1. The real lesson from Brexit

The real lesson from Brexit

The danger is that while we may well see several waves of regime change in favour of demagogues, it is unlikely that any of them are really aware of or even interested in addressing the real issues

By: | Updated: June 28, 2016 8:12 AM
Brexit referendum

This picture is of a piece with the US, where the “two Americas” movie has been playing for some time now, and where Donald Trump—the granddaddy of demagogues, who is today doubtless energised by the Brexit vote—becomes an even stronger candidate. (Reuters)

The Guardian’s analysis of the Brexit vote shows that the UK is a heavily polarised country, with Remain areas coming in more strongly for Remain than expected, and Leave areas more strongly for Leave. Geographically, Scotland and London voted overwhelmingly for Remain, but outside the capital, every English region had a majority for Leave. Significantly, the decision to Leave was overwhelmingly supported in parts of England with low income and education levels.

This picture is of a piece with the US, where the “two Americas” movie has been playing for some time now, and where Donald Trump—the granddaddy of demagogues, who is today doubtless energised by the Brexit vote—becomes an even stronger candidate.

Of course, the fact that large parts of the electorate are dissatisfied with their governments is nothing new—I would say it is absolutely the norm in virtually every country certainly over the last 40 or 50 years. So, why this sudden explosion of demagogues—Trump, of course, Nigel Farage, that guy in the Philippines, sundry right-wing parties in Europe and, to some extent, even Recep Tayyip Erdogan and Narendra Modi?

To my mind, it can only be the increasing impact of social media. Twenty or thirty years ago, if James Houghton, a simple man from a small town in the Midlands (in England), believed that the government was being unfair to him (and his type), he would pour out his discontent at the pub over several pints to his mates, most of whom would agree with him; but, in general, it would die out by the time the Eurocup—perhaps the Champions League would be more appropriate at the current time—rolled around. So, too, Simon Underhill in a village in the North, would say his piece, but forever hold his peace.

But, today—or, more correctly, over the past ten or so years—the explosion of social media has coalesced the views, beliefs, dissatisfactions of James, Simon and hundreds of thousands of others into a sort of public eye. While most politicians have social media teams, they are generally so vested in the status quo that, even if they believe what they hear, turning around is a non-starter. Indeed, David Cameron, blind as a social media bat, set up his own hanging. It is hard to tell whether the unofficial tag team of Boris Johnson and Nigel Farage are smart or just plain lucky, but net-net, they tapped into the loud general discontent and, boom, Brexit!

And, of course, there could well be more to come. Eurosceptic parties are gathering their forces across the continent—Geert Wilders in the Netherlands has already called for a referendum on EU membership. Across the Atlantic, Trump’s idiot smile is getting wider and wider.

The real danger, however, is that while we may well see several waves of regime change in favour of demagogues, it is unlikely that any of them are really aware of or even interested in addressing the real issues. For instance, while immigration was superficially the hot button issue in Brexit, an article titled The Tyranny of Popular Will (Praveen Swami, The Indian Express, June 26), quotes economist Simon Tilford, who points out “…attitudes to immigration are being fanned by the failure of successive governments to tackle the country’s real problems: housing, the poor educational performance of the white working class and the financing of public services.” In other words, the real issue is not immigration, it’s inequality.

Ditto, in the US.

So, why have successive governments been unable to tackle these problems despite record growth, at least till 2008?
First, of course, because fiscal policy (particularly, as practised through tax avoidance and tax havens) has been hugely regressive for decades. Virtually all policy is written by global elites, who have effectively captured government in both the UK and the US. Second, since the 2008 crisis—of which, by the way, Brexit is yet another aftershock—monetary policy (well-intended though it doubtless was) has only served to further widen the inequality in distribution of income and assets. It is hardly surprising then that a growing number of “second-tier” citizens know that their government is only for the rich. Michael Lewis’ book/movie, The Big Short, tells the tale very lucidly and points out that, shockingly, nobody went to jail for incredibly bad and, in many cases, criminal behaviour.

So, the lesson for Boris Johnson or Donald Trump or Marine Le Pen or anyone who comes into power as a result of playing on peoples’ fears is to quickly play down trade and immigration and focus instead on creating a less regressive tax regime first of all by addressing legal and illegal tax avoidance; and investing in improving low-income housing, education and social services.

It is, of course, the same lesson for Hilary Clinton if—hopefully—she is able to turn the tide back towards sanity.

The author is CEO, Mecklai Financial 

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  1. Kirubhakaran Rajendiran
    Jun 28, 2016 at 9:42 am
    I discontinued reading the article the moment it addressed Modi as a demagogue.
    Reply

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