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After the Brexit party—what’s the hangover cure?

Posted By on July 20, 2016 @ 14:30

Image courtesy of Flickr user Annie Mole

The heat of the Brexit result has given way to a cold dawn light revealing the enormity of the British decision. The nation is deeply divided, not just along traditional class lines, but between youth and their ‘boomer’ parents, between London and the rest, between the great land owners and the small leasehold farmers, between agricultural producers and the unemployed in the formerly great industrial cities, and between England and Scotland—the divide between England and Northern Ireland being of equal significance.

Two great political parties, Labour and the Conservatives, longtime models for their counterparts in other western democracies, are in disarray. While a majority of their parliamentary members favoured the ‘remain’ position, populism and wedge politics triumphed over the national interest as they failed to win the support and trust of the electorate.

It was a momentous failure in advocacy and leadership.

The economic consequences remain unclear, but they are likely to be severe. Notwithstanding President Obama’s soothing words [1], Britain’s strategic position in Europe can only decline, as France and Germany unite to impose harsh terms as they fight off similar disruptive forces within their own polities. And Britain’s political standing in Europe has been trashed.

The forces of the far right, led by Nigel Farage, and the populist wannabes of the Conservative right, led by Boris Johnson and Michael Gove, combined with the weak laissez-faire elements of the Labour left to ventilate an enormous wellspring of anger within the British electorate. This anger, fuelled by the volatile cocktail of rising inequality and immigration, is directed squarely at the political class—a class that has created and sustained the four key ‘deficits’ that sit at the centre of Britain’s malaise. These are the vision, leadership, trust and accountability deficits that are as visible in the US, and Australia for that matter, as they are in Britain.

Indeed, the lack of vision, leadership, trust and accountability affecting all the western democracies has contributed significantly to the growth in inequality across the major western economies. As Thomas Piketty argues in his book, Capital in the Twenty First Century [2], where the return on labour is less than the return on capital, inequality is the inevitable result. The enthusiasm with which UK governments since Margaret Thatcher and US governments since Ronald Reagan have adopted ‘small government’, ‘deregulation’, ‘free enterprise’ and ‘the market-based economy’ has led to precisely the situation that has incubated the likes of Farage and Trump.

Markets are anomic and amoral: they are essentially Darwinist, where the ‘dog eat dog’ and ‘winner take all’ character of markets seduces weak governments into mantras like ‘small government’ and ‘low taxation’ (interpreted by the multinationals as ‘no taxation’) that ultimately reduce services and penalise the victims of economic change.

Thatcher’s reforms, for instance, removed ‘inefficient’ mines and industries, reduced union power and sold off state-owned assets, without creating new industries and employment opportunities for those who lacked the skills or the agility to morph from mining and manufacturing to the services sector that now generates around 80% of the UK’s GDP [3]. US economic policy has similarly advantaged the financial elites at the expense of middle America and propped up predatory financial institutions at the expense of the taxpayer.

In the UK, and across the western democracies more broadly, the lack of hope in the young meets the hopelessness of the aged, and the result is anger—an anger that reveals itself in an attack on the political class rather than sound judgement about the nation’s, and the citizens’, economic future. Neo-liberal economics has failed the citizens [4].

For quite different reasons, Paul Kelly in his Triumph and Demise [5] and I in No, Minister [6] have identified the key deficits that infect the current conduct of Australian politics—leadership, trust and accountability. To those one should add vision, since that was totally absent from the arguments advanced by both sides of the Brexit debate. As Clausewitz noted in On War [7], the absence of vision and leadership (they usually go together) has fatal strategic consequences.

Most informed commentators have called the Brexit plebiscite and its outcome for what it was—a calamitous mistake.  Like the dog that caught the bus, Farage, Johnson, Gove, and Leadsom didn’t know what to do with their victory, and have vacated the field. Corbyn will surely follow. Theresa May, an ambivalent ‘remainer’ at best, is doomed to lead a divided and weakened party to deliver a result that will take the ‘great’ out of Great Britain and potentially the ‘union’ out of European Union.

The consequences for Europe are profound. Hollande and Merkel have already indentified the strategic danger to Europe’s future, which in part underpins their firm position on a divorce settlement that’ll deliver no kindness to the departing party. They will simply not permit Britain to have its cake and eat it, since to do so would see Spain, Italy, and Greece (and possibly a right-wing France) demanding exactly the same terms.

The possible break-up of the EU would be an event of the greatest strategic significance. War has been Europe’s default position for two and a half millennia. As the German government under Merkel has recognised implicitly, the cost of repeated bailouts for the weak economies brought in under the euro umbrella is infinitely less than the cost of war, defeat, and reconstruction. How long that recognition can survive is anyone’s guess.

So, what is the cure for the Brexit hangover? For a start, Theresa May will need to articulate a vision for Britain that unifies the nation around its greatest strategic assets: its political and legal tradition built upon the rule of law; its economic tradition built around invention, innovation and free trade; its religious and cultural tolerance; and, perhaps its greatest current strength, its racial diversity.

She needs to bring hope to the fragmented groups of Britons who feel dispossessed or outcast. She needs to build accountability structures that prevent a re-occurrence of the political wilfulness that took Britain to war in Iraq. She needs to restore trust in the democratic workings of Westminster. And she needs to restore to her party the conservative tradition of service and altruism that distinguished Gladstone and Churchill, tackling head-on the inequality resulting from the cupidity and venality of the City. She needs to display leadership. The best of British to Prime Minister May.                

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URLs in this post:

[1] soothing words: http://www.nytimes.com/2016/06/25/world/brexit-obama.html?_r=0

[2] Capital in the Twenty First Century: https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Century

[3] 80% of the UK’s GDP: https://next.ft.com/content/2ce78f36-ed2e-11e5-888e-2eadd5fbc4a4

[4] has failed the citizens: https://www.project-syndicate.org/commentary/anti-globalization-backlash-from-right-by-dani-rodrik-2016-07

[5] Triumph and Demise: https://www.mup.com.au/items/149038

[6] No, Minister: https://www.mup.com.au/items/155880

[7] On War: https://en.wikipedia.org/wiki/On_War

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