Yves here. This is a judicious, high level overview of the Brexit vote and its implications, the big one being that it moves Britain to the right.
By Philip Arestis, Professor of Economics at the University of the Basque Country, Spain and Malcolm Sawyer, Professor of Economics, University of Leeds. Originally published at Triple Crisis
On June 23, 2016, the UK voted by 52 per cent to 48 per cent, on a relatively high turnout of 72 per cent, to leave the European Union (EU). The UK and its EU partners will now have to enter into negotiations, which are likely to take at least two years in view of Article 50 of the Lisbon Treaty, the so-called ‘formal exit clause.” The economic impacts of UK exit from the EU will depend to a considerable extent on the outcome of those negotiations.
The coalition for “remain” ran in political terms from moderate Conservatives, through Liberal Democrats, Labour Party, and Greens. The supporters of “remain” generally covered large corporations and trade unions, universities and scientists, those in the arts and the media, and Premier League soccer teams. The “leave” campaign had more support from small businesses (though by no means universal), nationalists, and free marketers. And crucially received large electoral support from working class voters, particularly those located in the old industrial areas.
In “narrow” economic terms, the effects of Brexit are likely to be negative but not to a catastrophic extent. These come from trade effects—the UK would leave the “single market,” trade relations between UK and the EU would be somewhat more difficult, with some tariffs in place instead of tariff-free. The estimates from a wide range of official organisations (HM Treasury, IMF, OECD for example) and research organisations (National Institute for Economic and Social Research, Institute for Fiscal Studies, London School of Economics, for example) had put output and employment losses from Brexit which over time could amount to the order of 4 to 5 per cent of GDP. There would also be negative effects that would emerge from the City of London weakening in view of a number of the financial sector companies emigrating elsewhere in the EU; and volatile financial markets in more general terms.
During the referendum campaign these estimates were presented in terms of the economy crashing, falling off cliffs etc., and expressed in ways which allowed no allowance for any uncertainty of forecasting. Yet such losses of output, which means being lower than it would have been otherwise but still involving some economic growth, would be smaller than those suffered during the financial crisis. There are reasons to think that these estimates were on the high side—though it will never be known as the estimates are the difference between two alternative time paths and at the most only one of them would be followed. The estimates often build in significant effects of trade on productivity, and the fall in trade after Brexit through tariffs on EU-UK trade leading to fall (below what it would have been) in productivity. Previous experience with similar estimates such as those accompanying the formation of the “single market” in 1992 when gains of up to 6 per cent of GDP were anticipated but did not materialise may see smaller losses through Brexit. Paul Krugman in the New York Times put the loss of output at around 2 per cent of GDP. The Bank of England has eased “special capital requirements” for banks in view of fears of risks to financial stability. This implies that banks can pump into the economy up to £150bn. What is more important, though, in terms of supporting the UK economy after Brexit, is clarity on future fiscal policy, and acknowledgement and support of the view that it can help the economy in co-ordination with monetary policy.
In the first weeks after the referendum result in favour of “leave,” there has been the anticipated fall in the sterling exchange rate whereby the pound has fallen to its lowest level in 31 years against the dollar and it is at a 2-year low in relation to the euro. This should be seen against a background of a current account deficit of 5.5 per cent of GDP (expected in 2016; up from 5.2 in 2015), which has tended to worsen in recent years especially on the net income rather than the trade side. This lower sterling exchange rate may soften the blow with some stimulating effect on exports and raising the sterling value of income flows from overseas. However, the more significant impacts in the next few years could well come from uncertainty—simply delays in undertaking investment and in hiring workers until it becomes clearer what the trading relationships between the UK and the EU will become. This is overlaid by uncertainties over the status of EU nationals currently working in the UK, and the degree to which the free movement of labour enshrined in the EU will change. The economy may well tip into recession coming on the back of the uncertainties generated by the leave vote.
The negative economic effects are likely to be long-lasting. Investment not undertaken leads to a lower capital stock well into the future. But these negative economic effects are unlikely to be catastrophic in themselves—though they do add to the underlying weaknesses of the UK economy notably in terms of its current account deficit and over reliance on the financial sector.
The major catastrophic effects are political. The effective leadership of the “leave” campaign was the more right wing elements of the Conservative party and UKIP (United Kingdom Independence Party); more right wing in terms of being nationalistic and anti-immigrant, pro-“free markets,” neo-liberal, and pro-privatisation. As we write, the leadership of the Conservative Party, and thereby the person to be Prime Minister, is being contested. Whatever the outcome of that contest, it will represent a significant shift to the right in British politics. Much of the constituency, which voted “leave,” will be those who suffer from this shift. The political right would be more pro-austerity and more for privatisation of the National Health Service. The political right will have been put into power by the votes of the working class (in favour of Brexit), and then that working class will be the losers. However, if it were indeed the political right, which comes into power, attacks on workers’ rights (under the heading of de-regulation) are highly likely.
A further expectation as reported in the Financial Times (July 4, 2016) is that Brexit could very well result eventually to the collapse of the EU and to the end of the euro. This is so in view of the right-wing parties in Italy, Germany, France gaining ground; also gaining ground are the populist parties in Ireland, Portugal, Spain and Greece. All these parties are actually anti-EU as well as euro-sceptic and could be encouraged to promote these particular objectives of theirs in view of Brexit.
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The author does a poor job of analyzing the leave vote.
The strongly leave areas were the UK industrial and rural areas, and older people.
The young have the choice to reapply in ten to twenty years when demographics change.
A swing to the right is not so certain. If Labor understand the benefits to them of a move left, more local manufacture and workers protection from free trade, the resultant swing could be left.
Currently the UK Labor party is in an internicine struggle between the Blairites in the Parlimentary Labor Party, and the Labor party at large.
No one in the UK is currently articulating much, as the vote caught all by surprise.
Tories are in power at least until 2020 (fixed parilaent act). Labour will not recapture Scotland by then(if ever). It is prettty much leaderless (Corbyn, whatever else he is is not a leader), and is doubtfull whether it will have an effective leader by 2020. England heart is and long time was Tory (prett much all the rural districts which normaly vote Tory voted leave).
We are in for at least two Tory parliaments I dwould say
Moreover, the majority of leave voters are politically disengaged – if they stay so, it’s extremely doubtful that they will get what they teally wanted
The majority of leave voters are so politically disengaged that they… er… turned out in record numbers to vote leave.
At this remove it’s impossible to predict the 2020 election. There hasn’t been any voting intention polling since the 3rd of June, well before the Brexit referendum. The property bubble has now started its long-anticipated unwind. Do you think this isn’t going to have any effect on 2020?
the fact that someone turns out for a referndum protest vote doesn’t mean they will turn up for general elections.
Where do you see any evidence of the unwinding of the (residential) property bubble? CRE blew up in 2008, is blowing up again, but there’s no evidence of the RRE bubble being unwound. If anything, the rates are going to be lower for longer, the cost of selling is higher (thanks to the new stamp duty calculation), and cheap sterling makes it more attractive for Chinese, Russians and ME types to buy (and not just in London)
The only Leave voter I have bumped into told me “I don’t usually vote because I reckon voting’s rigged”. I responded that I hoped this proved it wasn’t rigged (at least in the UK).
Only time will tell if he will bother to vote in future elections.
2017 is impossible to forecast, let alone 2020. On Article 50 May said, “not before the end of the year” – she didn’t say, “next year, deffo”.
One consideration is how many leave voters will desert the Tories and UKIP in the post-coital glow of referendum success. Kippers show a higher level of support for nationalisation of energy and railways than Labour voters. The Tories are the scorpion on the frog’s back and will keep labelling tax credit working people as scroungers, so their voters may flip if Corbyn manages to commit Labour to Article 50.
This seems a peculiar view. I’m not sure you’ve got your details correct.
Firstly, nationalisation of railways is popular with UK voters across the board. This is just one of many indications that UK voters are less in favour of privatisations than their representatives.
https://yougov.co.uk/news/2013/11/04/nationalise-energy-and-rail-companies-say-public/
Railway nationalisation is a policy of the Corbyn version of Labour. It’s not a policy of the Conservatives, despite a small majority of their members wanting it. There seems little difference between Labour and UKIP support for railway nationalisation.
Secondly, I’m not sure that Corbyn is intending to commit Labour to invoking Article 50. This is for two reasons.
Firstly, Corbyn might personally want the UK to leave the EU. However, he is unlikely to want an exit under the currently offered arrangement. Regardless of his personal feelings, and in spite of him saying that Article 50 should be invoked “immediately” just before Cameron’s resignation speech, he’s unlikely to push on the issue. The reason is that much of his support base is pro-EU. The quickest way to shut down his nascent movement would be to openly campaign in favour of Brexit.
Secondly, Labour’s policy on Brexit or Article 50 is currently irrelevant. This is because the Brexit decisions rest entirely with the Conservative party – they control when the Article 50 trigger is pulled. All the decisions about how to handle the referendum result are an internal matter for the Conservatives. This may change if the withdrawal process is debated in parliament. However, if that happens, there is still no need for Labour to take an official position on Article 50 per se. They can simply oppose (or not) the Conservatives depending on the, as yet undetermined, detail of the parliamentary debate.
In short, there’s little need for any party to have an official policy on Brexit. That’s because there are no details of how Brexit will work. This was the big problem with the referendum campaign, and one of the reasons Cameron had to resign. Hard to have an official policy on something you don’t know the details of.
Hard to have an official policy on something you don’t know the details of. Pity that Labour disregarded that truth when it took the official policy of voting “remain” in a NONBINDING poll where there was no possible vote for Corbyn’s entirely proper “Remain but Reform” position. They should have called for Abstention. If they had done so that meaningless vote would probably have favored Leave by a bigger percentage of votes but left it with a much smaller percentage of the electorate and the whole Brexit mess would have been avoided!
Not sure which details you’re doubting. If Corbyn can negotiate an acceptance within the PLP of the referendum result, then the yougov stats identify some issues in McDonnell’s manifesto that will be persuasive for UKIP voters.
You’re proposing that Corbyn could win over some of the UKIP support by positioning Labour as a Brexit party.
The strategy is flawed, because to do so would lose Labour support among metropolitan professionals. The gains to Labour via a courtship of UKIP are likely to be smaller than the losses of Labour supporters who want to remain.
Furthermore:
a) It’s not yet clear that UKIP votes will rise on the back of the Leave campaign.
b) It’s not clear that those who voted to Leave will actually want to Leave when they see what’s involved.
c) You assume that UKIP voters would be on board with more of Labour’s manifesto than UKIP’s. This is hardly likely to be the case – and the handful who might be inclined to back Labour under Corbyn’s (historically eurosceptic) direction could have switched sides at any time over the last year.
I think it’s likely that Labour messaging on Brexit – both from Corbyn and from the PLP – will remain ambiguous until the Tories set out their preferred strategy for Brexit. A key indicator of the Tory approach is going to be whether May or Leadsom wins.
Following that, the ambigous messaging may well continue. Until there’s a parliamentary debate, there is little advantage in declaring a position.
Haven’t the railways already effectively been renationalized through Network Rail(state owned). Wasn’t this settled during the Railtrack disaster?
Note: I am not British so I am not informed on all the latest details
The operators are private. They receive a subsidy from the state.
The state had to take over the running of the tracks. The private operators who won the contract were incompetent. It proved difficult to install private operators who would run the track safely.
As an aside, the UK branch line I regularly travel on has rolling stock dating back to at least the early 1970s. The appearance is reminiscent of soviet era Eastern Europe more than anything else.
I’ve little doubt the rolling stock was well maintained when British Rail used to run it, back in the 1980s. The state of it now, under the private operator, is appalling.
It is also dangerous. On one journey last year, the train doors opened while the train was at speed. The train conductor looked terrified. If the same thing had happened during rush hour, people could have died.
I saw no report of the incident. The same trains are still running now. Maybe this was a one-off incident. But the trains regularly require a minute or more at stops while the conductor gets off to open the door – the doors often don’t open automatically. So, presumably the operator has introduced a more cumbersome door opening procedure as a safety mechanism. There’s no indication of the operator investing in the rolling stock. We also face above inflation ticket price rises every year, despite the service being well-used.
People vote on Issues if they are unbundled from Parties
“Leave” was an unusual coalition between the losers of globalization plus baby-boomers worried about their pensions: the pension worries are that interest on savings have been too low too long: Ben Bernanke and other central bankers have been applying policies adapted to the demographics of the 1930s where jobs were the sole priority and not the 2020s when retirees need to survive 30 years on their savings. The Euro aspect of pension fear is that the Single Currency could be failing and that this could lead to a monetary and fiscal crisis which pensioners cannot recover from. Politically, left and right have become meaningless, as is reflected in the question: is Hillary Clinton to the left of Donald Trump? My advice to both US presidential candidates is to concentrate more on pensioners and their income needs: these guys vote!
I would add: if you want to know the Eurocrats’ instinct re pensions, ask Greek or Irish pensioners, or Cypriot savers who have been “bailed in”. Is it so surprising that some people are saying “Nein, danke”.
I too feel that left is right and vice-versa: the world turned upside down. The left is traditionally economic, but has now become PC-ideological, eschewing debate over thorny issues in favor of knee-jerk, party line reactions. The right, traditionally blindly supportive of the establishment, has now come to be something of a critical gadfly, openly discussing social issues that the left now consider verboten. Somehow, these behaviors seem to be reverse of expected.
How does the issue of national sovereignty vs EU support play out over today’s right-left paradigm? Is the neoliberal EU project, progressively granting power to financial autocrats, really something that the left should support? Is an independent UK, possibly subject to more popular input, something that should be welcomed by the right?
Britain is like a tribe that has voted to attack a castle, but is now waiting for someone to lead the charge (After you, Alphonse!), but no one really has a plan. There’s a leadership vacuum, because there’s an ideology vacuum: traditional political parties Tory and Labor implicitly suggested what actions should be taken, but they provide little direct guidance for managing Brexit. So, what nascent ideas will expand to fill this empty intellectual space?
From these admittedly vague musings, I’ve come to think that we’re in the midst of a major revolution. I think it was Henry Kissinger’s Thesis that argued that revolutions are over before people realize they’ve happened.
Funny, you write as someone who has no idea about constitutional issues or EU structures or how EU law is implemented, nor how the EU Arrest Warrant was adapted to include the US as an extraditing party. You seem oblivious to any detailed focus on issues that affect UK nationals
“Tories are in power at least until 2020 (fixed parliament act). . .”
I’m not an expert on British politics by any means, but wikipedia provides a distinction with a difference:
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Section 2 of the Act also provides for two ways in which a general election can be held before the end of this five-year period:
If the House of Commons resolves “That this House has no confidence in Her Majesty’s Government”, an early general election is held, unless the House of Commons subsequently resolves “That this House has confidence in Her Majesty’s Government”. This second resolution must be made within fourteen days of the first.
If the House of Commons, with the support of two-thirds of its total membership (including vacant seats), resolves “That there shall be an early parliamentary general election”.
In either of these two cases, the Monarch (on the recommendation of the prime minister) appoints the date of the new election by proclamation. Parliament is then dissolved 25 working days before that date.
***************
Unlikely, I will grant you, but possible. Also, one would wonder at the timing of said Act and its promulgation under Tory leadership. Wow. The things you learn investigating little known machinations of power.
So let them reject Osborne’s next Budget which is the basis of a Government. If it cannot get Supply it is out of office
Saying that the young have a choice to reapply in 10–20 years is misleading.
As has been discussed in several places, it will take 5–10 years to rewrite the UK’s trade agreements. It will take as long or longer to separate UK legislation from EU legislation (the two have been entwined for 40 years – much UK law relies on EU statutes).
Brexit is a collosal upheaval. It seems highly unlikely that current 0–10 year olds would glibly reverse it, or that their parents and grandparents would let them. What you’re suggesting is that the UK rejoin the EU at just the point it has got over the pain of leaving. And when it might be beginning to see an uptick from life outside the EU (if, indeed, such an uptick does materialise).
The current hopes of the “British Left” rest with one man – Corbyn. If anything happens to Corbyn, then I believe by default it would be Tom Watson (as deputy leader), and not Corbyn ally (and shadow chancellor) John McDonnell, who takes over. Watson as leader would end the current direction of British Labour. British Labour would return to being a soft neoliberal party with similar domestic policies to those pioneered by Blair, and rule changes for member voting which prevent anything like the Corbyn takeover from happening again. An alliance of such a version of British Labour with the SNP and LibDems, both of which follow a neoliberal route but are less vicious than the Conservatives, would be about the best the UK could hope for.
There’s little doubt that Corbyn and followers are aware of this. The creation of the “Momentum” pressure group looks very much like an attempt to harness the popular vote within Labour party supporters which brought Corbyn to the Labour leadership. In the event of an ouster of Corbyn, it may be possible for this movement to form a new political party outside Labour. For example, it could do so by joining forces with the Green party, who have near-identical policies but just one MP. I should stress, rebuilding from this point would be very difficult.
So, the current direction of the UK is very much towards the right. It feels like there is tidal wave about to engulf the island.
It’s also not at all true that no-one in the UK is “articulating much”. For example, there was a massive (in my view, futile and borderline undemocratic) pro-EU march on Westminster last weekend. There have also been a spate of highly unpleasant racist incidents, likely instigated by right-wing extremists who have hijacked and/or feel legitimised by the Leave vote. The kingdom is more disunited than at any time in recent memory.
not to mention that first past post system would help tories even more, especially if they were able to pick up ukip voters, and labour fractured into two parties.
A 17 year old in 1975 had no vote in the Referendum called by Harold Wilson and today aged 58 years old when he votes to leave. He then gets told by the Beautiful People he is too old and half dead and his vote should not count because young people should decide his future. He is told he is working class, a loser, not one of the Beautiful People. What should the 17 year old from 1975 do ? Buy an AR-15 ?
I think it is a mistake to characterise Leave voters as being older. My constituency in Hampshire, for example is neither older in demographic nor especially rural. It is classic commuter belt, not poor or working class. It voted Leave. What was a big factor was immigration and pressure on an already overextended housing stock. The default response to an economic downturn from the electorate here is to vote Conservative, quite happy in the knowledge that, if required, the working classes should be thrown under a bus.
Please read the article more carefully. It states who comes out ahead in terms of leadership groups.
Please tell me how the UK will manufacture more. Not only does it lack skilled workers, it lacks the supervisors and factory managers. You need skills at multiple levels of an organization, industry specific competence, Pray where does the UK get that?
The manufacturing the UK does have now is mainly car parts and auto assembly for shipment into the EU. If the UK loses access to the free trade zone (which it will if it tried to restrict immigration, the EU is firm on that), the foreign manufacturers that have these plants in the UK will move that production elsewhere. So the UK will lose even more manufacturing if it does a Brexit and delivers what voters most wanted, reduced immigration.
And auto parts are not included in the WTO at all, so if it does not strike a deal, it will most assuredly lose its auto related manufacture.
There is a sizeable manufacturing sector in the aircraft industry (e.g. Rolls-Royce motors, Airbus wings).
“The manufacturing the UK [sic] does have now is car parts and auto assembly for shipment into the EU.”
Really? The UK is the 11th largest manufacturing nation in the world. Its largest sector by far is chemicals and pharmaceuticals. Another commenter has noted the importance of aerospace. Motor manufacturing is a significant but not dominant part of the manufacturing economy, whether size is measured by jobs, turnover, GVA or exports.
“If the UK loses access to the free trade zone (which it will if it tried to restrict immigration, the EU is firm on that)……And auto parts are not included in the WTO at all, so if it does not strike a deal, it will most assuredly lose its auto related manufacture.”
You can repeat this mainstream nonsense as often as you care to (it is your site, after all), but this will not make it true. I live in a provincial English city with a BMW plant, and count several senior German executives amongst my neighbours. Not one of them sees Brexit as having any lasting impact on their business model (although it might be a short-term negative if consumption takes the downturn Osborne and Carney seem determined to talk us into). As one of them observed the other day, ‘Just a call from our Chairman to Merkel and the trade issue goes away’. Sure, their lives would have been easier if the Remainders had won – hence the threats made by BMW and other foreign employers to their workforces (threats which backfired, I suspect) – but to extrapolate from this a desire to suicide-bomb their substantial investments in the UK is not plausible. One of the side-effects of the neoliberal pillaging of the country’s economy over the last 30 years is that so much of it has been given away to foreigners that they now have too much to lose by taking a hard-nosed attitude.
Another point: you do know the UK has a large, and in 2015 record, trade deficit with the rest of the EU? Of course you do. So you expect the Germans to walk away from one of their export machine’s most important markets just to let the Brussels crowd feel macho?
Finally, if Brexit does go ahead (which, given the perfidy of Britain’s elite, is far from certain), why would you assume that the EU 2-3 years hence will be the same as the EU today, and why would you assume that its key actors will still be in place? Enough fracturing in the European establishment between now and then could quite possibly lead to a much less antagonistic approach towards Britain than is currently being advanced by all those in Europe who see their ideological dogmas and / or careers and / or reputations as being under assault from democratic change.
Thank you for doing Naked Capitalism readers the favor of calling yourself, and by implication, your comment, “Error 404,” which for the benefit of US readers is British slang for “clueless”. And in keeping, your comment is quite the confection of orthodox and poorly informed Tory thinking.
1. Your attempt to present Britain as a manufacturing power is counterfactual and the information your present is misleading and even inaccurate. The fact that the UK is number 11 in manufacturing when it is the 5th largest economy in the world actually proves the point that it is consumption and services driven rather than a significant player in manufacturing. In addition, if you look at ranking of manufacturing, you will see that the decline in amounts as you go down from China is almost a power curve.
Moreover, car-relaed manufacture is its largest sector, not chemicals. In addition, the value-added in pharmaceuticals in not in the “manufacture” but in the development, intellectual property protection, and marketing. It is more profitable to “make” drugs than print currency. And the actual manufacture of pills almost certainly takes place in India, at the same factories that make pills for the major American pharma players and generic producers around the world.
The fact that there are no longer any domestic British auto makers also means that while the manufacture is currently in the UK, it is there at the pleasure of its German (and Japanese) overlords. These are not skills that the UK has any more, and the fact that the last remaining British marks like Land Rover were sold to foreign automakers is proof of the importance of international scale in theses businesses, ie, the odds of a domestic upstart rising if the Germans were to shift more production to other markets is zero.
Not only does Wikipedia confirm my point about the primacy of auto related manufacturing, it notes that GSK and AstroZeneca are headquartered in the UK and have R&D located there which is hardly the same as manufacturing there. Moreover, I note that both companies almost certainly locate their intellectual property in Ireland or another low-tax jurisdiction, meaning UK taxpayers benefit less from their success than they probably believe.
2. The UK is not an autarky. It’s not going to have substitutes for its many of imports. Yes, Brits can drink more beer and less wine and eat more Stilton and less Roquefort. But they aren’t going to have a domestic olive or orange industry. You assertion that the downside is EU imports would go to zero is patently false.
3. Regarding the gossip from your BMW managers. My father rose through the ranks of smaller companies that German automakers to become the head of manufacturing. I’ve also had quite a few large international companies as clients. Your local managers are several layers down from the top executives and hear only internal PR. And in this case, it is dated and irrelevant. Merkel is not the dictator of the EU, despite German fantasies otherwise. EU leaders have taken a unified stance that the UK is not getting any special breaks. Merkel has said so repeatedly. Merkel is a famously cautious politician and does not take public positions casually. And it is a cultural norm for Northern Europeans not to posture.
You are ignoring that more fracturing of the EU is fatal, and that includes for car markers. The EU politicians and Eurocrats are of a common view that the UK can not only not get any special favors but many, and potentially most of the key actors, think it needs to suffer in order to discourage others. This is clearly the view in Spain, Belgium, and France.
Moreover, Merkel is weakened by virtue of her unpopular stance on refugees. Wolfgang Schabule has if anything been more aggressive, saying he will tolerate the UK taking until its leadership election on Sept. 2 to invoke Article 50 (as if the EU can dictate that). A recent opinion survey shows support for giving UK a break in Brexit among key European countries at the low single double digit level….except for Germany, where it is 9%. And Germany is unique among EU nations in having such a large trade surplus with the UK. That will weaken her credibility with other leaders if she is seen as pushing for purely domestic interests that are not held by the others.
And the automakers have options. They’ll figure out how much to use their legacy assets in England and will shift production to other markets. Unpleasant and costly but not fatal.
4. You need to make the case as to why the negotiating dynamic should change. As soon as Article 50 is filed, initial stakes will be set in the ground. Particularly in multip-party negotiations, with multiple layers at each player participating, and international negotiations are an extreme version of this case, those are retraded only with abject apologies and even then at a price (concessions elsewhere). Behaving otherwise is seen as acting in bad faith and leads the other side to get punitive. See Greece last year as a case study. We warned about that as an outcome in real time. There are no major national elections between now and 2017, which is an eternity in political time. And in any event, the UK is negotiating with a 27 country bloc, not one country, so even a change in government, even it it would lead that government to take a more accommodating stance, would not have an impact on the others. And please do not tell me Marine Le Pen will become President of France. Given how the French three-round system works, the odds of that are close to zero.
5. There are also very significant procedural rigidities that you are fantasizing don’t exist. Please read this post to become better informed:
http://www.nakedcapitalism.com/2016/07/brexit-huge-spanner-in-the-works-negotiation-of-new-uk-trade-deals-verboten-till-exit-complete.html
“There are no major national elections between now and 2017, which is an eternity in political time.”
Hi Yves, you sound annoyed and saying this after calling someone ill-informed is rather unfortunate IMO. In France the presidential election will be in full swing by the start of the year 2017. If that’s not a mayor election in Europe, I don’t know what is. There will be two rounds, not three. The winner will be known on the 7th of May. Marine Le Pen is likely to be one of the two finalists. The other is most likely to be either Sarkozy or Hollande both of whom will have a hard time defending their records and credibility. She will have many advantages including the fact that many people who voted against her father in May 2002 won’t be prepared to vote for the other candidate this time around. At the moment, she probably still isn’t favourite to win, but many things can happen between now and then and it’s definitely a big (scary) risk. You shouldn’t under estimate the anti establishment atmosphere in France. Take the Brexit vote as a timely warning, anything can happen. Many people are angry with the elites in Europe.
The comment is accurate as stands. As other analysts have said repeatedly. Le Pen’s odd of becoming the President are virtually nil because the the loser of the major parties will urge their voters to support the other mainstream party. In addition, by then any Brexit negotiations will have been underway for more than a year and most key negotiating parameters will be set. And France is only one of 27 countries in the EU. The imperative for the current leaders is to show how costly an exit would be and they will have plenty of time to make that point before 2017.
I also suggest you read the link at the end of my earlier comment. There are rigidities in the negotiating process that cannot be changed, no matter who the players are, that virtually assure bad outcomes for the UK. International trade deals take many years to consummate even under the best of circumstances, and their complexity means they can’t be speeded up. It’s like expecting to impregnate a woman and have her give birth in two months. Na ga happen.
I’m no fan of neoliberal elites, but the Brexit fans have been cavalier and reckless in continuing to pump for it with no comprehension of the damage it will do to ordinary British citizens, particularly low wage workers.
>The manufacturing the UK does have now is mainly car parts and auto assembly for shipment into the EU.
??? looks like they do a LOT more than that– https://en.wikipedia.org/wiki/Automotive_industry_in_the_United_Kingdom#2011_to_present — and you cannot move industry at anywhere near the ease of financial services.
If any of it moves, it will move to the East and that will hurt Britain but not help the EU at all.
Transport-related manufacture is the UK’s largest sector.
Germany has two major car firms in Bavaria dependent on the UK. 14% BMW output goes to the UK and Audi depends on the UK. Siemens needs the UK. The UK manufactures jet engines – Rolls-Royce is a major producer of jet engines and nuclear reactors for submarines. The UK has a manufacturing sector equivalent to France – it does not manufacture the full range as Germany USED to, but take a close look at German manufacturing which is hollowed out in Germany where GFCF net of Depreciation is ZERO
A lot of the auto and transport related manufacturing in the UK is to take advantage of the UK’s more favorable labor rules and costs while allowing the product to be sold readily in the EU. If the UK is out of the EU, much of the basic rationale for being there goes away.
And your comparison to France does not make sense. France’s GDP is slightly smaller than the UK’s. How does the fact that its manufacturing sector is similar to the UK’s have any bearing on this discussion? They are both about 12-13% of GDP versus 18% for the US, when the US is widely recognized as a manufacturing power in decline.
France’s GDP is slightly smaller than the UK’s.
Not any more:
http://www.reuters.com/article/us-britain-eu-france-economy-idUSKCN0ZM1T5
Synoia: You are whistling past the graveyard.
The Brexit is a “predatory” abandonment of relative fixed exchange rates between the pound and the euro; pus the end of “we are all in this together” European Central Bank.
The only reason Germany has sponsored the ECB and been willing to backstop the PIIGS is they got to switch from the deutschmark, that would have an exchange rate of $1.60 to the dollar, for a wildly undervalued euro at $1.10 to the dollar. That is the secret to their export led economy.
The Brexit allowed Britain to massively devalue and may relieve the British people of the eventual bill to refinance the PIIGS and their banks.
You should correlate it with Public Spending. those getting most pork barrel voted to REMAIN and those getting little Pork Barrel voted LEAVE
Trying to jam the square peg that is the Brexit vote into a round left/right binary political scale leads to garbled results like this post.
The Brexit vote is a rebellion against Neoliberal Globalization. The Remain side was supported by globalist hyeneas such as Goldman Sachs, Peter Sutherland, Morgan Stanley, JP Morgan, Citigroup, and Davos people everywhere. Globalist Lord Rose ominously warned that in the case of an exit vote, “the price of labour will, frankly, go up”. Working class people all over Britain shuddered in fear — NOT!
The Leave voters were primarily working class and/or elderly. They are indeed voting for higher working class wages and an increased (or at least not decreased) welfare state. They may be working class, but they do realize that opening borders to cheap immigrant labour or to migrant’s who will compete for precious welfare resources is bad for the working class. As Labour politician Rachael Maskell said about cramming Britain full of migrants:
With the Brexit vote, working class people have rejected Ms. Maskell’s call for them to commit suicide-by-altruism.
So the Brexit vote is clearly a vote against the Globalist Left/Right plot to weaken the nation state by allowing Capital to find the cheapest labor, and to dismantle Western welfare states by overloading them with 3rd world migrants. The Globalist Left/Right imposes an Invade the World/Invite the World policy on its people by destroying nationalist and socialist governments in the Middle East and then inviting the refugees of the resulting Islamist governments to come live in the West.
The problem is that NONE of the LibLabConUKIP political parties represent the interests of these 17 million Leave voters. Labour is totally hijacked by arrogant bourgeois urbanites who despise anyone who lives outside of their precious “glamour zones”. LibCons are all committed to providing Capital with the cheapest labour possible. UKIP is to the Tories what Old Navy is to The Gap, just a slightly down market version of the Conservative Party’s Neoliberal Globalisation albeit with a slightly nationalist mask.
The Brexit vote proves there is a huge amount of Political Opportunity lying on the pavements of Britain just waiting to be scooped up by an opportunistic politician or movement. If Labour split then one one portion could be a kinder, virtue signalling, working class version of the Front National in France that fights mass immigration and try to pen Capital in with national borders. But the Left has proven itself utterly incapable of rising to the challenge of Neoliberal Globalisation so more likely a Trump-like movement will rise in Britain as well in the coming years once the current political elite in Britain stab the Leave voters in the back.
As indicated in another reply, the motive for the vote may have been to protest neoliberalism, but in fact, the result will be to advance it. The EU has better labor and environmental protections than the UK. In addition, one of the best reports on Leave voters by the Guardian, based on an extensive tour of towns in the North, found that the Leave voters assumed their vote would make no difference, as in even if Leave won and the UK left, things would not get better for them.
They are more realistic about what happened than you are.
Well perhaps the reason EU had better labour and environmental regs than Britain was that there was no need for Britain to upgrade their regs once they joined the EU. But now that Britian is supposedly out of the EU, these issues come into play for a potential working class party to champion (the labour laws at least).
The Tories abandoned their planned Austerity 2020 campaign in response to the Leave vote so that is one small bit of good news that Leave delivered to the working classes.
But the Leave vote is obviously just a first step and indeed nothing much will change and Neoliberal Globalists will double down on cramming even more migrants down the British working classes’ throats. And the political elite in Britain will probably just end up ignoring the vote and never leave the EU. But as I said, the Political Opportunity is there for a true working class party to rise around the core of Leave voters. Only when a nationalist working class party ascends to power will things change and get better for the working classes — and if that happens, the Leave vote will then be seen as a crucial first step towards the destruction of the Neoliberal Globalist hegemony of power in Britain.
You are correct in the short term. But there are “forces of history” at work – Trumpism in the US, anti EU parties rising all over the EU, and the Brexit camp in the UK. Things will change in time. There are political vacuums to be inevitably filled. What will emerge is unknown. One possibility is the current neo liberalism but with a repressive edge to keep the masses down. Other possibilities are socialism, social democracy or fascism lite. Different countries will evolve in different ways.
the labor party is evolving rapidly, Corbyn might be able to replace Blairites with new progressive supporters that are joining labor in droves.. then he can switch to supporting leave voters.
But Leave supporters can look to a cleansing of the Augean stables of New Labor and the Phoenix-like renaissance of a true employees’ party who will (I sincerely hope) ally themselves with diem25.org in Europe to start the recovery of democracy, the entrenchment of transparency on officialdom and endorsement of a green New Deal for the continent
On another matter, before we throw Nigel Farage on the bonfire of blame for Brexit, I should like to remember the very good service he did for Europe in drawing repeated attention to the absence of democracy in the EU parliament and the ubiquitous use of bribery to achieve consensus.
I may be a dreamer but I have no doubt about the shape of the world I want to live in. If enough of us want it, we can make it real.
You are wrong about the EU or perhaps you have not seen facts on the ground. Germany is heavily polluted and in most cities diesel is a major cause but in the East it is lignite. German sewers smell in summer because of lack of water throughput caused by high water prices. Garbage stinks because it is collected every 14 days in some areas. The Uk has serious deficiencies but at least the UK implements EU law unlike the rest of the Continent
You are proving my point. The UK is obeying EU rules. If you bothered watching the selling of “Leave,” UKIP and the Tories backing Leave regularly demonized EU regulations. That includes environmental regulations The UK will abandon all EU protections. That it one of the major aims of the Leave boosters.
Also, some of that pollution may be long-standing. It is very difficult to remediate old industrial pollution, and Germany was early to industrialize.
People engage more as they age.
On the ground in West Kensington (beside a rough housing estate).
When the only tool you have is a hammer, everything looks like a nail.
When the only protest you have against neoliberalism is a Leave vote (or a vote for Trump), you swing with all your might.
IMHO
The motive is desperation.
It seems that exchange rates do not have the old effects as some think. Modern economies are less dependent on exchange rates and more in the productivity. The Achilles Heels of the UK.
The exchange rates are more important regarding the international capital flows and less in the employment and production.
No model exists to drive us but the old faith in the exchange rates to increase the exports are more wishful thinking than reality. And the positive effects on the income flows is only one side of the book. The outflows from the UK, for several reasons, but the main, the fall of the GBP, could impact so badly the economy and much higher than the positive impacts of the income from outside.
Since 2008 the British economy recovered from Services and Construction:
http://webarchive.nationalarchives.gov.uk/20160105160709/http://www.ons.gov.uk/ons/resources/fig4m3q32015ouputindices_tcm77-428915.png
That can explain the lack of the rise of the productivity in the UK in last years. Those two main contributors for the recovery are now in perilous situation. Are the well known FIRE sectors and the main positive contributor to the Balance of Trade of the UK is? You guessed, Services, mainly financial services. Who are dependent on what? Free operations inside the EU.
The Brexit could terminate this “goldmine” of exporting financial services and the crash of the GBP can bust the real estate bubble and the… Construction sector and all activities connected, from banking services, insurance, brokering, building and even cleaning. Those two sectors, putting aside the anecdotal fact that now the prostitution and illegal drugs trade inside the UK are computed in the time series, are the main components for the economic recovery. And what will come in the next months or even years?
The ladrillo bauble bust in Spain destroyed about 20% of all the industrial jobs. Construction sector has a big share of the industrial production everywhere and specially where exists bubbles. Like in the… UK. In Italy the same happened as in Greece or even in Portugal. Building houses and commercial estate demands a lot of materials and the industrial production to provide them. Even the British job market is strong with immigrants because the lack of skills of the British replaced by the foreigners with those needed skills.
We do not have good economic models to know how much it will cost the Brexit. Nobody knows for sure but the components of the recovery in the UK are a good indication about what could happen. If the real estate implodes as it is happening and the financial services are stopped to export… Maybe the Brexit will cost more dearly than models created to forecast it.
Just before the Brexit the British GDP contracted and it is a nasty signal. After the Brexit all the signals are bad specially the specialized funds invested in the real estate. Real estate dependent of what? You guessed, money from abroad the British shores. And the fall of the GBP stimulates? More outflows of capital. And that means? You guessed, real estate bust.
Besides the fact that the Brexit per se destroys capital assets outside the UK and the income from abroad.
Time will tell what will come but the storm looks strong just evaluating the current bad winds.
We do not have good economic models for anything. Economics is a pseudoscience used by ideologues to and politicians to advance their agendas. It predicts nothing.
Incidentally, FIRE sector has no impact on the Balance of Trade which excludes Invisibles.
Last trade surplus was 1982 before Thatcher dismantled the industrial base and let FIRE sector burn it to the ground.
FIRE sector is too big and needs shrinking. That is true of Germany too which has unprofitable banks plus a large insolvent black hole in Frankfurt.
The UK will need to create SMEs on a major scale to replace imports – making stuff like brushes (imported from Germany), slippers, plastic bags……really basic and boring stuff.
You know most manufacturing is for basic housewares or simple things not frippery like iPhones.
This is very weak.
The UK hasn’t shifted to the right. There has been no general election. The Conservative Party still has a majority of 6 in the House of Commons. None of the leaders of the Brexit campaign are left to contest the Tory leadership. The next leader of the Conservatives will be “pro-“free markets,” neo-liberal, and pro-privatisation”?? What a disaster! So was the last leader. The next leader will still have a majority of 6. And will inherit a hopelessly divided party at odds with its base. Cameron wasn’t able to pass much legislation before Brexit, May or Leadsom is going to find it even harder whoever wins. Attacks on workers’ rights would happen whether we stayed in the EU or not, just look at what is happening on the continent.
A war is about to start for the Labour Party. Corbyn has won the first battle. Next you’re going to see the Momentum movement pushing to deselect every single Blairite in Parliament. This is not a “shift to the right”. It’s the opposite.
I haven’t spotted any mention on the blog of Juncker’s megalomaniacal pronouncements on the CETA deal. Although he’s apparently now “reflect(ing)… in the coming days” on whether or not he wants to put a ruinous trade deal with all sorts of juicy ISDS mechanisms to the national parliaments. The EU is a collapsing neoliberal wet dream. Leaving it isn’t a shift to the right.
You are really missing the point. The EU has much stronger labor and environmental protections than the UK. The Tories fully intend to use a Brexit to push the neoliberal agenda even further. They will use the same excuse deployed to justify austerity in Europe: the need to be “competitive”. That was precisely why UKIP pushed it. The blather about getting rid of “red tape” was all about weakening regulations.
Wake up and smell the coffee. You’ve been had and appear not even to recognize it.
I haven’t “been had”. You’ve not addressed any of my points and have attacked me based on nothing that I’ve said.
I am fully aware of the Tory agenda. They have been pushing it since 1979. And so did New Labour. The EU hasn’t prevented them from doing any of it.
The point is very simple: there has been no general election. Whoever emerges as leader of the Tory party will have a very hard time governing.
The Labour party is shifting to the left: news today is that membership now stands at 600,000. The largest in modern history. Corbyn has tripled membership of the party he inherited from Miliband in 10 months.
It doesn’t matter if the Tories pursue their austerity agenda. They have barely been able to pass legislation in this parliament – witness the fiasco over Nicky Morgan’s schools bill. It doesn’t matter if they pursue austerity because we will soon have a real opposition. And the legislative freedom to overturn austerity. We’ve had neoliberalism in the UK since 1979 – anyone who thinks that replacing it will be a walk on easy street is deluded. No left Brexit campaigners believed that the referendum is the silver bullet. But it’s the first step towards implementing some form of social democracy in the UK.
I have it from people with contacts at high levels in the Tory party that they expect to be able to have a lot more room to press their agenda once a recession is on.
Moreover, I very specifically said “neoliberal agenda,” not “austerity”. As we saw in the Reagan era, when the US actually ran large deficits, the most important element is weakening worker rights. That will be fully on if the Tories really do leave. I am also told by insiders (and I think they are greatly overestimating their odds of success) that they will be able to ignore the Brexit vote once the recession takes hold. I don’t buy that but one person I was dealing with descended to “mansplaing” me, which I’ve never had anyone attempt before (as in that is how insistent he was that he knew better than me from his contacts in the House of Lords and the Commons).
So the Tories believe they can ignore the vote, and if not, they’ll make the best of it by screwing workers and making life easier for businesses on other fronts.
To illustrate Yves’ points, Amazon are opening new fulfilment centres in the UK and hiring warehouse staff. So the UK gets more low paying, manual labour jobs in a company that pays no UK tax.
Meanwhile in Germany their staff are striking in protest at conditions.
If that doesn’t sum up the difference between the UK and most of continent, and the directions both are heading in, I don’t know what does.
Heh. Amazon UK is so expensive that it is often cheaper to buy locally (adlibris.se) or buy directly from Amazon US. Even for books by British publishers, amazingly enough.
Two weak anecdotes hardly illustrates any point, and it definitely doesn’t “sum up the difference between the UK and most of [the] continent”.
Here, let me try: in the UK 52% of voters expressed their will to leave the European Union and return sovereignty and legislative powers to their national parliament.
Meanwhile in Greece their parliament has handed over almost all democratic control to the European Stability Mechanism.
If that doesn’t sum up the difference between the UK and most of the continent, and the directions both are heading in, I don’t know what does.
See? Pretty easy to use these empty rhetorical flourishes. They don’t prove anything.
You are looking at the wrong time frame. Syriza had a naive view it had bargaining leverage relative to the EU. It had an ambitious program that failed after making first contact in negotiations as Costas Lapavitas pointed out in late February, but Syriza refused to change course.
Syriza at least made a naive but sincere go at getting change. The Tories also want to have a pony. They want to preserve the status of the City which is not going to happen in the event of a Brexit. The ECB will make sure the Continent takes a pound of flesh out of the City. That will have a massive adverse impact on the budget and justify austerity. Reduced worker rights are a given in the event of a Brexit.
The Tory leadership is overestimating its bargaining position just as the Greeks did. The parallels are freakish. However, the Tories are vastly more wily and are already plotting to use shock doctrine tactics to extract as much advantage for the people at the top of the food chain as they can if they can’t use the deterioration of the economy by early next year (assuming a May victory, she wants to delay as long as possible) to put the genie back in the bottle. May could well try the argument, “we can’t do a Brexit without preliminary negotiations, the two year timetable is too short to get a replacement deal in place and the consequences of having no new trade deal in 2 years are catastrophic. And the EU is refusing to negotiate, so we can’t go ahead.” That happens to be true. See my post on how the negotiations will roll and how long it takes to negotiate trade deals.
Now that is probably less saleable than the Tories fantasize. And they may have a better scheme. But I am told on good authority May will try to reverse the vote.
Yves, I think you are reading this very well. People so badly want a symbolic victory that they haven’t bothered to plan for a real one. Bernie supporters who want to vote for Trump are in the same mental space. What you do the day after Trump wins with a malignant Republican Congress behind him is irrelevant–sticking it to the Clintons is the only objective. My mother used to call it cutting off your nose to spite your face.
The “none of the above” vote is an act of desperation, we’re told democracy is bad because voters are ignorant. But this is highly offensive, voters know much more about actual economic reality than their ivory tower overlords or some thinktank “economist” with his sigmas and alphas. They know they are going backwards financially. They know their kids can’t find a job and will never afford a house. They know the cost of living is rising much faster than any bogus CPI figure. And they know for a fact they’re the ones who lost their homes or pensions or benefits post-2009 as they watch the 1% class zooming even further ahead.
And the people decrying Trumpism and anti-immigrant bigotry are conflating the symptom with the disease. An estimated $34 trillion is sequestered in offshore havens by the 1%. Release that, or at least tax it, and we would have plenty of money and jobs to keep a class/race war at bay.
The police in Dallas said “they could not understand the motive”. That’s exactly the reaction of the punditocracy and the likes of Juncker…blame the desperate victims, then just retire to your enclave to check on your stock portfolio.
I notice that the Daily Mail and the Sun are firmly backing Teresa May against Andrea Leadsom.
“voters expressed their will to …”
No. (Most)Voters ticked a box to leave. For a vast variety of reasons – including some who did it for reasons you mention.
But they are not really anything as homegneous as you paint them to. It was a coaltion of very strange bedfellows, which is very unlikely to be repeated in any general elections. I would not even say their only common goal was to stick it to ruling elites – Gove was and is ruling elite, and Johnson is the same mould as Cameron is. W/o general election, domestically, they just swapped one band of public school boys for another. And it was clear this would be the result if they win from word go.
And that’s why I described my point as an “empty rhetorical flourish”. It was a piece of hyperbole used as a specific response to Deep Thought’s point about Amazon.
I don’t get much time to comment here though I try to read whenever I can.
I understand the points you make and largely accept them. However, right now, it feels like the attitude of much of the population is misunderstood. No doubt you have the Conservative agenda nailed down but I do believe they will find this far harder to deliver than many expect.
Things are shifting in the UK, slowly for sure but I feel it everywhere I go. Attitudes of many people I have known for years have changed more radically then I would ever have thought possible (for example, Conservative voters who have switched and then joined the Labour party).
My world is a fairly small one and only time will tell. I don’t believe the outcome is as predicable as many suggest.
Thank you, Paul. You said what I am trying to say far better than I did. My earlier response to Yves seems to have been swallowed by the God of the Comments section so I’ll make a bash of reposting the main points.
The elephant in the room that is being ignored is the Labour party membership. 600,000 puts it at levels it hasn’t seen since before Sunny Jim Callaghan lost to Thatcher in ’79. This is very significant. There is no more automatic affiliation on Union members to the Party. Which makes it even more significant. The Conservatives don’t release party membership figures, but it is believed they have c. 100,000 members. Maybe less. And they overwhelmingly skew much older than membership of any other party.
Opposition to neoliberalism in the UK is growing and organising.
The position of the Tories within the Commons also hasn’t changed as a result of the Brexit referendum. They have a tiny majority and have been unable to pass anything but watered-down legislation (e.g. the Trade Union Act 2016). They may be overestimating their bargaining position, but so is the EU. How will an ‘pour encourager les autres’ settlement play outside of Germany? Not very well.
What is needed is a leadership that formulates policy to reverse the negative effects of neoliberalism and actually delivers.
The mood I see is that working class people are withdrawing their support for the powers that be and are desperately searching for alternatives. The mood is extremely cynical towards government and if anything, is a turing away from authority instead of embracing it.
I completely agree that insiders are likely overestimating their chances of success if they ignore the vote. Insiders are currently demonstrating how remote they are from what is happening all over the world. They are pretty wont to ‘mainsplain’ as well, although rest assured they mansplain to men too. Man-on-mansplain?
You can replace the words “austerity agenda” with “neoliberal agenda” in my post and the point remains unchanged. The Tories are in a weak position in the legislature, and their two main factions are at war. They seem to have recognised that going to the polls now or in the immediate future is incredibly risky. This is going to make it harder for them to govern – Brown struggled to do anything after he rowed back on a general election when he calculated that he might not win.
The elephant in the room is the Corbyn movement. The Labour party is now at membership levels that haven’t been seen since Sunny Jim Callaghan lost to Thatcher in ’79. This is very significant: party membership has been bumping along between 100,000 and 300,000 since 1978. Now it’s 600,000. The Tories don’t release membership numbers but are believed to have around c. 80,000 – 140,000 members. We’ll have to wait and see what this means for politics in the UK, but my reading of it is that there is a real appetite for rejecting neoliberalism. And it’s growing and organising.
You can remove the “if not” from your final sentence. The Tories will attempt to screw workers and make life easier for businesses whatever happens. We know that. I don’t see anyone arguing otherwise.
Don’t think so. The referendum was not a vote for the Tories….it was a warning to them
It seems that something is not very accurate:
If that was the truth why Germany introduced the minimum wages recently? To be more competitive? How? Can the Anglo-Saxon world understand how Germany became more competitive with the introduction of the minimum wages? No it can not. The Mental Model is very different and we could write pages and pages of words and a person who grew and studied in the Anglo-Saxon world barely will understand. Different cultures and mentalities.
The same applies of the wishful thinking of the “neo-liberals” as you called those in the UK. They can import the toxic industry from China to the UK and even with that, the British economy can not compete against the Continent. Not the British, not the American economy.
They can try to compete with the low taxes but can they live with low tax corp and the poor paying the money needed to sustain the State and all those public services? No, they can not. Unless they reduce the public services to a minimum like before the 20th century.
Just figure how strange is the UK. They cut 20% of the Public Servant positions and the public spending rose or fell? It rose and the promised surplus in the fiscal is only an utopia. Wishful thinking.
In the Continent they didn’t have austerity to be more competitive but others things. To be more competitive they made some economic reforms. But how the Anglo-Saxon world will understand? They can not unless grew and studied in Europe during the youth.
Between Continental Europe and the Anglo-Saxon world exists one mental and ideologically barrier. They can work together in military terms but with big fissures and problems between the two blocks.
Ciao
Germany’s minimum wage is only a smidge above the UK’s in terms of being a percentage of GDP per capita.
So hardly stunningly generously. It beats the US’s minimum wage level, but then again, what doesn’t (in the developed economies).
It’s not going to be a game changer for (or, better put, against) German mercantilism.
The point is noticed but not taken.
If the German model is low levels of wages to compete as Yves induced, why they introduced the minimum wages? Doesn’t make sense if the German want to compete in lower levels of wages.
I will not point the fact the purchasing power of the wages in Germany is well above than in UK except for some workers, specially those who work in the financial services. I think it is not needed. Just visit some small Germany city and compare it with one small in the UK. Or even in the USA.
By the way, Denmark do not have minimum wages. Officially. But in practical terms they do have.
“It’s not going to be a game changer for (or, better put, against) German mercantilism.”
Call it what you want but the model is stronger than the Anglo-Saxon models. Doesn’t matter how you call theirs model. It works and British and Americans can not compete at the same level, no matter the wishful thinking.
Ciao
Is the German model not still – in part at least – one of supporting families by paying higher wages but to a single – typically male – earner?
This is not the UK/US model so direct comparison of wage levels or purchasing power may not amount to much.
I may be getting behind the times.
The Labor Force Participation Rate varies across Europe but look where they are higher. In the countries with higher incomes as Denmark, Sweden and so on.
Of course note. Just look this image and think who needs to work more hours to pay it:
http://cdn0.vox-cdn.com/uploads/chorus_asset/file/677236/health_spending_this_one.0.png
Has the American population better health services than France? Germany? Or even Italy? It seems they do not have. I avoid to compare with Sweden or Denmark to not shame anyone in special.
Lets take another measure, shall we? Vacations and leisure. Compare the vacations paid and the leisure of the workers in Europe and the UK. I avoid to compare against the USA of course.
What is more intriguing is how the USA has a bigger productivity per capita than almost all the Europe and the living conditions of the common worker and people is so bad comparing with the Europeans. Just look to Switzerland with almost the same productivity. And compare the living conditions there with the USA. I do not want to shame anyone in special but comparing the living standards of the common Swiss worker with the American worker is like comparing apples and potatoes.
The mental model is very different even if the Swiss system was inspired in the American political model. But comparing Switzerland living conditions of the workers with the USA it is like comparing apples and potatoes. Why this happens? Because the mental model is very different from the Anglo-Saxon world.
As some weeks ago the Prime Minister of Denmark warned some Sanders supporters in Washington: do not try to copy our model because probably you will fail miserably.
Why he said that? Because what works in the European Continent maybe will never work in the USA because the lack of mental model in the USA to adapt to these conditions. This is not something that we can use like what McKinsey sells around the planet to the bad managers and CEO.
Ciao
Look at net incomes and then adjust for purchasing power parity before you wax lyrical about any particular country. No way I’d dream of going back to Denmark.
It is your mental model.
Compare this situation with Denmark and think twice:
https://www.opendemocracy.net/5050/samir-jeraj/why-are-so-many-children-in-uk-going-hungry
They have their model. It works fine for them. They barely see a child with hunger in Denmark because the economic conditions or poverty.
Ciao
German minimum wage ? You jest. They have Hartz IV Mini-Jobs paying €1/hr and short-term contracts for postal workers. You have no idea about German labour – none at all. It is like assuming all Englishmen wear tweeds and sip tea with cucumber sandwiches when not grouse-shooting
The best comment to the argument that EU offers “much stronger” labor protection than the UK was published in the London Review of Books:
Regarding You’ve been had — it appears that many voters were pretty much aware that a brexit would never improve their situation. I interpret their vote as taking a chance to hurt, somewhat (not fatally though), those middle and upper classes, and damage the standing of EU-UK elites responsible for their misery.
I read that article, which I think reflects the UK mood well. Although, I felt it does in places overlook the discomfort people can feel when cultural changes are imposed without consultation. This is a big deal for some in the UK. It can often be distinct from anti-immigrant sentiment.
Her conclusion is worth quoting in full. From the final paragraph:
Is this not on paper only? When the fundamental basis of the entire European project, that is a single currency without a central treasury, can only lead to austerity or increased centralization, does this not completely negate democracy and so-called ‘workers-rights’?
I have run businesses in Holland, for example, that has very strong employee legislation. But in reality this has led to a less stable employment environment, in that there are now some of the world’s largest (international) temp agencies who’s sole purpose is to allow employers to ‘end-run’ these regulations with temporary employees. As a result there are large swaths of the population who cannot look to any form of stable employment there.
The reason German car makers have plants in the UK is because the worker protections are lower in the UK. I don’t have the details but I suspect it involves firing at a minimum.
On the environment:
The European Union (EU) is considered by some to have the most extensive environmental laws of any international organisation.[1] Its environmental policy is significantly intertwined with other international and national environmental policies. The environmental legislation of the European Union also has significant effects on those of its member states. The European Union’s environmental legislation addresses issues such as acid rain, the thinning of the ozone layer, air quality, noise pollution, waste and water pollution.
https://en.wikipedia.org/wiki/Environmental_policy_of_the_European_Union
NO. They have plants in the UK because Alex Issigonis designed a car called a MINI and it was built in Oxford in the Cowley Plant. Henry Royce built a business making cars and aircraft engines – his shadow factory in Crewe was build by Neville Chamberlain in preparation for WW2 to build engines. Henry Royce had bought Bentley and Crewe was where Bentley and Rolls Royce cars were built with bodies made in Cowley at Fisher Body…….when Piech stole Bentley from BMW who bought Rolls-Royce they got the Crewe Factory and invested £500 million in revitalising it.
The Rockefeller Center is in New York because it is cheaper for Mitsubishi to use low cost American workers rather than build their own in Tokyo
You are wrong about the EU or perhaps you have not seen facts on the ground. Germany is heavily polluted and in most cities diesel is a major cause but in the East it is lignite. German sewers smell in summer because of lack of water throughput caused by high water prices. Garbage stinks because it is collected every 14 days in some areas. The Uk has serious deficiencies but at least the UK implements EU law unlike the rest of the Continent
I’m interested in your comment about ‘deselection’. How would that happen? And would it not only be necessary to ‘deselect’ six or maybe seven of the Blairites in order for a plurality to be obtained through which a new (what we used to call ‘snap’) election might be called for?
Ah, I see one would have to have unanimity among all Labour members.
I apologize for my extreme ignorance here.
This is a very biased and poorly considered article. For example:
What is this comparison? Horse shoes and grapefruit? These are not quantifiable, definable or comparable.
Leave is “right wing”? Who financed Remain? Let’s see (Telegraph):
JP Morgan
Goldman Sachs
Citygroup
Morgan Stanley
etc etc
What about:
Bloomberg
Much, if not most. of the Remain funding (as above) came from entities with interests that are external to the UK – and often Europe. These are global corporations, many are American.
The British government, hardly “left-wing”, spent at least £9.3 million of taxpayer funds on Remain .
How about bribing the media? The BBC received (and tried to hide) £3 million in funding from Europe.
Almost every major head of state took a position in favour of Remain, even posing threats against the country, including Cameron (Project Fear) and Obama (back of the queue). Are these “left-wingers”?
In spite of all this nonsense the grass-roots working class English and Welsh voted Leave. These people are not right-wing – many, if not the large majority, come from traditional Labour strongholds.
Europe does not stand for left-of-centre policies. It is, in fact, the opposite. There are union strikes in Germany, France, Italy, Britain, Spain, Bulgaria… This is what happens under a single currency with no central treasury. The ultimate destination is austerity.
My personal view, in contrast to the article, is that in time Britain is more likely to move to the left or centre-left than the right, in political terms, if there is such a thing any longer.
More importantly, the old left-right paradigm is falling away, no matter what the media would spin. It is becoming a battle between the global governments/treaties/corporations and the people – who demand accountability and transparency. Any political party that identifies this trend will find success into the future.
Aren’t you forgetting that UKIP is well to the right of the centre of the Conservative party mainstream? And that on the left, as typified by how Corbyn’s lukewarm support at best for Remain has seen him hounded by the Blairite faction plus the fact that two thirds of Labour voters voted Remain, wasn’t Remain the overwhelming position? Yes, there was some blurring of the boundaries, but “left = Remain”, “right = Leave” is a completely accurate generalisation.
So the Conservative party mainstream is not on the right? And the Blairite faction is… on the left?
Are you sure?
Yes, because while neoliberalism’s domination of both of their economic policies is complete, Labour — even the hopeless dyed-in-the-wool Blairite faction — is still way more left-leaning on social reform than the Tory’s are. Did you miss that both the Conservative leadership candidates were at-best ambivalent and at worst against the principle of same-sex marriage? The Blairite’s were always in favour of that policy, Cameron was out of step with his party on that one and it remains to be seen whether the new Tory leadership will risk backtracking on that.
My personal view is that the ‘left-right’ paradigm simply does not apply anymore. UKIP is really an English equivalent of the Scottish SNP or the Welsh Plaid Cymru. But to say the UKIP had an overwhelming effect on this election is stretching things a bit.
In the 2015 General Election, UKIP did far more damage to Liberal Democrats and Labour than the Conservatives – hardly the traditional stronghold of the right.
The voter dynamics in this referendum were completely different than a general election – and the left-right view of voter dynamics is no longer the correct perspective, in my view.
UKIP is very different to the SNP or Plaid Cymru.
This is most evident when you consider the goals of the parties. The SNP and Plaid Cymru want to secede from the UK, but remain in the EU.
UKIP, on the other hand, want the entire UK to secede from the EU, but want to retain control over Scotland and Wales.
The SNP and Plaid Cymru are able to make a reasoned case for leaving the UK. Their reasoning is that the UK government doesn’t act in Scottish or Welsh interests, and the SNP and Plaid Cymru will offer a better future for Scottish and Welsh citizens. It’s open to debate whether then SNP and Plaid Cymru would be able to deliver on their promises.
UKIP, on the other hand, must argue that it’s the EU which doesn’t act in the interest of all of those in the UK. This argument is much more difficult. The political situation in the UK is that the UK government has for many years been eager to deliver policies which are more right-wing and regressive than those allowed by the UK’s EU membership. For example, this is obvious in the area of worker and human rights, and environmental protections.
UKIP doesn’t oppose any of these more undesirable urges of the UK government. Thus, it can’t be portrayed as a parallel movement to the SNP or Plaid Cymru, both of which do oppose the UK government’s direction.
Europe’s unrestrained austerity that is destroying, not just worker’s unions and worker’s rights, but entire nations and democracy itself; is not regressive, but is progressive? Is this what you are saying?
No. Reread my comment. I’m saying that the Conservative UK government is eager to implement a version of neoliberalism that is in many ways more regressive than the EU version.
If you want a very simple illustration, consider the UK’s austerity budgets since 2011. These were entered into voluntarily. The EU wasn’t making Osborne implement austerity. There was no sound economic reason for the austerity. Yet, it happened anyway.
Many, perhaps most, of the arguments for the UK leaving the EU crumble upon consideration of how the UK government will handle the exit. It’s very easy to overlook this when focusing on the shortcomings of the EU.
I think you are missing the point made by Epistrophy that this is a point on the evolution of a “people versus corporate” revolution. This is becoming evident everywhere. It does not mean, or require, that everyone on the “people” side of things agree politically, far from it; where they do all come together though is the need for government by the people rather than by unelected power, in other words, democracy. I think that Brexit is a good example of this trend and I hope it presages more of this coming together of disparate political groups to counteract the overwhelming power of the unelected financial, corporate, and institutional entities.
I don’t think I’ve missed the point. It’s been obvious since the referendum results came in that a large portion of the Leave vote was motivated by what in your terms is a “people versus corporate” protest. This rejection of the status quo is a positive in my view.
But the the assumption that this will lead to a revolution seems misplaced. It relies on a misreading on the UK political dynamic. The result of the referendum has been to hand decisions about the UK’s future to tiny group of Tory grassroots members, who are just as distant from the UK public as the UK’s political class:
https://next.ft.com/content/ce2e24ca-4500-11e6-9b66-0712b3873ae1
Today’s UK headlines are a nasty blend of whether the inability to have children in some way disqualifies a candidate from being PM, whether it’s possible to row back on Cameron’s same sex marriage pledge, and how useful offering to reinstate fox hunting will be as a vote incentive for the future Conservative PM. It’s like a timewarp back to the 1980s.
The style of the Brexit “Leave” campaign, and the political direction which is following, bear similarities with the Trump campaign in the US. I find myself now in the bizarre position of hoping that Theresa May will be PM.
Obviously there will be opportunities for a left-wing or anti-austerity movement in the new environment. But to me it looks more difficult than under Cameron.
You may be right, we’ll have to see how things play out, but even if you are, the electorate will be able to kick the bums out in the not too distant future; not so with the bums who increasingly determine their future from Brussels. The result may also serve to reduce the stranglehold of the rich and powerful on our lives: it is much easier for their agents to influence a few hundred unelected bubble dwellers than the millions of the great unwashed who have to live with the consequences of their vote. That can only be a good thing.
I think you’re being unduly optimistic.
We’ve had a neoliberal hegemony in the UK since 1980, and no semblance of opposition (the past 9 months excepted) since at least 1995. The neoliberal hegemony has been strengthened by the Brexit vote. This is because the EU acted as a brake on some of the more regressive policy directions the UK government wanted to take.
Today’s latest news is that the neoliberal faction of the Labour party is going through with their attempt to take back control from the socialistic, but tiny, Corbyn-supporting PLP faction. This has happened on the back of the Brexit vote.
If the coup is successful, the UK electorate will have zero opportunity to “kick the bums out”. Swapping one set of bums for another set with a slightly less noxious odour would be the best than can be hoped for. And, even if Corbyn can hang on, there’s no electoral shoo-in. The prospects of being able to “reduce the stranglehold of the rich and powerful” are slim.
There is little or nothing positive about Brexit from a UK domestic perspective. I realise that those looking at the larger EU picture may be gladdened by the apparent blow to the EU’s ambit. But some greater consideration is needed as to how this actually plays out. Believe it or not, the situation in Europe can get worse, as well as better.
There is no ‘reply’ button to post to your comment below, so I do so here:
‘There is little or nothing positive about Brexit from a UK domestic perspective.’
Your argument seems to hinge on taking Cameron et al at face value, i.e., that they are genuine in a belief that the right thing to do is treat a 2% margin as if it constituted a broad mandate when the opposing side has half the vote and all the traditional firepower. I think political suicide will greet the Tory PM that takes that path, and expect instead some form of fix for the democratic ‘error’. Perhaps a unity Government that votes not to activate Article 50. And the damage to EU taxpayers will sit only at the current 150 billion euros for a new bank bailout.
If, however, the Conservatives forge ahead despite all resistance, how does that not hand Labour the next possible electoral opportunity to form a majority left or centre-left Government in a ‘free’ UK? Isn’t that actually the position Corbyn would love to be in, i.e., to be able to negotiate with neoliberal power within the UK and, as PM to somewhere in the negotiations with the EU, be able to influence that body as well?
Things can change on a dime these days. Expect it.
Greece, Spain, Italy, Portugal, Latvia, Ireland … the list will go on and on. The UK and especially the UK electorate has absolutely zero chance to change these terribly destructive policies and fundamental flaws that are destroying Europe. These policies and flaws are more than shortcomings. They are destroying millions of lives, wrecking families and erasing cultures.
I don’t disagree, but you haven’t read my comments. The UK is worse off out of the EU than in it.
Here we disagree, of course. I am not so pessimistic.
I’ve described the motivations of some major UK political actors. You’ve not given me any reason to doubt my characterisations of those actors.
You’ve also not provided anything to support your assertion that the UK is likely to move to the left or centre-left. I do hope that the path the UK takes is to the left or centre-left. However, as I’ve described, the current indications are that the UK is moving to the right.
Things are moving quickly though, and could change just as quickly. Let’s hope so.
Why worry ? You are heading for a major war anyway. The inevitability of nuclear war with Russia and China is never factored into these ramblings. The largest invasion force since June 1941 is on Russia’s borders and with THAAD deployed in South Korea to monitor Chinese missile launches it is obvious that the US is on a war-footing and China will need to deploy more SSBNs in the Pacific.
I doubt the EU will negotiate BreXit because I don’t think the current political leaders will be around much longer. Hollande is toast in May 2017, Merkel in September.
You are mixing up agents.
“Europe” is a geography, not a political entity.
The EU is not imposing austerity. The Eurozone is, through the Maastrict Treaty. The UK is not a member of the Eurozone nor a signatory to the Maastrict Treaty.
The U.K. IS a signatory to the Maastricht treaty. It’s arguably our signature to that treaty that started the whole Brexit ball rolling.
(sighs) but it opted out of the key provision — the actual ratification was a face-saving exercise for the UK and the EU
https://en.m.wikipedia.org/wiki/Opt-outs_in_the_European_Union#Economic_and_Monetary_Union_.E2.80.93_Denmark_and_the_United_Kingdom
The only reason it got through the Conservative majority parliamentary session was because there was an opt out of it. Pure political theatre.
Not clear that is true. In fact it is more a case of forcing Greece to pay BANKS and no other principle but satisfying bond holders.
You may be thinking of this:
https://www.indiegogo.com/projects/lexit-the-movie-the-left-wing-case-for-brexit#/
There is undoubtedly a left-wing case for Britain leaving the EU. For example, a protest at the EU’s treatment of Greece should be sufficient for many, and that’s without going into the many more undesirable policies of the EU, and the lack of democratic control over important areas of its direction.
However, I’d estimate (can’t be sure – no-one can) that the amount of the UK public who voted Leave for the reasons given in the film is very small. Indeed, the film didn’t even get to its £15,000 funding goal, and so was made instead for £6,000:
https://www.youtube.com/watch?v=pq72f81kkM4
And immediately hijacked by UKIP:
http://ukip.wales/2016/06/20/lexit-the-movie/
That UKIP were able to hijack the efforts of this left-leaning group so effortlessly perhaps tells you why most of those UK voters who favour left-wing policies also voted Remain. The dangers of an EU exit under the conditions offered by the recent UK referendum are simply too great. There are at least two reasons why the dangers are too great:
1. There is no coherent plan to exit the EU without at least short- and medium-term economic pain. The Conservative UK government will ensure that this pain is inflicted upon those least able to withstand it. (As many have pointed out, the group due the pain ironically has a major overlap with the group who voted Leave).
2. A vote to leave strengthens the most extreme right-wing elements in the UK. These elements are notable both among the political class, and among a small but thuggish and vociferous group of disenfranchised voters who are inclined to interpret the Leave vote along racist lines. (Please note, I don’t mean to suggest a parallel between these groups).
Perhaps the unfortunate truth is that more Tory austerity concentrate is required in order to fully expose the full reality of their intentions, in order for there to be a large enough change to make a difference later. I think that Corbyn is making a mistake through laudable intentions in regard to his stance on immigration & doesn’t seem to know or care about the studies in terms of it lowering workers wages, conditions etc – perhaps if he did, it would take the sting out of UKIP, & lead to more support from people in areas, who long disillusioned by New Labour, are stuck on the frontline.
I am not sure about the EU’s protections, although I admit that they were & probably still are better than the UK’s, but as someone already mentioned it doesn’t seem to have held the Tories back & in any case, doesn’t Junker’s recent declaration in regard to ” Le Nuit Debout “, that the new standards ( El Khomri ) being imposed was the very bare minimum, reveal where the EU is heading, particularly as it seems the only tool left to governments within the EZ strait-jacket is to cut labour costs ?
As for the future in consideration of recent surprises like Corbyn’s rise & the Brexit vote, in what strikes me as a time of much upheaval – I think that crystal ball gazing is bit pointless. One thing I am glad about is the fact that unlike those seemingly forever stuck in the Hotel California of the EZ, eventually & hopefully we will have at least more tools to at least try & improve things, which ironically is only the case largely because of Euro sceptics & Little Englanders.
That delightful woman Theresa May is it seems taking advantage of the immigration issue. I have the horrible thought of seeing her & Clinton grinning in unison.
http://www.telegraph.co.uk/news/uknews/immigration/11913927/Theresa-Mays-immigration-speech-is-dangerous-and-factually-wrong.html
Neo-liberalism has taken hold in the West because of “Left” wing parties pushing it. They talk about workers rights while taking actions to hurt workers. Meanwhile the general populace only takes in the sound bits. Neo-liberalism by stealth. How does one combat that, when most of their energy is wasted arguing over if it’s actually happening? With right wing parties pushing neo-liberal policies it will be more in the open for people to see. Then it will be up to them to find a political alternative.
The most important thing is that Britons voted against the status quo. They have exercised their right to demand change. This is the first step to actually changing anything – like ending the neo-liberal oppression. Sort of like, one step backwards to take two steps forward later. Granted it may not be possible to stop neo-liberalism and the 1% peacefully. Still one must try, even if the democratic possibility is merely an illusion.
I think you have to be my age (late 50’s) to really understand how ridiculous the “Left” label has become. Bernie Sanders was excoriated for being a “socialist liberal” for pursuing military policies Eisenhower would love, tax policies Reagan would love, and social policies Nixon would love.
A pox on all their houses I say: squirming Labour in the UK, the Democrats in the US, Labor in Australia. It’s the same old story: the moneyed class will squeeze the poor and bamboozle and extract from everyone else with their slogans and as always they will overplay their hand. Finally a butterfly will flap it’s wings, a Tunisian bread seller will immolate, and the blood-dimmed tide will be loosed.
There was a discussion in the comments of the article on Italy’s banking crisis on the difficulties (impossibility) of leaving the eurozone. It was widely accepted that unwinding these systems (from an IT perspective, primarily) is infinitely more difficult and time-consuming than it was winding them previously, and bound to have disastrous economic consequences, even if ‘winding’ was a bad decision to begin with. It seems we have the same issue with Brexit. Perhaps the UK’s unbridled integration into the European economy decimated its industry, increased inequality, and turned London into a vacation spot for the world’s .001%, but now it’s too late to turn back without causing an extremely severe recession (that could perhaps spill over into Europe and the rest of the world).
On the other hand, perhaps this was the right decision. Some economists are saying that while times will be tough, the British economy won’t be entirely ruined, and that eventually, it’ll be more or less back in the position it used to be in. If this is true, the UK may have ‘unwound’ itself from the ticking time bomb that is Europe before it’s too late. I can only imagine the carnage nations like France and Italy might have to suffer if/when they have to exit in the next decade or so.
I think the lesson is that we need to be a lot more careful about what we ‘wind.’ If it’s something extremely difficult to ‘unwind,’ than maybe we should proceed slowly, and design the system so that ‘unwinding’ is possible.
Very well said.
Does anyone else find LEFT-RIGHT an overly confining way of looking at politics. If being against TPP is “LEFT”, then the three most LEFT politicians in the US are Sanders, Trump, and Warren……. I’m not sure Trump and LEFT is a natural fit, but it seems to be his logical location if there are only two options LEFT and RIGHT.
The real problem is that Freedom falls outside the spectrum defined by:
— RIGHT (obedience to Corporations that are dominated by a multitude of Government regulators), or
— LEFT (obedience to Governments that are heavily influenced by by mega-corporations)
_________
More to the point on Yves proposed interpretation. Release from EU hegemony means that the UK will have more flexibility to pursue its own policies.
— In the short term, if one considered the Tories RIGHT, then yes the short term move will be rightward.
— In the longer term, the LibDem party could enter government. If one considered LibDem to be LEFT then this actually opens the door for eventual leftward moves.
The first query about this article would be about the UK and its EU partners entering into negotiations. The reality is that there can be no trade negotiations until the UK has left so those negotiations are more likely to be around how the UK leaves and preparations for negotiation.The economic impacts on the UK are more likely to be reflected in whether the UK can use default WTO trade agreements and since the UK is only a member via the EU this is questionable.
In my opinion the UK is more likely to adopt the Hong Kong duty free , financial safe haven option with the hope that the UK can become more of a Tiger economy. This will probably require some creative thinking around current subsidies (like paying farmers to maintain land for the future instead of giving subsidies). If anyone thinks that the elites have learned much of a lesson from the vote I suspect they will be substantially wrong and you can expect them to come to the conclusion that the policies did not work because they were not strong enough. So we should expect a double down on austerity reduced tax rates for business, removal of workers rights and an accelerated race to the bottom for the global economy. If Cold war spymaster IT confused Theresa and Banker friendly Andrea being selected as the potential leaders does not tell you this then I don’t know what does (I suppose it could have been ban the unions Boris or 1980s business school GM2 Gove).
Next up is the idea that a lower sterling exchange rate may soften the blow. This may not be entirely true since it may stoke inbound inflation transferring more income from the poor to the rich. A 6 percent inflation jump with no wage inflation will almost surely tip the economy into recession without significant growth (Companies are more likely to pocket the money or use to outsource in my view). Where I partially agree is that many who voted “leave,” will be those who suffer from a government shift to the right. Rural rich and some asset rich pensioners are likely to benefit while those working poor in the rust towns are likely to suffer.The Brexit vote might have been perceived as a vote against globalization, but in some respects so was the Remain vote (you need a large voice and backing by many people to fight it – not that the EU administrators would have allowed it) so it was always a hobsons choice.
So I largely agree but quibble over a few details and I am not sure Synoia is correct about the UK Labour Party. There are not just two factions in the UK Labour party and its not just about Blairites and a move to the left. The question for the Labour Party is how far to the left they want to move and still be an electable alternative to the Conservatives. The banker friendly Blairites I hope are a spent force, the question comes down to how far do you want to take the redistribution of wealth and if you take from the middle 70 percent and give to the bottom 10 percent then you don’t have an electable policy. Bearing in mind age distributions and that older voters with the time to vote have a tendency towards conservatism the UK Labour party has a very tricky policy path to tread. Dogma and lack of forward thinking seems to haunt all politicians and its all a bit of a talent contest. Maybe Jeremy stuck on the 1970s picket lines Corbyn can thread his policy through the eye of the needle but I don’t see him being the talent contest winner (Nor any of the Blairites or other Labour faction leaders either come to that).
UK Political parties are dysfunctional for the same reason everything else is when you replace people management with administration upward communication no longer works (I blame the management consultants from the US) (In my opinion having worked in Germany having proper people management is one of the reasons their economy is successful along with better worker rights and semi sane top management). So looks like we swap one set of administrators for another in the UK and get to foot the bill in the process.
Brick,
There appears to be an unwarranted assumption in the first paragraph of your post:
The reality is that negotiations will take more than 2 years. Therefore, there must be negotiations before any formal event that starts a 2 year clock. Most likely scenario is, “There will be no formal exit until negotiations are 100% complete.” Rational parties realize that the cleanest possible legal changeover will be one where the formal UK-EU separation and acceptance of the new UK-EU arrangement is a single action. This prevents an entire realm of gap exploitation in jurisprudence ‘after the end of the old’ and the ‘before the beginning of the new’.
I have no idea of what is going on in UK. But I have my doubts about the last paragraph of the article. I know that everybody and his uncle is expecting the eurosceptic parties gaining ground everywhere, but my gut feeling has been the opposite from the git go. I think that the Spanish elections, so soon after the British referendum, already suggested that I’m right, and this article from today’s Guardian, the same:
https://www.theguardian.com/world/2016/jul/08/brexit-causes-resurgence-in-pro-eu-leanings-across-continent
In Portugal a poll that has been published today (the first one of after the British referendum) sees a small drop of all parties with the exception of the “animals” party and the PSD of Passos Coelho (the previous, very pro-EU and austerity PM). The politician that lost more in this poll is the head of the Syriza-like party, who suggested that Portugal should make a referendum like the British one in the event of sanctions by the EU for excessive deficit, to the great horror of the Government party, PS, who is doing its difficult balancing act. But apparently, it didn’t sit well with the voters, either.
The same is happening in Denmark, the next to exit according the Brexit supporters:
http://www.thelocal.dk/20160704/danes-support-of-eu-skyrockets-after-brexit
It seems that the Brexit it was good to the EU and is leaving the UK isolated.
Ciao
Oh, and another poll in Portugal about a possible referendum:
63% against, 22% for
And an interesting question in hindsight “should there have been a referendum BEFORE?”:
55,7% against, 27,8% for
Was it a good decision for UK?
54,3% no, 23,8% yes
Will there be consequences for Portugal?
61,9% yes, 20,5% no
Will a Brexit lead to the desintegration of EU?
60,5% no, 16,4% yes
As an American who just returned from Britain after a month and left on Brexit Day, I agree that there is a strong Nationalist tinge to the Exit Voters, but to what end? Much of the complaint that I had heard from working class Brits was that the ‘faceless’ EU bureaucrats were pushing ‘privatization’ and ‘free enterprise’ and also pushing for a break-up of the ‘welfare state’, (National Health, Public Services etc.) Correct me if I am wrong, but isn’t it true that that has been the EU modus operandi in other less fortunate EU countries in privatizing public services in Greece, Portugal, Spain, in order to bring about a reduction in public spending and an austerity to conform with EU monetary regulations? What is being predicted in this article is that the forces behind the Brexit vote are even more viciously austere and champions of laissez faire that the EU has been. What a double cross that would be, if it were true. I encountered many Polish and other eastern European workers in bottom tier service jobs such as gas station attendants or coffee kiosk barristers, and the like. I think that the EU has grown way too fast and dangerously. The embrace of the former Soviet Bloc countries over the past 25 years is causing estrangement from the very people the EU needs to make it work. Furthermore, the attendant rise in building a NATO military machine is provocative and destabilizing. This whole experiment could collapse upon itself like a house of cards at any moment.
The issue is that the Eurozone, not the EU, has forced austerity on many member states. The EU has “forced” the UK to have better labor and environmental protections. It also provides large subsidies for higher education that would go poof in an exit, which would push the UK in the terrible US higher education model (only the rich can go without being loaded up with student debt, which has the effect of creating students who dare not rebel, since they can’t afford an arrest record that would keep them from getting a job).
Be careful with this one. It is correct that the number of local authorities with high levels of social deprivation in the old industrial areas voted Brexit (77%). But what swung the vote in favour of Brexit was the middle class voters in the southeast. The referendum count was reported by region (local authority), but the vote was a numerical vote -ie one person one vote. There are a lot less people in the old industrial areas – and a lot more people in the south east of the UK. In addition less people voted from the low socioeconomic groupings. From Danny Dorling (Prof at Oxford) – editorial in the British Medical Journal.
The outcome of the EU referendum has been unfairly blamed on the working class in the north of England, and even on obesity.7 However, because of differential turnout and the size of the denominator population, most people who voted Leave lived in the south of England.8 Furthermore, of all those who voted for Leave, 59% were in the middle classes (A, B, or C1). The proportion of Leave voters in the lowest two social classes (D and E) was just 24%.8 The Leave voters among the middle class were crucial to the final result because the middle class constituted two thirds of all those who voted.