do the job. Maybe EU citizens now living in Britain could have permanent status, but there could be stricter requirements for newcomers. Maybe there could be a reciprocal arrangement: one new Continental permanently residing in Britain for each new Brit permanently residing on the Continent. Any such expedient, of course, would last only as long as the current refugee crisis. And it bears remembering that other EU members, such as Hungary, also have a keen interest in resolving these issues.

Good lawyers and diplomats can iron out these differences by making small adjustments. There is no insuperable reason to abandon the EU project, nor for Britain to leave it.

And if Britain must leave, both sides of the split must recognize the vast domain of morality, laws, mutual prosperity and security that Britain and the Continent will still have in common. The instrument of separation should recognize common principles by treaty, enforceable between Britain and the EU, even as separate entities. Similar principles should apply if Scotland leaves Britain, the Basques or Catalonians leave Spain, or some or all of the South leaves the US.

The important point is to recognize what is general in human progress. Since humanity’s most horrible war, our species has made significant, albeit halting, progress. We have universal declarations of human rights. We have prohibitions against genocide and ethnic cleansing. We have economic systems that try to pick a down country up, rather than stomp on it as the victorious Allies did loser Germany after World War I. And we have stable international institutions, such as central banks and nascent central regulators. There is no reason these fine institutions could not consult, coordinate and even work with their separate British counterparts, even (indeed, especially) when divergent views suggest divergent policies.

Sometimes political ideologies get in the way of pragmatic cooperation. “Austerity” is one. It’s condescension, selfishness and hubris masquerading as economic policy. It lacks the empathy, understanding and cooperation that are our species’ hallmarks. And as Nobel-Prize-winning economists like Paul Krugman and Joe Stiglitz repeatedly remind us, it makes little quantitative or historical sense. Keynesian economics has worked (in the Great Depression, and somewhat in the Great Recession) and will work again: government must provide jobs when broken private markets won’t or can’t, even at the cost of big deficits, which later prosperity should cure.

Perhaps we can measure some progress of human social evolution by how many good things move from the “local” to the “general” column. But a world without differences would be a flat, bland and lifeless thing. There will always be elements of joy and beauty—inconsequential to our species’ survival—that distinguish one culture from another. As empathetic and curious humans, we should celebrate them, not supress them.

Federalism does that by putting such things in the “local” column. The EU, like the US, should never forget that vital point.

The trick is to weed out ugliness in both the “local” and “general” columns while adjusting the two in a changing world. It’s better to do that within the context of a federal system, like the US and the EU. But it’s better to do it outside such a system than not at all.

That’s the tradeoff to be made in the next phase of the EU’s long struggle to improve itself. And the very same type of tradeoff faces the Scots, Basques, Catalonians and our Southerners as they weigh continued membership in larger societies versus secession.

Whether inside or outside a federal system, and whether in big or small nation-states, if we humans treat each other with respect and seek mutual benefit in cooperating, there’s no telling how far and how fast our social evolution can go. We don’t have to wait for random genetic mutations to evolve socially; we just have to think and stay flexible.

Endnote 1. The British discovered federalism the hard way. Long after England had annexed Northern Ireland, Scotland, and Wales by force, diplomacy and intrigue, it gave them each separate parliaments in an act of “devolution.” It’s ironic that a nation that has used federalism to keep itself united is breaking from a federal Europe. But that irony suggests a more felicitous outcome: accommodation by the EU to keep Britain in, just as England has accommodated its three other federal states to keep them in the United Kingdom. (England itself has no separate parliament of its own.)

Endnote 2. I cannot leave this essay without paying homage to Angela Merkel. Her measured, moderate and sensible response to the Brexit vote was exemplary. As one of the most intelligent leaders on the world stage, she knows that a vote to leave is not leaving. She warns that long, hard and delicate negotiations beckon. And she foresees that, with care and good will, some change for the better can come out of either outcome. Another British referendum would be ridiculous now but might be entirely appropriate in a year or two, under different circumstances and different terms. Brava! (Merkel has taken a more cautious tone recently, apparently under pressure from the self-righteous “kick the Brits out now!” crowd. But her initial, more salubrious reaction was both right and telling.)

The Big Lie about Free Trade

As we look at Brexit and search for solutions to what’s causing it, we must think clearly about those causes. “Free trade” is not at fault in destroying the middle classes in Britain, the US and other advanced nations. It’s the thoughtless exploitation of free trade by the elite, the 0.1%, to enrich themselves at the expense of their advanced-nation societies.

What does “free trade” mean? Does it mean shipping jobs overseas? Does it mean shipping out whole factories (60,000 in our Yankee case)? Does it mean hollowing out whole nations’ manufacturing capacity? Does it mean reducing healthy middle classes to workers in a so-called “service” economy where the elite provide big-buck services like law, accounting and banking, while the erstwhile “middle class” does menial work for them? Does it mean a return to a sophisticated, modern form of feudalism?

No, no, no, no, no and no!

Show me where, in any trade deal, the words on paper encourage or even explicitly permit any of these things. The closest you can come is the “pay for rules” provisions, which allow multinational corporations to sue governments for money when those governments enact rules to protect their people from unsafe workplaces, unhealthy environments and unfair labor practices, and those rules also incidentally reduce profits. “Pay for rules” allows corporations to recover those profits not in national or supranational courts, such as the EU’s, but in private—and secret—arbitration tribunals. (See 1 and 2.)

“Pay for rules” provisions are social and political abominations. They should be stricken from every trade pact, present and proposed, including the proposed TPP, the so-called “Trans-Pacific Partnership.” If they are not stricken, the TPP should be rejected, not just by the US, but by every prospective party to it that cares about economic equality, social justice and having a middle class. We cannot allow multinational corporations—as fine as may be the products and services they provide—to subvert governments worldwide by making expensive the rules that governments enact to protect their people from injury, health and environmental hazards and from economic exploitation. That way lies a new feudalism.

But “pay for rules” and shipping whole factories abroad are not “free trade.” They are perversions and misuses of free trade.

“Free trade” means one thing only. It means that Country A cannot stop or slow the stream of products (and now some services) coming from Country B by prohibitions on imports, tariffs, quotas, or “regulations” that make no sense except as pretexts for stopping or slowing imports.

“Free trade” means no protectionism, and nothing more. So how did we go from allowing the unfettered shipment of products and services to shipping whole factories and industries overseas?

We went there because the 0.1% saw an opportunity to get rich quick. If they could combine their nation’s know-how, technology and management expertise with the low wages of developing-nation workers, they could undercut their competition—including their own domestic factories—and make bundles of cash.

So they did so, eagerly and enthusiastically. The result, as Bernie oft has said, was sending almost 60,000 US factories abroad, to places like China, Mexico, Vietnam and Bangladesh. US manufacturing became a specter, a shadow of its former self.

The US is not alone. I use a Braun electric razor to shave. It’s made in China, not Germany. I’ve had it for over two years, and it works like a charm. It’s durable and flexible and well made, and its battery seems to last forever, with no degradation in charge.

Do you think the Chinese could have made such a product on their own? Hardly. The Germans, apparently, taught the Chinese everything. The Chinese now know how to make the flexible cutting screen that is the razor’s “cutting edge.” They also know how to organize and supervise manufacturing to maintain consistent quality.

Somehow, Germany has managed to survive as a manufacturing nation despite its shipping some factories like this one abroad. It has done so primarily by staying ahead of the manufacturing curve—by creating new, more sophisticated manufacturing industries to replace those it has shipped overseas.

The German “solution” deserves study and emulation. But it may not be easily transferable to other, larger, less homogeneous nations. And in any event, it’s beside the point here. The point is that what Braun did, what the US has done, and what Britain and every other advanced nation has done, is not a necessary consequence of “free trade.” It was a choice, choice that should have been made by the entire societies but actually was made by the elite, in its own self-interest.

Free trade is just a tool. It’s a tool by which advanced nations have reduced the economic imbalances that helped cause World War II, regularized international economic relations, and brought over a billion people out of extreme poverty in the last twenty years.

But tools can be misused. A hammer can become a murder weapon. Or it can negligently strike your thumb. That’s what’s happened with “free trade.” The elite have used it, apparently unconsciously, to destroy the middle classes of advanced nations and, in the process, to create a modern Luddite rebellion.

That rebellion is responsible for the bizarre candidacy of Donald Trump. It’s responsible for Brexit. And you can be sure it will have further consequences unless the underlying causes are resolved.

The solution is not to stamp out free trade with tariffs or other forms of protectionism. Doing that would only cause chaos, a global recession and perhaps a Second Great Depression. The solution is to stamp out free trade’s misuse.

The 60,000 US factories are gone. They are not coming back. Nor are the equivalents in Britain, France, Germany, Italy and other EU nations. It’s just a matter of time before Japan’s middle class also starts to feel the pinch. Maybe it already has, in the form of Japan’s extraordinary economic stagnation.

But all these countries are able innovators. Therefore, the solution is to keep the next generation of factories from going offshore. Nations can do that by direct prohibitions, by tax and other incentive and disincentives, and by taking control of intellectual property developed onshore. The “solution” is not to kill or main “free trade,” but to manage it to avoid political and social revolutions in the world’s most advanced societies.

François Hollande may be a socialist, but he’s apparently not very bright. He says that negotiation over Brexit is about keeping Britain from getting the goodies while avoiding the burdens. That’s not it at all. The negotiation over Brexit is about making sure that Britain, France and all the other EU nations can continue to have a middle class that feels secure enough not to revolt. Britain’s working class is the canary in the coal mine.

It’s extraordinary that a leader whose nation was recently crippled by massive labor strikes can’t seem to understand this point. If he and other EU leaders can’t study up, maybe it’s time for a change of national leadership, in order to save the EU’s middle classes. The choice that Britain, in particular, makes for its next prime minister will be one of the most consequential in its history.

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