The Collapse of Western Democracy

The Collapse of Western Democracy

Over the weekend, friends asked my opinion of Brexit. You lived abroad, they said, and you’re an analyst or something, so what can you tell us?

It wasn’t what they wanted to hear.

Most Americans who support Britain remaining in the European Union have characterized “leavers” as ignorant, backward-looking bumpkins, motivated by chauvinism or even racism: the British version of Trump supporters.

In a way, that’s what they are — a sizable group of ordinary people with valid concerns who’ve been neglected and misled by elites for so long that they’re seizing their only chance to register their rage at the established order. But just like in the U.S., Britons’ concerns have been buried under an avalanche of prejudice and mischaracterization.

Can we Americans learn anything from this … or is it too late?

The Shadow on the Cave Wall

Like the shadows in Plato’s allegory of the cave, politics is never what it seems. Brexit is a case in point.

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Elite opinion says that English cultural chauvinism explains Thursday’s “leave” vote. Many “leavers” were bigots, but for most, anti-immigrant sentiment was just one way they dressed up their underlying frustrations. Tellingly, “leave” seems to have been just as popular amongst nonwhite lower-class British as amongst whites. Second- and third-generation South Asians and West Indians voted the same way as the Andy Capp pub-and-darts set.

Here’s my take on what happened — and why it’s going to happen here, too.

The EU is essentially a supersized free-trade agreement. It provides for the free movement of capital, labor, goods and services throughout the EU. But to avoid competition between member states, EU rules override laws that were previously decided by sovereign parliaments, such as agriculture, fisheries, external trade, the environment and, above all, budget policy.

This framework has affected British society differently. (Note that England is just a part of Britain, along with Scotland, Wales and Northern Ireland.)

  1. It decimated Britain’s manufacturing, mining and agricultural heartlands, especially in the west and north of England. Plants fled to lower-cost places in Eastern and Southern Europe. As in the U.S. “Rust Belt,” millions of English households lost their livelihoods and never fully recovered. They have stagnated ever since — especially since Eastern and Southern Europeans have taken advantage of free borders to compete for local jobs as plumbers, electricians, nurses and the like.
  2. It made the City of London the center of Europe’s financial universe. The “City” is a separate administrative division of London proper and can make its own rules. It used this power to make itself irresistible to bankers. London rapidly became the headquarters of Europe’s financial services sector and top-tier incomes soared — just like the U.S. “1%.”
  3. Scotland and Northern Ireland attracted investment from non-EU companies wanting headquarters in the EU so they could access the common market. That boosted their economies and explains why they voted overwhelmingly to “stay.”

The EU Contradiction

The benefits of EU membership weren’t evenly shared. The London financial elite and Scotland and Northern Ireland prospered. The English heartlands didn’t.

That’s why English of all colors voted for Brexit.

The only way this could have been avoided is if Parliament had used its tax powers to divert some of the massive flows of wealth to London to provide improved public benefits and services to the rest of England. But it didn’t, because raising taxes on the financial set and on corporate headquarters would have led them to relocate to somewhere else in the EU.

Instead, U.K. governments pursued austerity and privatization policies that made English lives even harder. For example, housing prices have soared as cheap money flowed into Britain and the government stopped building public housing.

In other words, the same mechanism that created massive inequality in Britain — the EU — made it impossible for Britain’s leaders to do anything about it.

To make matters worse, the British elite misled voters year after year, promising benefits that never came. And after 9/11, they adopted the “clash of civilizations” narrative, which encouraged ordinary people to blame foreigners for their problems.

Brexit: As Ye Sow, So Shall Ye Reap

The EU was sold as an unalloyed benefit to everyone. After 40 years of EU membership, a majority of Britons decided that it actually reflects the agenda of a narrow group of wealthy and powerful people at the pinnacle of society, not the majority.

This has nothing to do with traditional left-vs.-right notions of politics. British voters of all stripes used Brexit to signal their rejection of the ruling elite. Labour and Tory voters supported Brexit in much the same proportion.

I draw two conclusions from this:

  1. Increasingly, on both sides of the Atlantic, the left/right lens through which we interpret politics obscures fundamental problems of sovereignty and equity. Focusing on cultural issues to mobilize voters works for a while, but it blew up in the Tories’ faces by giving them an anti-immigrant rallying cry against the elite. It has done the same to the Republican Party, and may do the same to Hillary Clinton. But focusing on immigration won’t solve the real problem.
  2. When enraged voters are given an opportunity to “blow up the building” rather than remain in it, they may do so — after all, nothing else they’ve tried has worked. Years of broken promises mean that when given a choice between the status quo and a demolition job, as U.S. voters are now, they may choose the latter.

A final conclusion is even more sobering. Globalization and democracy may well be incompatible. The outcome of David Cameron’s voluntary decision to hold a Brexit vote will send a clear message to the ruling elites of the world: Don’t dare let the ordinary person have a say.

That, of course, will just raise the political temperature even higher … until something gives. And when it does, you won’t want your money or your future to be stuck in a place like the U.K. … or America.

Kind regards,
The Collapse of Western Democracy - Brexit
Ted Bauman
Editor, The Bauman Letter