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What’s it all about … Brexit?

Uploaded: Jul 7, 2016

Is it just for the moment we vote?

My views on the UK’s python-worthy referendum are summed-up in this brilliant magazine cover. Brexit is a self-inflicted wound that has little prospect for near-term healing, as well as a warning for All of us on this side of the pond.

Departure from the EU (now, and if/as/when it actually happens) will damage the British economy, with that burden falling heaviest on those who voted for it out of frustration with their diminished economic circumstances. The unintendedly weaker Pound currency will help tourism and any exports to the US (scotch, mini-coopers, fish, chips, border collies?). It will hurt everywhere else, including trade with the EU, talent acquisition, and higher prices for imported-anything that is denominated in another currency (read: everything). The people most vulnerable to economic vicissitudes, who were also those who voted overwhelmingly to leave, will be slammed. Piece of nose – meet your face.

The recent Ministers most guilty of silly-walking are each headed briskly for their own exits, including leading ‘Leave’ campaigners Boris Johnson and Nigel Farage, as well as resigning PM David Cameron – who made the blunder of calling for the advisory vote when he thought it’d be a slam-dunk win for the ‘Stay’ side. It seems that nobody wants to deal with the very current consequences of the country’s very dead parrot.

Cameron’s culpability goes deeper. As Prime Minister since 2010, he has been the architect of an economic austerity approach that gave primacy to reducing the rate of deficit spending. In the post-Great Recession era, what was needed, in the land of Keynes, to address its economic malaise was precisely the opposite. Any fault of Keynesian economics lies not in government pump-priming in lean times, but in the inability of politicians to rein-in spending during the fat years. The continued poor performance of the British economy since 2008 sowed and nurtured the seeds of its current discontent. There have been no fat years to counter-cycle.

The Brexit campaigns, however, found easier targets to blame for the plight of the proletariat. Immigrants and Belgian bureaucrats became its whipping boys, as Britons sought to cope with the loss of control they felt over their lives and times. “Others” are convenient bad guys, despite the fact that neither group bore significant responsibility for the changes that seemed to have overrun the country. Voters were goaded in that direction by rodent pols who are now doing-what-they-do when the ship of state takes-on water.

So, this was a protest vote against things as they are, or might be made to seem – a lashing out in anger against a changing world. There is precious little of a plan for how to implement the Brexit, or what will happen next, now that the bulldog has actually caught the car. We DO know that t’wont be pretty.

It’s worth noting that the Brits may get a do-over in the long run. The poll was formally ‘advisory,’ the vote was close (52-48%) and there has been much teeth-gnashing regret expressed, even among prior supporters. Mr. Cameron has also dodged responsibility for pulling the trigger, by resigning instead of invoking irrevocable Article 50 of the Treaty of Lisbon to formalize the departure. Cooler heads may yet prevail as it becomes clearer that the other EU members are not amused, or inclined toward any special dispensations for their prodigal in-laws. We do know already that a lot will have been lost by all concerned, regardless of the eventual outcome.

So, what are the lessons for we Yanks in all this, then?

First, for the Trumpistas, raising hell and sticking it to The Man is fun, and there may even be catharsis in casting that protest vote. The problem here is that the guy they’d be voting-for has not the first clue how to ‘make America great again’, and the political party he represents is really the party of the Big forces that have wrested perceived control of their lives from them. It’s not Hispanics, or Muslims, or regulators in Washington that deteriorated and exported the manufacturing sector, and limited the horizons of those thrown out of work.

Globalization is a big business phenomenon, and the GOP is traditionally the party of big business, as well as the ‘unshackling’ of the poorly-policed tycoons of Wall Street and Finance. They are also the enemies of taxation and public sector spending (except on defense) that could renew and extend infrastructural investments. ‘Starving the beast’ of government is exactly the wrong medicine for what ails the stagnant parts of the US economy.

Similarly, the EPA did not cause the global warming that has doomed coal. Bloodless, faceless ‘bureaucrats’ are thus an easy target, but when you ask folks to point to specifics, those replies become sparse. The parallels to the Brexit vote are thus pretty clear – and ought to be sobering. ‘Wrong targets’ and ‘no plan’ are as much a recipe for disaster ‘here’ as they are ‘elsewhere’ in the world.

For the Dems, the lesson is no less clear, and the need to respond intelligently is no less compelling. Lefties have tended to be dismissive of the desperate frustration of the Trump rabble-rallyers, replete as they are with wrongheaded anger and numerous superficial hostilities. Libs have missed the reality of the pain, and the need to truly be the party of working America.

There was a comment to an article in the NY Times that captures the concept: “… I am a liberal, and well educated (Stanford) and understand the intellectual arguments. But until the elite comprehend the social impact of globalization on the 24 year old in London that can't get a job as a waitress, or the 45 year old factory worker in Ohio -- you will continue to see populists like Trump gaining support. Hand wringing and intellectual arguments will not carry to day. Explain to the factory worker what he should do to feed his family, and perhaps we can push back this awful tide of populism.”

I would substitute ‘hucksterism’ for ‘populism’, but the meaning is the same.

In other words, the Left clearly must form policies that address the unrest of the archetypal coal miner or assembly-liner, as well as the next generation of workers for whom ‘career’ is a pipedream. If government is not ‘the problem,’ and it’s not, then it must become seen as an engine of solution. Progressive tax policy (somebody has to pay, and The Fortunate have gotten a very easy ride since the 1980s), massive support for re/training and education, and investment in infrastructure of the scale (if not the same kind) that helped underwrite the post WW2 boom would be a good start. Politics and business as-usual just won’t do – folks need hope, and actual, well-targeted solutions.

In a way, the Dems are fortunate that they are opposed by such a deeply flawed candidate. That won’t always be the case, and if they wander too close to the cliff, we’ll all join the Brits at the bottom. That wouldn’t be just silly, but tragic.
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Posted by Michael Austin, a resident of Pleasanton Meadows,
on Jul 7, 2016 at 4:42 pm

Michael Austin is a registered user.

The monarchy and her wealth lives on, above it all.

Posted by Cholo, a resident of Livermore,
on Jul 7, 2016 at 4:44 pm

Brexit and Brit xpats!

Web Link

Posted by Ben Johansen, a resident of Birdland,
on Jul 9, 2016 at 10:44 am

Government is not the problem? Government used to not be the problem when it stayed out our lives.
How does government create wealth? It cannot and never will be able to. And no answer a progressive will come up with will ever be true. Until the progressive (aka socialist, and yes it is a socialist movement, please admit it) understand that, you will have citizens clamoring for THEIR liberty. People are tired of a progressive driven agenda, forced on us by the the praetorian guard media, that gives more rights to the progressive elite and illegal citizen, then it does the very citizen(s) that live in their respective countries.

Posted by Tom Cushing, a resident of Alamo,
on Jul 10, 2016 at 9:35 am

Hi Ben -- thanks for your comment. Here are my thoughts.

The categorical statement that “government does not create wealth” is an article of faith that may not survive close examination.

To believe that, you have to conclude that the interstate highway system doesn’t promote wealth creation by increasing productivity -- moving people and goods around efficiently. But it clearly does so, and it was built by the government (meaning: all of us). Closer to home, we know that BART is worth at least $73 million/DAY ($20 Billion/year) to the Bay Area economy, because that startling figure is what’s lost in a strike. Web Link What of the Grand Coulee Dam’s electric power and Boeing’s rise in Washington state – impossible without it?

The list is endless – infrastructure builds wealth.

Or take education and training, where we’ve invested publicly since the 1850s, in part because it prepares people to be productive – does that not ‘create wealth?’ Of course it does. Or take a former coal miner who gains productive skills, gets a job, provides and pays taxes-in instead of being a drain on public resources -- what about his/her/our net gain in wealth?

As the blog mentions, these are the first places to invest public funds in the future – precisely because they ‘create wealth.’

We haven’t done enough of it, either to renew old investments or build a 21st century infrastructure (as they are doing, to their credit, in places like Korea and even France). Our children and theirs will be the poorer for it, and wonder why we chose to deny them tools to compete, and thus sacrificed their futures on bad economic thinking.

I’ll also argue that fiscal policy – pump priming in lean years, for instance – creates wealth by injecting a stagnant economy with activity that multiplies as wages are earned, spent and re-spent. Despite some recent revisionist economic history (substantially funded by the Koch brothers) to the contrary, it works – and wealth is created.

Finally, even transfer payments have a mild stimulus effect, as they are more likely to be spent locally, rather than saved/invested anywhere else in the world. That spending also creates wealth.

BTW, I don’t think the term ‘socialist’ is a dirty word, or that Progressives are socialists, or that it means what you think it means.

Posted by Cholo, a resident of Livermore,
on Jul 10, 2016 at 12:14 pm

Tom: Sorry to interrupt but I just discovered a dog that you might be interested in adopting: Web Link

He needs time to grow but if you're patient, he may be just the spirit in your life! Think about it!!!

Posted by Tom Cushing, a resident of another community,
on Jul 10, 2016 at 1:48 pm

Further diversion alert -- sorry to anybody who might be offended.

Thanks for posting that real good-lookin' boy, cholo -- the eyes have it!

Tell you what, anyone -- if you will adopt him, I'll show you how to help him overcome his shyness -- I did it with a disastrous dog who's still with us, based on what a woman wrote to me on the web when I asked for any suggestions. I was out of ideas -- she saved his life and he's a serviceable, lovable, quirky dog today.

Posted by Tom Cushing, a resident of Alamo,
on Jul 11, 2016 at 3:28 pm

Apparently, I'm not completely alone -- here's Krugman, today:

"... Many people don’t like what’s happening, but raising rates in the face of weak economies would be an act of folly that might well push us back into recession.

What policy makers should be doing, instead, is accepting the markets’ offer of incredibly cheap financing ... there are huge unmet demands for public investment on both sides of the Atlantic. America’s aging infrastructure is legendary, but not unique: years of austerity have left German roads and railways in worse shape than most people realize. So why not borrow money at these low, low rates and do some much-needed repair and renovation? This would be eminently worth doing even if it wouldn’t also create jobs, but it would do that too.

I know, deficit scolds would issue dire warnings about the evils of public debt. But they have been wrong about everything for at least the past eight years, and it’s time to stop taking them seriously.

They say that money talks; well, cheap money is speaking very clearly right now, and it’s telling us to invest in our future."

Web Link

Posted by Doug Miller, a resident of Country Fair,
on Aug 25, 2016 at 7:29 am

Doug Miller is a registered user.

"Departure from the EU (now, and if/as/when it actually happens) will damage the British economy...."

As the Brits sometimes say, Rubbish!

Two months later the FTSE100 is up by about 25% and growth forecasts have been revised upward for the UK.

But as liberals would respond, "That's old news. Let's move on."

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