Winner of the New Statesman SPERI Prize in Political Economy 2016

Thursday, 30 March 2017

Lessons from Brexit

Even if at some late hour Brexit does not happen for some reason, we will still have seen the country vote for and parliament approve a measure which inflicts substantial harm on its citizens. Anyone who still thinks otherwise should go through this Demos report on the opportunities and risks that Brexit creates, and ask whether the ‘opportunities’ are in fact things that we could have done anyway. Yes Brexit may force us to train more doctors etc etc. The disadvantages of doing it after Brexit is that the government will be more strapped for cash. [1]

In truth there are precious few opportunities that Brexit will bring, and an awful lot of costs. Those of us of a certain age have got used to losing votes of one kind or another, but in the past you could generally point to some group or class that gained from our loss. What has happened over the last few years has been something quite different: a democracy voting for things that will make almost all of the people worse off, to satisfy the interests or ideology of a minuscule minority. [2] The lessons we should draw from Brexit involve understanding clearly how this could have happened so to ensure it never happens again.

The referendum result went the way it did because of a perfect storm of two groups who had become disenchanted with the way society was going, or the way it had treated them. The first group, often forgotten by the left, were social conservatives who could be quite well off but who had probably not been to university. The kind of people who would react to claims that the Conservatives under Cameron were moving to the right by shouting ‘Nonsense. What about gay marriage’. The second group, the ‘left behind’, were the working class in once proud industrial areas that had declined steadily for decades. They were people who said before the referendum: 'well it cannot get any worse, can it'. 

The first group, because they were social conservatives, were naturally fearful of social change like immigration, although they were likely to live in areas that had seen little of it. The second group were more dependent on the state, and saw in the last few years their access to social provision steadily decline. Yet until recently neither group would have cared much about the EU either way, and certainly would not have been prepared to pay good money to leave it.

In John Major’s day the Brexiteers were a very small group who could best be described as an irritant. (John Major had a less kind word for them.) How did this group get to win a referendum? Crucially, they had allies in the owners of two key tabloid newspapers, the Mail and the Sun. Over a prolonged period these papers pushed two key ideas: that we were in some important sense ‘ruled by Brussels bureaucrats’, and that immigration was a threat to public services and wages. The first claim resonated with social conservatives, and the second with the left behind.

After John Major’s time in office, this alliance encouraged the opposition to use immigration as a stick with which to beat the Labour government. The Conservatives talked about the UK becoming a ‘foreign land’. Concern about immigration started rising well before the arrival of Polish immigrants. This in turn led to growing UKIP support. With the election of Cameron the pressure continued, and being the chancer he was he gave into the demand for a referendum, thinking both that it wouldn't happen (because he wouldn’t win an outright majority in 2015) and that he could win it.

The final part of the strategy was to associate immigration with the EU. The EU was not a major popular concern until 2016. But the tabloids were relentless in their anti-EU, anti-EU-immigrant propaganda before the referendum. The Leave campaign emphasised immigration (Turkey) and the public services (£350 million), and with ‘Project Fear’ neutralised Remain’s strong card. The bias obsessed broadcast media did nothing to expose these lies, treated academic knowledge on trade as just one opinion, and the polls showed the lies were believed.

Some have subsequently chosen to focus on the left behind group, and to suggest that they were both hard done by and their concerns about immigration deserve respect. Authors like Goodhart have suggested that the middle class social liberals that came to dominate the Labour party had little regard for this constituency. We can of course debate the successes and failures of the Labour party, but it seems this analysis misses the important point.

Those who voted Leave didn’t win. If they wanted immigration to quickly fall, it won’t. If they ‘want their country back’, they will find that all the EU interference Brexiteers go on about amounts to little more than a load of bananas. If they think their wages will rise because of Brexit they will see - are seeing - the opposite. £350 million to the NHS will become £50 odd billion to the EU. Those that will be hurt most by loss of trade to the EU will not be in London, but the very areas that voted most strongly to leave.

In other words the big news is that Leave voters were conned. The only people who will gain from Brexit will be the tabloid owners whose power will be enhanced and the ideologues who for some reason think the EU was stopping them reaching their promised land. That, as I suggested at the beginning, is not something I have seen in UK politics in my lifetime. The parallels with Trump’s election are in this respect apt. We can no more 'reconcile' ourselves to Brexit as we can think that Trump is in any way presidential. If your takeaway from both events is that Labour should better represent the working class and Clinton was a poor candidate I would politely suggest you are missing something rather important.

If there is a lesson for the left in all this, it is to be smarter about what the hard right is doing, and not to play along by talking about British jobs for British workers. The main lessons are really for those in the centre and the soft right. Don’t appease those on the hard right by using migrants as a political weapon (a lesson that was once understood). Don’t appease them by offering them referendums. Don’t appease the right wing tabloids by trying to befriend their owners and protecting their backs. Don’t appease them by being unbiased between truth and lies. If you continue to do these things, have a look at the Republican party in the US to see what you and your country will become.

When Donald Tusk received the letter from Theresa May yesterday, he expressed regret that the UK was leaving and said ‘we already miss you’. The letter he received made clear threats to end cooperation over security if the UK did not get the deal it wants. This made me rather proud to be European, and rather ashamed at the actions of my country’s Prime Minister and her government.

[1] There are only two examples I can see where Brexit might be necessary before we can exploit the 'opportunity of Brexit'. The first is to enable us to reform a farming system large parts of which are heavily dependent on subsidies. People draw analogies with New Zealand decades ago. But any transformation will be both painful and may threaten things we take for granted in the UK, like sheep grazing grass hills in areas of outstanding natural beauty. (George Monbiot likes forests more than I do.) The second is to offer development enhancing trade deals, where of course I fully agree with my economics colleagues.

[2] I say the last few years because I believe it also applied to austerity, which people voted for in 2015 despite having endured its consequences during the previous 5 years.



22 comments:

  1. But leave voters were conned because they didn't believe that labour was listening to their concerns - some of which were legitimate and genuine.

    So in many ways it was a failure of Labour to genuinely represent their constituents, and, of course, as I've said many times before, its was the failure of all mainstream political parties to stand up for the EU for the past 2 decades.

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  2. I'm intrigued on why economists think Freedom of Movement is beneficial to people in the UK.

    Firstly, it is important to distinguish between a policy which enables immigration to fill specific gaps in skills and one such as FOM that enables employees to be recruited on an equal basis from across the EU.

    Secondly the experience in my small corner of the SE is that there are practically no transaction costs in employing people from Eastern or Southern Europe; flights are cheap, a room in a flat is easy to find and arrange, and they can be here in a day. In contrast, someone from the UK receiving benefits faces significant administrative risk in taking a job as getting back onto benefits is not straightforward, and if they have children then working tax credits means their effective rate of taxation is over 90% so there is little incentive to get a job. The combination of UK government policy and EU policy has created a situation where employing citizens from other EU countries is the easy option and employing UK citizens a head-ache.

    FOM is economic heroine for large corporations. Mainlining cheap workers means they don't have to worry about the every-day things that normal companies would worry about, such as training, or productivity. Tariffs mean they are protected from innovations outside the EU. Given the combination of circumstances I don't see why if we remained in the EU this process wouldn't just continue until every currently unemployed young person in Eastern or Southern Europe is working here. And I'm told by a recruiter that those young people who came a year or two ago are now bringing their parents over to work, so we are nowhere near the end of this process.

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    1. There are many jobs in the UK that British people don't want to do. Freedom of movement means they don't have to.

      Arguably, if we hadn't had freedom of movement, those jobs would have either been off-shored or automated, leading to much the same outcome.

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  3. Would you be happy if everything turned out OK?

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  4. "We can no more 'reconcile' ourselves to Brexit as we can think that Trump is in any way presidential." That hits the nail on the head.

    I'd add that, although the right-wing press did indeed ramp up the anti-EU, anti-immigrant rhetoric prior the referendum, the debate around the EU is a well that has been poisoned since Maastricht, if not before. That's 25 years of people reading in the country's most popular newspapers that the EU is bad, overly bureaucratic, a dictatorship, etc etc. The bar for a sensible debate was so incredibly high that it's amazing really that 48% of people voted to Remain..

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  5. 'Half of Leave voters want to bring back the death penalty after Brexit' Ben Kentish, Peter Walker, Independent.

    "The YouGov survey also found 42 per cent of those who opted to part ways with the European Union want corporal punishment back in schools and 30 per cent want inefficient light bulbs to return to shop shelves...But the poll found 53 per cent of those surveyed want a return to capital punishment after Britain leaves the Union. The poll, quizzed 2,060 adults on 21 and 22 February. The research, also surveyed 810 Remain voters and found that 20 per cent of people opting to stay in the European Union backed the death penalty."

    There is a shallowness to all of this which makes even their gripes insubstantial.

    Food prices are beginning to rise, and we shall see politically what this does over the next few months.

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  6. Very well said. An excellent overview of how we got here and and how those who voted leave did not win. Many of my friends voted Brexit and seem impervious to the growing evidence of the negative impacts. I am not sure how bad things would have to be before they do - if ever. It is almost a badge of honour to accept higher prices as a price worth paying for something with no obvious benefit.

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  7. As a 75% "Remainer" like J Corbyn I agree with several arguments of this post, but the overall message seems to me, and I hope that I am wrong, the usual one from Economists like B DeLong members of the "Rubin wing of the Democratic party" or its UK establishment equivalent: that the "little people" should not presume to take responsibility for the affairs of state, but delegate them to "technocratic centrist" Economists who as "philosopher kings" will manage "the economy" in the "national interest", with a tiny bit of trickle-down flowing down to the "little people" sooner or later...

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  8. Good Grief.

    How can the monopoly issuer of the £ ever be strapped for cash Simon?

    Surely the word monopoly gives the game away.

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  9. I'm afraid you have read what Brown said.

    He said "drawing on the talents of all to create British jobs for British workers"- a clear statement of immigration's role in improving employment for Britons.

    He didn't say anything about immigrants taking jobs or discriminating, as lots of the media and the left tried to make out.

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  10. Dear Simon,
    Many thanks for this. Again, spot on. Incidentally, I assumed you saw Barnier's tweet with a picture of his team. It looks to me that they have organised themselves rather/quite well. How about "our" (sic) team. Do we have "secret weapons" and we don't want to reveal them? Makes me sad really the whole Brexit adventure...
    Best wishes,
    Costas

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  11. Dear Simon, do you have any thoughts on why the tabloid editors are so pro Brexit? I assume its a mixture of: an ideological obsession; (perhaps) more influence over policy from outside the EU; a tool for selling papers. But I dont find either of these reasons completly appealing. Do they have any other commercial interests in Brexit?

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  12. Why will the government be more strapped for cash to train more doctors when it can create as much cash as it wishes and buy anything that is for sales in the currency which it alone can create?

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  13. It's a tragic event, I still think we are only at the start of the hate, rage and scapegoating.
    I draw an additional lesson, listen to politicians. Those who play to identifiable tribes are to feared. We used to know this, playing we are great they hold us back or cheat us card is morally wrong. The us gets smaller over time. As my namesake said we read all men are created equal except slaves soon we except Catholics etc.
    I think we have to keep puncturing the lie that EU is broken that we are leaving for a bright future. We must never stop highlighting the damage this is doing. We have to show what we gain for history will not forgive such maddening indolence as playing brexit games while facing civilization threats as climate change, migration and rise of autocratic nationist regimes

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  14. In realpolitik terms the veiled threat over security is unfortunate but necessary to counter cheap talk about punishing the UK or ensuring a worse deal (partly to paper over the EU's problems). The UK getting a worse deal may be unavoidable, but it should not be an objective. There is a looming client-agent problem between the narrow interests of the EU's bureaucracy and the wider interests of the people that must be constrained.

    Security is one of the UK's strong cards, we really don't want to use it against supposed allies, but if supposed allies mean to do us harm I don't see any case for not leveraging it (and others). We should go into negotiations in good faith, but it should be clear that attempts to penalise the UK will be reciprocated. If proactive bad faith or deliberate intransigence by the remaining EU results in negative reinforcement it will hopefully reduce its attractiveness (the EU wants to look strong, but everyone knows it's not).

    Btw your analysis is one sided, I agree with significant parts of what you write, but you ignore the part of EU elite in creating the conditions you describe. The unwillingness to reform, the institutional sclerosis, the grandiosity, megalomania, unaccountability and corruption all remain rotting away at the EU's foundations.

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    1. «Security is one of the UK's strong cards, we really don't want to use it against supposed allies, but if supposed allies mean to do us harm I don't see any case for not leveraging it (and others).»

      The threat about security is just an euphemism for turning the UK not just into a tax haven on the doorstep of the EU27, but also into a terrorist haven on the doorstep of the EU27, by not reporting to EU27 countries terrorist activity directed at them from the UK. The mere voicing of that threat has rather damaged for a long time the relationships between UK and EU27, in particular the 20 countries of the EU27 that are also in NATO. Certain negotiating tactics, used for party political purposes by the Conservatives desperate to win in 2020 and manage the aftermath of exit, are at best counterproductive.

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  15. 'People on the left often fail to realize this, but conservatism does indeed speak to and for people who have lost something. The loss may be as material as a portion of one’s income or as ethereal as a sense of standing. It may be of something that was never legitimately owned in the first place. Even so, nothing is ever so cherished as that which we no longer possess. It used to be one of the great virtues of the left that it alone understood the zero-sum nature of politics, wherein the gains of one class necessarily entail the losses of another. But as that sense of conflict diminishes on the left, it has fallen to the right to remind voters that there really are losers in politics and that it is they—and only they—who speak for them. Conservatism is not the Party of Order, as Mill and others have claimed, but the Party of Loss. The chief aim of the loser is not preservation or protection but recovery and restoration, and that is the secret of conservatism’s success. Because his losses are recent, the conservative can credibly claim that his goals are practical and achievable. He merely seeks to regain what is his; the fact that he once had it suggests he is capable of possessing it again. Whereas the left’s program of redistribution raises the question of whether its beneficiaries are truly prepared to wield the powers they seek, the conservative project of restoration suffers from no such challenge. Unlike the revolutionary, moreover, who faces the nearly impossible task of empowering the powerless, the conservative asks his followers to do more of what they have always done. As a result, his counterrevolution will not require the same violence and disruption that the revolution has visited on the country. “Four or five persons, perhaps,” writes Maistre, “will give France a king."'

    (Corey Robin, THE PARTY OF LOSS, 2010).

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  16. My synopsis: Propaganda wins. Reminds me of 1930's Germany. It's been 80+ years since then and the lesson's of those times are now lost to the present bulk of the voting populations.. in the UK and U.S. at least.

    Propaganda exploits peoples emotions... usually fears and anxieties, always blaming a minority (which is never the cause of what actually creates the fears and anxieties that can be exploited), but almost always this is to the benefit of ultra-right nationalists, whose real agenda is masked by the propaganda.

    We should ask ourselves, as I do, why this is nearly always the case (if not always in fact). Unless we understand this phenomena it's hard to counter it or prevent it's occurrence.

    In the medium term it produces a negative feedback spiral with more and more adverse consequences feeding more and more of the ultra-right nationalists propaganda and furthering their agenda. This nearly always ends badly... and that's why we need to understand the basis for it and with that understanding find the means to prevent it... by hook or crook.

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  17. Well said.
    Is there alternative economic theory which does not aim for what is best for the common good?
    Pirate or Mafia economics? ie. what is best for the few?

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  18. I gave the blog to a friend to read. These were his comments:

    This is interesting and better than a lot thagt's been written, but generally there's a narrative that's been created here and in much of the other stuff that is written about Brexit and Trump – and it's become a sort of orthodoxy – that creates a rationale for the votes last year that’s based around the dispossessed voting against the establishment and in particular a rejection of internationalisation and globalisation because their benefits have been junequally spread.

    I'm afraid that I find the alternative which I haven't seen articulated more plausible. When people vote – especially in England in between general elections – they tend to vote against the incumbent and always have – remember Orpington? - and in the case both Brexit and Trump they were offered a cocktail of lies and xenophobia and grasped it enthusiastically, unconvinced by the argument that these would damage their interests. Nothing to do with globalisation, and no more to dowith the establishment than protest votes through the ages. It's true that globalisation has distributed its benefits unequally – but every aspect of every economic and social order – even communism – has done so. I wonder if there is a large element of claptrap constructed by sociologists, political scientists and pundits who create complex theories when the simple answer stares them in the face.

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  19. Who are the people at The Sun who produce stories alongside pictures of a giant Union Jack on the Rock of Gibraltar? Whenever I see a Sun journalist reviewing newspapers or making political comments on TV they always seem so restrained and so reasonable. They seem very unlike the breast-beaters who write the jingoistic “Gib’s British!” stories.

    Are the journalists we see on TV especially chosen for their presentational skills?

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