Brexit has highlighted those that were left behind by globalisation

tiberius gracchus death

HFN thinks that leaving the European Union would be a mistake.  It is likely, however, that it will happen.  So be it.  The world will not end.

However, Brexit has highlighted a serious problem that threatens the stability of western countries: the plight of those that were left behind by globalisation.  Millions of people and families in the United Kingdom and in other parts of the developed world have not benefited from globalisation.  In the aftermath of the Brexit vote, the elite that have benefited from globalisation have mocked the intelligence of Brexiteers.  After all, voting to leave the EU was fundamentally against many of their interests: British fishermen will be worse off outside the EU; poor parts of Cornwall and Wales will lose development funding; the NHS will be starved of critical doctors and nurses; farmers will struggle as 55% of their incomes, linked to the Common Agricultural Policy vanishes. Bremainers talk to their like minded friends and moan: “How stupid are these people?”

The Bremainers do have a point.  Voting against your apparent financial interests does seem to be particularly stupid.  But if Bremainers are so smart, they need to look deeper.  They need to understand why Brexiteers felt the need to vote the way they did.  And the answer is Globalisation.

Globalisation has had many major waves.

One huge wave that upset large parts of the world came during the 1800s and 1900s.  During this era most non Western countries were battered by free trade as imports of Western low cost goods wiped out their domestic production.  India and China’s economies, for example, were decimated, resulting in social unrest and political collapse.  While many citizens of the West also suffered during this industrialisation process eventually their wages started to rise, along with standards of living.  The middle class eventually came into being during the post war period.

Another wave started at the end of the Cold War when countries previously shielded from Western industrial might joined the global economy.  With the creation of the World Trade Organisation sleeping giants such as China woke up and started to compete.

During both of these waves there existed, and still exists, a global supranational elite.   HFN is part of that elite.  We went to the same schools and universities.  We are White, Black and Brown. We are Christians, Muslims and Atheists.  We wear the same clothes and share the same culture. We all speak English fluently, though we may have a different mother tongue.  We can travel from country to country with few, if any, restrictions and can live and work where we want.

We have benefited tremendously from globalisation.  We have taken the pension funds of regular workers in our home countries and have invested the money into profitable ventures overseas, building airports, roads and factories in Brazil and China.  We have acted as management consultants, teaching companies in Korea, Taiwan and Mexico how to compete with European companies.   We have provided legal and accounting services to ensure that companies in Russia and Nigeria can get access to capital from London and New York. We have provided engineering advice to ensure that there is a smooth transfer of intellectual property that the West has accumulated over 200 years to companies all over the world.

We have persuaded ourselves that we have been doing a public service.  Like Christian missionaries spreading the world of Jesus in the 1800s, alongside new railways and trade deals, we take pride in our goodness.  We have brought millions of people out of poverty around the world. And we have looked after the less well off in our home countries by giving them the benefit of cheap televisions, iPhones and clothes.  Everybody has benefited.

But that is a convenient, self serving, lie.  The supranational elite has benefited.  People in developing countries have benefited.  But our own people have not.  We have given them trinkets, modern day versions of the glass beads we gave to native Americans in the 1700s.  What we have done is hollowed out our own economies.  American factories that once made goods for all over the world have closed.  British shipyards that carried our goods to foreign lands have been converted to bars and cafes.  The jobs that sustained millions of middle class families have gone.  We have created competitors where once there were consumers.  In the meantime we have allowed in huge numbers of immigrants from all over the world.  For the supranational elite this is wonderful: we get access to different cuisines, are exposed to different languages and cultures, and have a lot of labour who can do work that many of our own citizens cannot do or do not want to do.  Those that are left behind have come to see immigration in a different light.  Immigrants that do have jobs are “stealing” the jobs from natives, and those that do not have jobs are “parasites” on society.  Either way, they are unwanted.

The leaders of India and China and much of the developed world have much to be thankful for this supranational elite.  They would not have been so unwise.  Looking back at Chinese history, for example, it is clear that their leaders were far more interested in keeping China strong.  China managed to keep hold of two key intellectual property areas – silk  and porcelain production – state secrets for hundreds of years.  Today China mandates that if western companies want to sell goods or build factories in the lucrative China market they need to hand over key intellectual property rights.

Trump and Brexiteers have been riding this backlash against the power of globalisation.  Sure, Trump and leading Brexiteers are also part of this supranational elite and probably don’t really care about those that have been left behind.  They are more like Tiberius and Gaius Gracchus, the popular tribunes of the people who led a populist revolt against the Roman senate in the mid 130s BC: they are using the angst of the people to propel themselves into power.  But they are dangerous, nonetheless.

In order to have a stable country all of its citizens need to buy into the political and economic system.  True, a country that only benefits a (supra)national elite can maintain the status quo for a long, long, time.  The Romanovs had a good run until 1917.  The Bourbons had a good run until 1789.  North Africa and Syria had a good run until 2010.  Unequal systems ultimately get rebalanced and a lot of people get hurt along the way.

We supranational elite need to think very hard about what lessons should be learned from Brexit.  What can we do to make the lives of the working and middle classes better so that they too buy into the benefits of globalisation. How do we ensure that our countries can provide good, satisfying, well paid jobs for all of our citizens, no matter how smart or how hard working.  We need to slow down global integration, pause on TTIP and TPP, and ensure that everyone catches up and is with us.

Because if you thought that Brexit was bad, it could be a lot lot worse if really effective populists take over.



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