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NOW that the dust from Brexit — the vote on the British referendum to leave the European Union — is settling, gloomy voices are basically saying: “We told you so.” Various sectors of the British economy are reporting a downturn around the corner, and the pound continues its volatile downward path. The fact that the stock market has risen is attributed to the weakness of the pound that makes it cheaper for foreigners to buy shares on the London stock exchange.
Industries from airlines to car manufacturers are warning of job cuts and lower profit expectations. In the EU, too, there is a sense of unease at the economic implications of divorce from the UK. Currently, half of Great Britain’s exports go to its trading partners in the EU, and its manufacturers import a significant proportion of their spare parts from the rest of Europe. Farmers and operators of hotels and restaurants, too, are fearful of restrictions on free travel and the right of work as they employ thousands of EU citizens in their fields and kitchens.
But Brexit’s impact on the UK, and to a lesser extent on the EU, is a small part of the larger story. The British vote to leave was greeted as a major victory by Marine Le Pen, the leader of France’s far right National Front, and warmly welcomed by Donald Trump, the Republican nominee for the US presidency. In much of the industrialised world, resistance to globalisation and international trade agreements is building up. And as the European Union has been the most successful of all trading blocs, it is a natural target for nationalists.
Even Bernie Sanders, the left-wing Democratic candidate, railed against globalisation. So clearly, this issue unites the right and left as workers see their jobs migrate to foreign, low-wage countries, while politicians like Le Pen and Boris Johnson deplore the gradual loss of sovereignty to unelected bureaucrats in Brussels. Above all, it is the free movement of people within the EU that most alarms and angers nationalists: the notion that they are no longer in control of their own borders arouses the ire of even tolerant people.
However, Brexit was also a vote against rising inequality. For much of this century, wages in the West have stagnated while the top one per cent, comprising bankers and senior corporate figures, have raked in huge salaries and obscene bonuses. This apparent injustice has angered large numbers of working class voters. As Ruchir Sharma wrote recently in the Guardian:
“The popular frustration is amplified by rising inequality. To fight the global downturn, central banks have been pumping out easy money. Instead of fuelling wage and job growth in the real economy, as intended, much of that money has found its way into financial assets, including stocks, bonds and housing — pushing prices to record highs. Because the rich own most of these assets, inequality is widening, and wealth is massing in financial capitals like New York and London…
“In that brief span [2007-2015], the world population of billionaires nearly doubled to over 1,800. More than 70 of them live in London — one of the highest concentrations in the world. In England proper the Brexit vote was, in large part, a vote against London, its globalised elite and all they stand for, including free trade and open borders.”
While millions have been lifted out of poverty by manufacturing and IT work created by globalisation in countries like India and China, workers in the West have seen entire sectors outsourced to low-wage regions. This is why there is no backlash against globalisation in Asia and Latin America. Nevertheless, there is a real danger of rich states raising walls to keep jobs at home, and foreign workers out. This would, of course, lead to an unravelling of the web of international agreements and institutions that have been at the heart of global peace and prosperity in much of the world for decades.
The election of xenophobic, populist leaders in Poland and Hungary, and the increasing popularity of politicians like Le Pen and Trump, bode ill for the liberal post-war institutions that have been so crucial to world peace. If Europe reverts to its patchwork of bickering states where economic rivalries and nationalistic ambitions led to frequent wars, then the ongoing bloodshed in the Middle East might seem like a garden party by comparison.
For two generations of West Europeans brought up in unprecedented peace and prosperity, this is a horrifying notion. This is why the majority of young Brits voted against Brexit. A friend seated next to me at a party said recently that her children were furious with her for having voted to leave the EU. “Can you blame them?” I asked. The young resent being deprived of the opportunities to travel freely and work that membership of the EU guaranteed. For them, the world has suddenly grown smaller.
In a recent editorial, The Economist offered this advice in support of globalisation:
“Trade creates many losers, and rapid immigration can disrupt communities. But the best way to address these problems is not to throw up barriers. It is to devise bold policies that preserve the benefits of openness while alleviating its side-effects … But don’t equate management of globalisation with abandoning it.”
Wise words, but in today’s climate of bitter divisiveness, are any leaders listening? When millions barely make ends meet, and austerity budget cuts fray the social safety net, the anger over growing inequality can be easily understood. And when, at the same time, foreign workers from Eastern Europe arrive in their hundreds thousands, Brits can be excused for saying “Enough!”
Published in Dawn, August 1st, 2016
