• STRATFOR ANALYSIS

    The problems a Brexit won’t solve

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    WITH just a week to go before Britain votes on whether to remain a member of the European Union, yet another Global Affairs column on the topic perhaps seems unnecessary. Stratfor’s contributors and subscribers alike seem to lean strongly toward Britain staying, and Betfair, the most influential bookmaking website, estimates a 65 percent chance that that is exactly what will happen. Admittedly, in late-May Betfair put the chance of remaining at 81 percent and now says “both sides have everything to play for,” but it hardly seems likely that another column from me will have much impact on the numbers. To date, in fact, the more I have written urging Britons to stay, the faster they have turned away from that option.

    But that is exactly why I am writing this piece. I strongly suspect that when future historians look back on the 2016 referendum, this mass rejection of the views of the kind of people who read or write for Stratfor will strike them as one of its most telling features.

    The rift between experts and voters widens
    To be sure, there was also plenty of resistance to self-appointed experts the last time Britons went to the polls over Europe, in 1975. According to historian E.P. Thompson, the worthies who insisted that staying in the European Economic Community (EEC), as it then was, would be good for the lower orders were elitists who thought about the Continent entirely through “a haze of remembered vacations, beaches, bougainvillea, business jaunts and vintage wines.” But although his view was widely shared, the left-wing Labor lawmaker Barbara Castle nevertheless found that voters repeatedly asked her, “How can I choose [how to vote]? I don’t know enough about it.”

    What is global affairs?
    But this time is different. Trapped in early June into admitting that he could not name a single economic expert who thought a Brexit would be good for Britain, Secretary of State for Justice Michael Gove simply told his interviewer, “I’m glad that all these organizations are not on my side … People in this country have had enough of experts.”

    Though this initially sounds absurd, it is actually not hard to see what Gove was talking about. In January, just days before Prime Minister David Cameron finished renegotiating the terms of Britain’s EU membership, I heard him lay out his country’s concerns about sovereignty, democracy and immigration at the World Economic Forum in Davos. His speech was clear and to the point, but when it ended, the experts made it equally clear that they simply could not bring themselves to take these concerns seriously.

    I was astonished by this reaction, but a couple of months later I had an even odder “expert moment.” I went to a talk by a leading authority on the European Union, and I asked how she would explain the Davos experts’ apparent inability to grasp the concerns of British voters. To my surprise, she (and several members of the audience) interpreted this not as a question about why experts are so disconnected from popular concerns but as one about why British voters are so stupid.

    The West is losing its edge
    Popular resentment of experts, elite blindness to everyone else’s concerns and the rise of politicians like Gove seeking to exploit this gap are not, of course, purely products of the Brexit campaign. Rather, current British politics—much like the politics of the rest of Europe and of North America, too—are being driven by deeper geopolitical forces.

    The most important of these forces is a long-term global shift in power and wealth away from the West and toward the East. In most ways, the past 200 years have been the best of times for the nations around the shores of the North Atlantic. Since the Industrial Revolution, wages have risen nearly 20 times higher in Western Europe and 25 times higher in North America. Life expectancy at birth has nearly doubled, democracy has brought ordinary people previously unimagined freedoms, and women have shaken off much of the burden of oppression that crushed all but the wealthiest few before the Industrial Age.

    Of course, the past two centuries have been the worst of times as well for the West, with two world wars fought primarily on European soil. But until recently, the Industrial Age had given the rest of the planet a much worse deal. Living standards and life expectancy were rising more slowly (if at all), authoritarian rule remained common, and ignorance was the norm. (In 1960, the year I was born, more than half the people on Earth were still illiterate.)

    In the past half-century, however, all this has been changing. In 1820, most societies were very unequal. Measured on the Gini coefficient—a commonly used tool scoring inequality within a group on a scale from 0 (everyone has exactly the same) to 1 (one person has everything and everyone else has nothing)—most countries scored between 0.5 and 0.6. The economist Branko Milanovic has pointed out, however, that while all these societies were unequal, they were also fairly equally unequal. From China to England, each had rather similar income distributions, and if we compare entire nations rather than individuals within nations, the global Gini coefficient in 1820 was just 0.15. The Industrial Revolution changed that, making nations in Western Europe and North America much richer than anyone else, and the global Gini score for income rose steadily until it stood at 0.55 by 1950.

    Since 1950, though, as East Asia and other parts of the world have begun their own industrial revolutions, the global Gini score has stopped rising and might now even be falling. There is mounting evidence that the Western Age is coming to an end as the advantages the West reaped from being the earliest adopter of industrialization run out. In my books Why the West Rules—For Now and The Measure of Civilization, I even suggested—only partly tongue-in-cheek—that the index of social development I had designed indicates that the East will catch up with the West in or around the year 2103 (by which time I will of course be dead, and so cannot be mocked for being wrong).

    A power shift that cannot be stopped
    But 2103 is a long way away; if I am even approximately right, we can expect the West to dominate the world for another generation at least, and probably for two, though likely not for another three. Right now, Western nations still get their own way most of the time—just not as often as they did in the 19th and 20th centuries.

    This, I suspect, is what explains the widespread Western turn against experts. Throughout history, when things have gone wrong, people have blamed their leaders. In the West, things are now going wrong more than they used to, and in the decade to come they will go wrong even more. There is nothing that Western leaders can do to turn the clock back; the only way to try to keep up in this brave new world is through innovation, which means the creative destruction of much that many of us hold dear.

    This is where the European Union comes in, as perhaps the most important piece of political innovation in the past 5,000 years. Since 3000 B.C., people have been forming larger, richer and more powerful socio-political organizations, chiefly by means of violence or threat, swallowing up neighboring communities through conquest or intimidation. The ancient Indian epic poem Mahabharata called this “the law of the fishes”—in times of drought, the big fish eat the little ones.

    As armies have grown and weapons have improved, the potential costs of war for winners as well as losers have steadily increased; since the introduction of nuclear weapons, they have leaped toward infinity. “I do not know how the Third World War will be fought,” Albert Einstein told a journalist in 1949, “but I can tell you what they will use in the Fourth—rocks.”

    This made war increasingly unthinkable as a way to build larger societies, even though the largest industrialized states—the United States and the Soviet Union—retained a clear edge over all rivals in geopolitical competition. And this was the setting in which Western Europe’s little fishes, trapped between the American and Soviet superpowers, innovated their way toward a new kind of state: a superpower made by committee.

    Documents released by WikiLeaks show that in 1955 the goal already was not just to make war between Western European governments impossible but also to entangle them in such nets of rules and regulations that they effectively became a single federalized state. When British Foreign Secretary James Callaghan started attending EEC meetings in 1974, he was stunned to find,

    “… [N]ine Foreign Ministers from the major Countries of Europe solemnly assembled in Brussels to spend several hours discussing how to resolve our differences on standardising a fixed position on rear-view mirrors on agricultural tractors. I wondered what Palmerston, Salisbury or Bevin would have made of it.”

    But that, of course, was the whole point. The bureaucratic process of consensus building was stultifying, but no one actually dies of boredom. And by 1992, when the crucial Maastricht Treaty was signed, 500 million people had come together to create one of biggest, richest and safest socio-political units the world had ever seen—all without a shot being fired.

    The European Union delivered a lot to its citizens, but it also threatened to destroy a lot, above all the national sovereignty, local democracy, and control over immigration and economics that loom so large in the Brexit debate. On the whole, Europeans seem to have thought this trade-off worthwhile until things started clearly going wrong around 2008. Since then, a yawning gap has opened. On one side are Davos-type elites who remain committed to the European Union as the best way to turn Europe into a big fish able to compete with both the United States and China. On the other, a growing proportion of the electorate blames the Continental bloc for the very problems it has been trying to solve. From this perspective, self-appointed Europhile experts are not just failing to turn the clock back to the days when the West stood above the rest; they are actually traitors, rats who are leaving the ship they have themselves sunk and jumping as quickly as they can to join a deracinated, globalized elite, happier in Brussels or Singapore than in the depressed cities of their own homelands.

    If I am right that the Brexit debate is just the British version of a larger revolt against upper-middle-class elites driven by the beginning of the end of the West’s easy ride, another question seems to present itself: How much does the vote on June 23 actually matter?

    One decision won’t fix most problems
    Terrifying claims are being made on both sides. Staying, the “exit” camp insists, means that Britain will hemorrhage 350 million pounds ($495 million) per week and see its population shoot up from 60 million to 80 million as European immigrants overrun the isles. Going, retort some “remain” voters, will cause property markets, sterling and employment to collapse overnight and could mean war. European Council President Donald Tusk even says a “Brexit could be the beginning of the destruction of not only the EU but also of Western political civilization in its entirety.”

    Alarming stuff. But the more we look at what happened—or didn’t happen—the last time Britain’s EU membership was at issue, the harder it becomes to take the millenarianism seriously.

    When Charles de Gaulle vetoed Britain’s applications to join the EEC in 1963 and 1967, Britons were enjoying rising standards of living, expanding freedoms and high employment. But because the country was also adapting poorly to increasing competition as economies in Europe and East Asia recovered from the devastation of World War II, productivity was falling, inflation and borrowing were rising, and industrial relations were worsening. Furthermore, Britain’s political elite were stunningly complacent. Walking away from a then-astronomical budget deficit of 800 million pounds in 1964, all that departing Chancellor of the Exchequer Reginald Maudling could think of to say to his successor was “Good luck, old cock. Sorry to leave it in such a mess.”

    Joining the single market in the 1960s would almost certainly have forced Britain to confront its problems sooner rather than later, perhaps causing the crisis of the early 1980s to arrive in the early 1970s. But it is hard to see how de Gaulle saying “oui” instead of “non” would have changed British or European history very much. The important forces were too deep-seated for one decision to change them.

    Similarly, when Britain joined the EEC in 1973, its descent toward being the sick man of Europe did not stop. In 1975, inflation passed 24 percent; in 1976, Britain had to ask the International Monetary Fund for a loan; and in 1984, unemployment touched 12 percent. Had the country voted to leave the EEC in 1975, things might have been even worse; but surely not much more so. Comedian Michael Palin, of Monty Python fame, probably got things more or less right when he wrote in his diary that year that “Neither [staying nor going]I think involves the downfall of our nation. Once a decision is taken, it will all be absorbed into the system and the country will carry on working (or not working) as it always did.” Palin’s position seems as sensible in 2016 as in 1975, and the wilder claims now swirling around the Brexit debate will probably soon look as silly as George Orwell’s 1937 prediction that losing the empire would “reduce England to a cold and unimportant little island where we should all have to work very hard and live mainly on herrings and potatoes.”

    One of the things I learned while writing Why the West Rules—For Now was that the historical importance of specific decisions varies inversely with the scale of the questions we are trying to answer. When we ask such a huge question as why wealth and power tipped so sharply toward the West between 1500 and 2000, or speculate on how far and how fast they might tip toward the East in the 21st century, no single decision seems very important. If, on the other hand, we zoom in on a single country and a shorter time-span—asking, say, what will happen to British standards of living between the 2010s and 2030s—a decision like the Brexit vote can be very important indeed.

    Whatever British voters decide, wealth and power will continue moving eastward throughout the 21st century, Britain’s fate will remain inextricably linked with Europe’s, and people across the West will get even angrier at the elites who fail to prevent these things from happening. Brexiteers certainly have legitimate concerns about rising inequality, stagnating incomes, the loss of national sovereignty and the disruptive effects of immigration, but leaving the European Union is the wrong way to address them, because the causes are deeper than anything the experts in Brussels can affect. And that alone, it seems to me, makes yet another column on Brexit worth writing.

    © 2016 STRATFOR GLOBAL ANALYSIS

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