Britain is facing the consequences of irresponsible leadership.
Theresa May, the British Prime Minister, is struggling to find support for a compromise approach to Brexit. Her goal is to accomplish the will of the people expressed through a referendum without completely destroying the British economy in the process.
Already, economists agree, the British economy has taken a serious hit. But that hit is based upon uncertainty as to what is going to happen. It is possible that Brexit won’t ultimately happen, or that there will be a “soft Brexit,” where Britain remains closely associated with the E.U. The real fear is a “hard Brexit,” what the radicals want, that will completely split Britain off from the E.U. If that happens, the economic pain will become much worse, and that is just what Theresa May is trying to avoid.
The irony is that none of this mess is Theresa May’s fault — she is just the one left to clean it up. I think many women will relate to her position, having to clean up after the irresponsible actions of men. If there is anyone to blame, it is former PM David Cameron. Rather than arguing that the European Union was necessary for the long-term peace and prosperity of Britain and the rest of Europe, he played a dangerous game. He tried to finesse the issue by supporting a referendum. That way he could avoid having to take a hard position on the issue, he could claim he was listening to the will of the people, all while believing that the referendum would never pass.
So when Brexit actually did pass, narrowly, Cameron ran for the exits. By failing to deal with the issue head-on, he allowed Brexit to happen. Then, once it became reality, he left the mess to others to clean up.
And a mess it is. It is a cliche to say that we live in an increasingly interconnected world, but it is true. For Britain to pretend that the rest of Europe doesn’t exist is a denial of reality. Part of the reason Britain has prospered over the past decade has been its position as part of Europe but speaking the same language as the Americans. To think that trade with the United States can make up for lost trade with Europe, as some Brexit advocates think, is a pipe dream. Europe is a quick drive through the Chunnel from Britain. The United States is eight hours away by air.
The dirty little secret is that trade is good overall. Economists of all ideological stripes agree with this assessment. The specialization that comes with trade results in higher incomes for the world as a whole. Unfortunately, the adjustments that come with trade, namely the closing of industries in less efficient locales as the jobs move to more efficient ones, can be painful and long-lasting. The fear, uncertainty and economic hardship that accompanies these disruptions are fertile ground for demagogues promising easy, short-term solutions to these long-term problems.
The painful disruptions resulting from increased trade is a difficult, complex problem. Rather than dealing honestly with the issue by describing the overall benefit to society that comes from trade, and proposing retraining and other worker assistance for those hurt by its effects, it is much easier to simply blame immigrants and make unrealistic promises. At some point, however, people realize that these promises were empty, and they are actually worse off than they were before they fell for the promises of the demagogues.
Britain is now waking up with a hangover from its Brexit bender. People’s incomes are down and opportunities are drying up. It is expected that if there were another referendum, the people would overwhelmingly reject this empty promise. In fact, many British political observers are suggesting that another referendum may be the solution to this mess. That result will demonstrate just how fanciful were the predictions of the Brexit advocates.
Similarly, the United States is on its way to its reckoning. The stock market is performing poorly of late in large part due to uncertainty over the economy’s long-term prospects. The bond market is also flashing warning signs, and Goldman Sachs recently warned of slowing economic growth next year— just as I predicted months ago.
How long will the economic expansion last?
James Carville, when working for Bill Clinton’s 1992 campaign for President, famously said “it’s the economy, stupid.”…
In the last Presidential election, some states that have borne much of the pain associated with liberalized trade, namely Michigan, Wisconsin and Pennsylvania, voted for the false promises offered by Trump. Nothing he promised these voters has come true, and people are waking up to that fact as shown by the mid-term election results. It might feel good to go to war over China’s decidedly unfair trading practices, but the soybean farmers who voted for Trump are now feeling the ramifications. Rhetorical solutions to real problems are nothing more than just words.
The challenge then, that responsible public officials face is to explain complex issues to a public overwhelmed with information. What’s more is that such public officials need to show people that complex solutions to difficult problems are better than empty words. Bill Clinton, for all his flaws, was a master at this. He was re-elected comfortably after initiating a big tax increase. Similarly, George W. Bush, also for all his flaws, worked tirelessly to make sure that anger over 9–11 did not turn into anti-Muslim racism. It can be done, it just requires focus and hard work.
Unfortunately, Hillary Clinton lacked the political skills of her husband, and was thus unable to win people over to a more complex argument when faced with a demagogue promising simple solutions. David Cameron didn’t even try, resulting in the mess that Brexit has become. Politics has to be about something more than just winning. It has to be about doing what is best for our country’s long-term interest. That is the challenge responsible politicians must rise to.
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