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

25 June 2016

Brexit: A Letter from the “Lower Classes”

[For a recent post on how to save the global middle class, click here . For a brief note on Brexit’s financial impact, click here.]

Our Dear, Right Honorable Elite,

Most of you can’t ken why we, the British working people, voted to leave the EU. So we thought we’d write you a little note to explain.

It’s not that we don’t want peace and prosperity. We do. We’re the blokes who fight and die in the wars you start. We died, by the millions, in the most misguided war ever—you know, the one we Brits call the “Great War.” Many of us died in the trenches from shelling and shooting and (horribly) from mustard gas.

You had the nerve to call the policies that caused that terrible, useless war “the Great Game.” And we went along. We went along because of “duty, honour, country.”

Those were the values then, and you shared them. You were right there in the trenches with us, suffering and dying by our side. All of you were there: dukes, earls, marquises and their sons and cousins. The Great War was a Great Mistake, as was the collective punishment of Germany that motivated the next one. But you shared the consequences of your mistakes. We died in the Charge of the Light Brigade, but you led us and died, too.

Loyalty, duty, and sacrifice. That was the deal then. We “lower classes” bought it. The Queen still follows it: even in her old age, she works as hard as any man alive. She never complains.

But below her level, that’s all gone now. In its place, you’ve got your little theories. You give us “free trade,” “globalization,” “economic efficiency” and “shareholder value.”

These things make may sense to you, in the abstract, plush world where you live. But for us their results have not been good. The great manufacturers where we used to work hard and well are gone. They’ve been broken up, like Imperial Chemicals Industries. Or they’re parts of Yankee or other foreign firms, like Land Rover and Jaguar. The good jobs have gone offshore with the headquarters.

And the immigrants? Well, they’ve come, by the millions.

They don’t seem to bother you. You’ve got the education, the connections, the wealth and the power to avoid the bad ones. The few immigrants who make it to your rich communities share your education, wealth and values. They speak the Queen’s English well. You don’t get many of the misfits, malcontents, criminals and drifters who live where we live. Immigrants don’t take your jobs. And ISIS recruits don’t live in your gated communities.

We, not you, are the cutting edge of immigration. You get the benefits of a bigger labour force, lower wages and a more docile population (albeit with occasional outbursts of terrorism). We bear the discontents.

And then there’s London, with its City. It no longer governs a nation of factories where middle-class people like us make worthy things for good money. Instead, its elite sit in front of computer screens, shuffle money, gamble at high stakes, and prepare the next financial panic.

A couple of years ago, your house organ—the “Economist”—went so far as to brag—brag!—that London’s “greatness” comes in part from bankers and rich refugees seeking good government, including exiled Russian oligarchs. In an excess of humility, that rag called London “Europe’s greatest city.” But London is not where most of us live. Nor is Europe.

The Yanks, we hear, have a theory, too. We “developed” nations are all going to do “services.” Lawyers will get rich when we sue each other. Bankers will get rich gambling on an uncertain global economy.

What will we working blokes do? Open pubs? And where will the ale come from? Germany?

What’s in that for us?

So, yes, we bought your little theories when you shared the pain they caused. We fought the Great War for the glory of God, Saint George and the Empire. We fought the Big War, which also followed from your bad foreign policy, because we had to: it was a matter of survival. We helped build British industry, working under appalling conditions, for industrial progress, for the glory of King and Crown, and also because we had to.

But now we’re getting a little tired of your theories. We’re people, not tokens in some great economic game. Our lives, happiness and families matter.

We did our parts, and we always will, as long as the game is fair and someone, somewhere takes our humanity into account.

But we want good jobs with a bit of self-respect, preferably in manufacturing and construction. We don’t want to live in a nation of pubs. We don’t want to go to war again with Germany or Serbia or anyone on the Continent. But we also don’t want to live lives of quiet desperation, serving bitter or summonses to our fellow Brits, and dwelling in neighborhoods with all the wretched refuse of communities even more desperate than ours.

A united Europe and global capitalism are working fine for you. A smaller and smaller slice of you are getting richer and richer, and more and more powerful. But they aren’t working for us.

So get back to your drawing boards and gin up a better theory, one which includes us as more than lifeless commodities of labour, to be played off against an endless stream of desperate foreigners and asked to live with them. Once you do, we’ll be back at your side, as we always have been, whenever the burdens and benefits have been shared.

With respect and hope for a better future,

The British Working Class

Life After Brexit

There are only two things you can be sure of about Brexit: (1) analysts will overanalyze it, and (2) markets will overreact. The latter appears to have been the case Friday (yesterday).

This is not war, folks. It’s not economic Armageddon. It’s not even a replay of the Crash of 2008, which we seem to have survived. Britain and all the EU nations will still be members of the WTO. Most will be members of NATO. Smoot and Hawley will not rise from the dead to stalk the Earth as zombies.

Think every business in the UK and EU will suddenly change its prices? Some might, for example, if automatic tariffs arise, but are there any? Who knows? Other scoundrels may gouge, just for greed, like Valeant. But most will do business as usual, wait and see.

The real problem is for analysts. To tell our post-Brexit future with any accuracy, you would have to know all the details in: GATT, the WTO, all the various versions of EU treaties, and all the dozens of bilateral trade treaties involving the UK and EU nations separately. Then you would have to sit down and analyze how they interact. Proper analysis probably would require a stack of paper a foot high, filled with excruciating detail, and computer models approaching those that project global warming in complexity. If anyone has assembled either, my take on our species’ general laxity and penchant for shooting from the hip is misinformed.

If anyone has a general handle on this, it's the USTR, foreign counterparts, and a few trade lawyers earning $1,000 an hour (who aren't giving their advice for free). Some companies may have detailed knowledge for particular products or product lines. For the rest of us, it’s wait and see.

Waiting and seeing is a good idea in any event. Why? Because no nation has ever left the EU before. So there’s going to be some negotiation and a lot of uncertainty, for up two years after Britain submits its notice, which it hasn’t done yet.

Some in the EU are going to try to punish Britain for wanting to leave, and to discourage other members from leaving. But in the end, the negotiators will probably wax reasonable and make the best compromise in their separate interests, as most diplomats do. It’s even conceivable that, after long negotiation, Britain will decide to stay under conditions that will assuage other nations’ fears, too.

The EU has been a wonderful peacemaker. But as an economic amalgamation of entirely different economies and societies, let alone as a super-government, it has self-evidently been far from perfect. Eventually, the diplomats may sit down to “form a more perfect Union,” just as we Yanks did in transitioning from our Articles of Confederation to our Constitution—a process that took seven years, or fourteen including the negotiations over both compacts.

The sole prediction that now seems safe is that those making facile predictions—especially apocalyptic ones—will prove wrong. What is true is that the same financial “experts” who gave us the Subprime Crisis and the Crash of 2008 will treat Brexit as an opportunity to do a lot of gambling and a little swindling. Some gamblers will win, and some will lose. The winners will claim it was all brains and skill, and necessary for a well-functioning economy; the losers will say it was all government’s and central bankers’ fault. Over-financialization of the developed world will continue.

If there's any risk of an economic apocalypse, it’s from all the inevitable speculation on Brexit, not Brexit itself. Brexit is a political earthquake, not an economic one. It’s the revolt of a particular nation’s middle class (in this case the Brits’) against the notion that fuzzy abstractions like “free trade,” “economic efficiency,” “shareholder value,” “freedom of migration,” and “austerity” are invariable paths to the general welfare. It’s a revolt against elitist dogma, which often seems self-serving, and for flexible, practical, event-responsive and data-based governance, based on the popular will. It might hurt the bankers and the ideologues, but it will probably strengthen democracy.



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