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).
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.
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.
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Listen to the full interview