Brexit and Trump began a new era for the West

Summary: This is one of the best essays I’ve seen about the causes of Brexit, going beyond Britain’s elites (and their journalist servants) blaming the ignorant racist proles (which conveniently excuses them of any responsibility). Professor Mark Blyth shines a light on the real forces at work, and shows how the US has similar problems. Brexit and Trump began a new era for the West, for good or ill. Written in 2016, time has proved it to be prescient.

“Europe will be forged in crises, and will be the sum of the solutions adopted for those crises.”
— Jean Monnet in his Memoirs (1978). He was one of the architect of the program to unite Europe (see his Wikipedia bio).

Brexit as pieces of a puzzle

Mark Blyth explains the hidden reasons for Brexit.

Excerpt from transcript of an interview
by Athens Live on 26 June 2016.

Let’s think about it this way: was austerity the policy or was austerity a side effect? What we have found out recently from a paper done by the German business school was that, according to their estimates, a full 95% of the cash that went to Greece ran a trip through Greece and went straight back to creditors — which in plain English is banks. Public taxpayers’ money was pushed through Greece to basically bail out banks…So austerity becomes a side effect of a general policy of bank bailouts that nobody wants to own. That’s really what happened, ok? …

Why are we peddling nonsense? Nobody wants to own up to a gigantic bailout of the entire European banking system that took six years. Austerity was a cover. …

If the EU at the end of the day and the Euro is not actually improving the lives of the majority of the people, what is it for? That’s the question that they’ve brought no answer to. …

I’m very pro-European, but I’m against the euro, so if I still lived in the UK I would have an interesting choice. Now if you look at Larry Elliott in The Guardian, he thinks he should vote for exit because this might be the existential crisis that blows up the euro. Now why would you want to blow up the Euro, because “that would be terrible etc etcetera.” Because the long-term effect of the euro is going to be to drive Western European wages down to Eastern European levels in global competition for export share with the Chinese.

Game of Plutocracy

That’s one interpretation as to where this all goes. And that’s going to be fine for the Eastern Europeans coming up. It’s going to be great for very efficient exporters in the North. It’s going to be a disaster for France and parts of Italy, if not all, and certainly for Greece.

Now if you have a system in which one side runs a surplus and the other side cannot run a deficit because of the rules, the only thing the other side can do is permanently contract their economies to allow someone else to make money selling BMWs. I don’t see this ending well so perhaps it’s better to nip it in the bud when you’ve got the chance.

Now the thing is with Brexit I don’t think that’s what the debate is about. This is Trumpism. Everybody’s got a version of it. Here’s what I mean by Trumpism. For the past 25 years particularly the centre-left has told the bottom 60% of the income distribution in the country the following story…

Globalization is good for you. It’s awesome! We’re going to sign these trade agreements. Don’t worry, there will be compensation. You’ll all end up as computer programmers. It will be fantastic. And by the way we don’t really care because we’re all going to move to the middle because that’s where the votes are. And the people with money are the ones that we really care about. So you get the shaft under Schroeder and you get the same thing under Blair (New Labour), whatever.

You make that move and you basically take the bottom 30% of the income distribution and say we don’t care what happens to you. You are now something to be policed. You are something to have your behaviour changed. We’re going to nudge you into better behavior, as the Americans like to say. It’s a very paternal, very patronizing relationship. This is no longer the warm embrace of social democracy, arm-in-arm in solidarity with the working classes. They are there to be policed and excluded in their housing estates so that you so that you feel safe in your neighborhood. So that you can have your private schools. There they have their public schools which you don’t really want to pay taxes for any more.

Once this has evolved over 20 years you have this revolt not just against Brexit. It’s not about the EU. It’s about the elite. It’s about the one percent. It’s about the fact that your parties that were meant to serve your interests have sold you down the river. The UKIP. Le Pen (president of the National Front), they are all the same.

Think of how ridiculous this is. Think of the Scottish independence thing. So these guys vote to stay in because the entire British establishment links arm in arm and says don’t do it. You’ve got to wonder why, because ultimately who’s going to get hurt if they do it? People with money.

So they say “alright, then we won’t do it”. So then the SNP {Scottish National Party}, the anti-austerity party, is like well we didn’t win that, but we’re still in power. Great, on you go.

So what happens next? If apparently if there’s going to be a Brexit to get out, then the Scots are going to vote to get back in. Okay, this is fun. So you’re going to give up George Osborne, who is an austerity chancellor, for who? Dr. Wolfgang Schäuble {Germany’s Finance Minister}. So your nice little Scottish welfare states going to be really well protected by the tender embrace of the Germans. How’s that working out for the Greeks? People aren’t thinking this one through.

This is basically a revolt against technocracy. It is a revolt against government by unrepresented, unelected, undemocratic elites. And having had a government where every single district in your country says no chance. 61% say no chance {I don’t know to what he’s referring.}. And then the result is we’re going to do it anyway. You’re basically proving to people that democracy is irrelevant.

So this is global Trumpism. It is a no win scenario until basically until elites figure out that at the end of the day, as I like to say to my American hedge fund friends, the Hamptons is not a defensible position. The Hamptons is a very rich area on Long Island that lies on low lying beaches. Very hard to defend a low lying beach. Eventually people are going to come for you. …

What’s clear is that every social democratic party in Europe needs to find a new reason to exist. Because as I said earlier over the past 20 years they have sold their core constituency down the line for a bunch of floaters in the middle who don’t protect them or really don’t particularly care for them. Because the only offers on the agenda are basically austerity and tax cuts for those who already have, versus austerity, apologies, and a minimum wage.

——————- End excerpt ——————-

Listen to the full interview


Other posts about Brexit

Mark Blyth

About Mark Blyth

Professor of political economy, political science and international affairs at Brown. From his website at Brown: “His research focuses upon how uncertainty and randomness impact complex systems, particularly economic systems, and why people continue to believe stupid economic ideas despite buckets of evidence to the contrary. ”

He is the author of several books, including Great Transformations: Economic Ideas and Institutional Change in the Twentieth Century (2002), Austerity: The History of a Dangerous Idea (2013), and (with Matthias Matthijs) The Future of the Euro (2015).

See his website, his Twitter feed, his professional papers, and his articles. Especially see “Rethinking Greece: on austerity, social democracy and the political ‘extremes“.

For More Information

Ideas! See my recommended books and films at Amazon. Also, see a story about our future: “Ultra Violence: Tales from Venus.

If you liked this post, like us on Facebook and follow us on Twitter. See all posts about immigration, about Brexit, about populism, and especially these…

These books show how we got here

What Is Populism? by Jan-Werner Müller (2016).

Democracy and Populism: Fear and Hatred by John Lukacs (2005).

What is populism?
Available at Amazon.
Democracy and Populism
Available at Amazon.

26 thoughts on “Brexit and Trump began a new era for the West”

    1. John,

      The Tories were already well into their projects of wrecking the NHS and Britain’s fine universities.

      As in the US, the people of Britain have no friends among their elites. Just two groups of preditors with different goals.

      1. Yes, indeed. Very grim. I was just hoping the US negotiators make it worse enough for a backlash to salvage it. But not very hopeful, The left everywhere is all over the place with nothing coherent to show for it, even though it is really important now for something solid.

  1. The remarks about Scottish independence are correct. The situation changes totally on Jan 31 (assuming Brexit goes through, which now seems certain). After Brexit Scotland would have to apply for membership in the usual way as an independent country with a land border with a country outside the EU.

    The result would be the loss of the current subsidy from the UK and an obligation to meet the EU finance regime rules, which would lead to austerity on Greek levels, given the current Scottish level of deficit. It would also require adopting the Euro. And to maintain the sacred ‘four freedoms’, the Single Market and the Customs Union, it would also require a hard border at the Tweed.

    Nicola Sturgeon is a smart and capable politician – albeit an unrealistic obsessive about the goals she has chosen to pursue – and knows all that perfectly well, hence her difficulties and vacillations on the second referendums. Should you try to have an other Independence referendum before or after a hoped for second Brexit referendum? Neither was very palatable. In the event of course the second Brexit referendum has gone up in smoke, and its vanishingly unlikely that Westminster will grant a second Independence referendum.

    There will be pressure for it, based on the Westminster performance of the SNP in the December 2019 General Election. But this is less than it looks as I now explain.

    The thing about Scotland which may not be apparent from the other side of the Atlantic is that there are two voting systems. The Scottish Parliament (like the EU Parliament) is elected on a fairly proportional basis.

    Westminster MPs from Scotland are elected on the UK first-past-the-post system.

    In Scotland, unlike in England, the SNP vote is fairly uniformly spread and the majorities by constituency fairly small. The result is that in elections to Westminster the SNP may not have a very popular vote majority, but it gains a disproportionately larger majority of Westminster MPs. Its proportion of Westminster MPs is far greater than its share of the Scottish Parliament.

    The SNP got 48 out of 59 Westminster seats, with a vote share of 45%. The Conservatives were next with a vote share of 25% which resulted in only 6 out of 59 seats.

    You can see the effects of all this on the Scottish Parliament here:

    Showing the SNP with 63 out of 129 Scottish Parliament seats.

    Bottom line: I doubt this will be sellable as a mandate for a second Independence referendum, and after Jan 31, even if one were granted, I doubt that Independence would win this time either. And I’m absolutely sure that Sturgeon knows that.

  2. The second comment I would make is that I don’t believe immigration was the main issue in the Brexit vote, and especially not in the recent General Election vote or the earlier European Parliament elections.

    There is simple widespread distaste for the EU because of what it is and how it is, in particular, its undemocratic nature and its federalism.

    There are large sections of the UK population, particularly in English urban centers and in Scotland, who very much want continued UK membership and simply don’t care what kind of institution the country will be a member of. Its an emotional demand, its not to do with what kind of a thing the EU actually is. You will never hear any defences of the EU in terms of features. There are vague invocations of trade advantages, but that’s it.

    These views overlap, surprisingly, with the current Labour vote in the last General Election which of course was dominantly big city. This despite the fact that the Labour Party is bitterly split on EU membership, with a strong section of the leadership taking the view that the EU is a neo-liberal capitalist enterprise, the Parliamentary Party, the MPs, being overwhelmingly in support of Remain, and the Northern Labour voters, as we saw in the General Election, the Referendum and the EU Parliament elections wanting

    (a) to just leave and
    (b) to get as far away from the Corbynites as they can as fast as they can.

    Go outside the cities and the liberal professional classes however, and the big objection you find is to the steady march to a federal European state. People simply do not want that. The thing you repeatedly hear is that the country signed up, all those years ago, to a Common Market, not to a project to create a United States of Europe. But what its ended up being a member of is a hugely expensive, slow and incompetent, burocratic monster. Don’t think the UK electorate did not notice when the EU rejected all the other referendums and got them re-run till they gave the right answer. Don’t imagine that they do not understand the absurdity of the Parliament train commuting between Brussels and Strasbourg.

  3. Because the long-term effect of the euro is going to be to drive Western European wages down to Eastern European levels in global competition for export share with the Chinese”.

    This is what is happening in the rural areas, the good blue collar jobs gone and replaced with service jobs on the lowest wages, in the town I lived in for a few years when a child, the main employer was a lawn mower company, we were working class, but there was a full time job for most families. This closed long ago, drug are now common, of my family who used to work in the company most now have casual service jobs, cleaning the hotel, doing the gardens of the wealthy in the next picturesque villages, which are commuter distance to London. The only full time employed family is a Social Worker specialising in drug re-hab.

    Globalisation closed their factories, then of their service jobs Immigration has lowered these peoples wages as they have few skills and are competing head on with each new generation, while the media types in London have their lawns cut, food cooked, ride hail services and childcare done as very low prices, so of course they voted to stay.

    The working class are the ones that are the first to see their wages fall to Eastern European levels, austerity hits them hardest are they are most dependant on the services like state education, social workers and so on. My youngest brother is married to a Polish woman, they have three children it was not racism, she voted leave, too.

    The working class are asking why do they need to compete with China, why not wall themselves off and compete and trade with other rich nations. This question will get asked in ever louder voices as time goes on, nationalism combined with trade with countries of similar economic power to allow specialisation without impoverishment, how racist and ignorance! What we need in 1930’s levels of wealth distribution or worse according to Ray Dalio, and then a recession with people hardly surviving now at the bottom, what could go wrong.

    Thanks Larry for the article – expressed many of my feeling in a much more articulate way.

    1. “The working class are the ones that are the first to see their wages fall to Eastern European levels, austerity hits them hardest”

      I have seen documentaries about how the working class struggles in Europe, even in Germany. Low wages, zero hour contracts, dependence on food banks, etc. It seems no different than in the “Wild West” USA Small wonder that the Yellow Vest movement (which the US media consigns to the memory hole) is still protesting,

      1. There is a global dark out on the Yellow Vests, last revolution started in France and the next could, too.

        The media just calls everyone that disagrees with this form of globalisation racist or deplorable, they are not, they are desperate and see wages falling while prices rise, add food and energy price increases and no wage rise and this could tip them over the edge. If we don’t inject just a little more money into these areas they will fester like boils and when they burst it could be painful to society.

        I have unemployed family that live on A$12/day after rent and utilities, in areas with no work, this person drives a Taxi when owner ill or on holiday, cleans, cuts lawns, but left school at 16 and has no real market skills, he has a wife and three kids, pasta bake and meat loaf, supplemented with dumpster diving outside the local supermarket. Even the undergarments are mainly second hand form Charity Shops. He once was a full time factory worker, they had two cars and a house that was repossessed. Even the beer they drink is home brewed. No lazy guy, takes any work, proud Father, misses meals to put treats in kids lunch boxes, there is no work in these areas, cars gone long ago, meat a rarity, pasta a staple, fresh veg and fruit occasionally, walks the weekly fresh vegetable market at night and collects the discarded stuff. 15 years ago he worked 10 hours overtime a week, had a house, two cars and had a holiday every year.

        I wonder about globalisation, my parents had three pairs of good shoes made nationally, I have twenty pairs all foreign made and none of them that great, what extra utility is that really providing me when my cousin is jobless? I now made Australian first, other five eyes second the rest I try to get at the Charity Shop second hand. Globalisation, you can keep it when my family is unemployed.

    1. Just a guy,

      Please, no more nonsense from Armstrong. He’s not always wrong, but he lacks any logic.

      McCain was a long-time cold warrior. That he would give the Steele report to the FBI – with its allegations of Russian influence on the election – was as predictable as dawn following night. It was 100% appropriate for McCain to do so.

      Armstrong’s claim that “McCain Conspired Against Trump With Hillary” is just a lie for which he gives not a shred of evidence.

      It’s sad that you read such garbage, let alone take it seriously.

      1. Larry,

        “It was 100% appropriate for McCain to do so.”

        A real man of honor would have asked Trump what was going on. What McCain did was pay-backs. It didn’t work.

      2. Ron,

        “A real man of honor would have asked Trump what was going on.”

        That’s bizarrely nutty. This was a national security issue, of the highest importance. It’s not a TV show, where people decide to play police and investigate crimes and conspiracies. Such things should be turned over to the proper authorities for investigation, without amateur tinkering.

      3. Ron,

        Life is not 6th grade. McCain was given what looked to an non-professional like a legitimate intelligence report claiming a serious national security risk. Turn off the TV and ask a cop what should be done with that kind of evidence.

      4. Larry,

        “Turn off the TV and ask a cop what should be done with that kind of evidence.”

        I watch about an hour of TV a day. I know what a Republican Senator should have done for the member of his party that won the WH.

  4. Yes, I caught this the other day on Youtube and Blythe is raising very important points.
    Good that you are sharing it.

      1. It was up about a couple of weeks ago and there was an interview with him. I was searching through various clips about Brexit and the EU right after the Dec election. Some were old, some new. But I compare what people were saying in the past to what they are saying now about a subject.

      2. And to add: It was eye opening to find (in other clips and docs) that in the past, at the beginning of the EU, the Labour Party was the anti-EU party.

      3. LT,

        That’s an important point, showing the drastic reshaping of the political spectrum. People forget that while there is almost always a left – right political spectrum, it represents just the two teams. Not specific ideologies. After all, its origin was in the seating of delegates at the first French National Assembly.

        Another example: the national security agencies (eg, FBI, CIA) for generations were the natural foes of the Left in the US. Now they are best friends. Since Vietnam, the Left opposed US invasions of less developed nations. Now they love them.

        Things change. They do especially rapidly in ClownWorld.

      4. LT

        The comment about it being interesting to find that the Labour Party was anti-EU.

        Its one of the inexplicable delusions of the current Blairite left that the EU is left wing or progressive. It simply is not. The ‘four freedoms’ are just about making competition of some sorts more efficient with an emphasis on improving the power of large corporations and vested interests. This is why those on the left who support the EU so passionately never, never ever, talk about what is so great about it. As soon as you look at how it works, and in whose interests, you see it is what the far left usually calls a ‘neoliberal’ construction.

        This is why the far left, which Corbyn is, are at heart Brexiteers. They want a world in which they are free to subsidize and nationalize to their hearts content. They want to run huge deficits, banned under EU fiscal rules. They also want to fix the markets so that the nationalized industries are the obligatory suppliers. The point is to have a regime in which union power is unlimited, and the consequences in terms of competitiveness are eliminated by regulation and government subsidy.

        The far left also want out from under the Human Rights Act for more sinister reasons.

        What the EU wants is no state subsidies and unlimited competition in labour, goods, capital and services. But this is always set up in such a way as to favor established large players.

        I will give two examples: the Recreational Craft Directive had as its nominal aim the standardization of all recreational boat specification and certification across the EU. The nominal objective was that anyone should be able to export anywhere in the EU.

        A curious rider however effectively banned the sale of boats built by amateurs in-country unless they put their boats through the same expensive and elaborate testing procedure, which is only affordable if you are doing mass production. The effect was to raise barriers to entry.

        Another example is the concept of the ‘appelation controlee’. A Cornish Pasty is not allowed to be labelled as such unless it is actually made within the borders of Cornwall. They must have had a hard time with Cheddar Cheese – the logical thing would be to only allow cheese actually made in the Cheddar Gorge to be called Cheddar. But that was a step too far even for the EU! The result is to advantage existing producers.

        The EU is full of this sort of thing. Its a mass of regulations that effectively freeze product and production in their current form, to favor those who are doing it right now and prevent competition or disruption.

        All this is something the left somewhat approves of, though they detest the large corporations, but they are torn because financed by the unions who represent their workforces. They also approve of open borders, since they detest any kind of nationalism. But they are largely union financed, and their electorate does not want unlimited labour competition from unlimited immigration.

        The Bennite left, obliged to choose, has always taken the view that the EU was a capitalist neo-liberal construction (in which they were right) and therefore to be opposed with the aim of producing Socialism in One Country, namely the UK.

        In the last election, Corbyn was thus faced with a conflict between two wings of his party. One of which was working class, socially conservative, patriotic, living in northern cities and wanting out of the EU. The other wing was urban, liberal and professional, internationalist, socially liberal, and infatuated with the EU.

        He tried to resolve the situation by refusing to take a position, and promising a second referendum.

        The result was a massive majority for the Conservatives.

        Basically far-left opposition to the EU had gone underground and ceased to be respectable. There was no way the Labour Party could openly and unequivocally endorse it. But they could not push Remain either. And so they fell between the two stools and lost.

  5. I believe

    And having had a government where every single district in your country says no chance. 61% say no chance

    Is referring to Tory/right wing vote share. I have no idea how accurate that is in practice. Looking it up it seems like the Tories got about 37% in that election (and 330+ seats) and UKIP got about 11% (and no seats), assuming he meant the 2015 one.

    Any thoughts on the Iranian thing? I imagine it might be a future article, of course…

  6. i’ve been following blyth for a number of years. he has many [similarly] interesting things to say about what’s been happening in the u.s. if any of you found the above excerpt interesting, i suggest looking at some of his other lectures.

  7. Pingback: Brexit and Trump began a new era for the West – Investment Watch | ZUTI LIST

  8. “Another example is the concept of the ‘appelation controlee’. A Cornish Pasty is not allowed to be labelled as such unless it is actually made within the borders of Cornwall.”

    Interesting. I don’t think there is a large market for genuine Cornish Pasties. I’ve tried them, in Cornwall no less, and they weren’t all that. They were OK, but not something I would pine for. The ones I had were purchased at small bakeries, so I assume they weren’t mass produced in factories. If I saw a box of frozen genuine Cornish Pasties at the store, I would probably pass.

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