JOHN MASON - Recognizing the disequilibrium that globalization brings
Recognizing the disequilibrium that globalization brings
Brexit, in my mind, is a perfect example of way the European Union does business. It also highlights the lack of leadership that exists in the United Kingdom and the dangers being posed by populist initiatives in Europe and other places in the world.
First of all, the principal way of doing business within the European community is to “kick the can down the road a bit” and go on with your business. Nothing, in the way of big issues, is ever solved. And, then as further problems arise, the Europeans “kick the can down the road a bit”…once again.
As for what is going on in Great Britain, no good path seems available and so fears arise that there may be no deal at all.
“Deal or No Deal’ read the headlines. It seems as if even though Prime Minister Theresa May might be able to craft a deal before deadlines arise that Ms. May might not be able to sell the agreement to her Conservative Party.
Thus, Robert Shrimsley writes in the Financial Times that the Brexiteers…those that favor leaving the European Union…may be the biggest threat to constructing Brexit.
What a mess!
But, the problem may be something different than what the press…and, consequently, most of us…end up talking about.
Maybe the fact that no good path seems available is due to the fact that the issue of “leaving” should have never been posed. That is, the question of “leaving” was botched up.
Former Prime Minister David Cameron thought that voting on whether or not the UK should stay in the European Union was not really an issue, that “remain” would be the overwhelming choice of the voters.
Does not seem too dissimilar to other decisions in recent times, for example in Italy where the center parties thought that they were certain to win the latest election, only to be totally surprised by two, at that time, “fringe” parties that now run the government.
Also, in the United States, Hilary Clinton thought that she was heading for a runaway victory to become the first woman president…until on election night she learned otherwise.
The United Kingdom was not ready for a vote to “leave” the European Union and no one had any plans for what “leaving” might mean and how “leaving” might actually take place.
And, upon losing his “sure thing” bet, Mr. Cameron resigned. And, no one knew what to do.
The real issue of the vote to “leave” had to do with what those in power should do to assist those that felt left behind in this modern age…not how we might bring back a world that is gone.
The reality of the situation is that the modern world is upon us and that it is not going to change. And, the world is going to keep changing…regardless of the vote on “leaving”…and, if anything, the pace of change is going to increase.
A vote to “leave” was a vote to turn back history, something that no one has ever figured out how to do.
As Christine Lagarde, the head of the International Monetary Fund has recently stated, “Compared with today’s smooth single market, all the likely Brexit scenarios will have costs for the UK economy. The larger the impediments to trade in the new relationship, the costlier it will be.”
And, there are “no easy options for the Bank of England or the Treasury if they wanted to cushion the blow of the UK crashing out of the EU.”
“I don’t think a massive fiscal stimulus would address the nature and the roots of the problem.”
She concludes that “This should be fairly obvious, but it sometimes isn’t.” This is true, especially if you have your focus on the wrong things.
The choice of leaving was…and is…a bad decision. Those that voted for it were really angry about something else. And, I would argue, history has shown that the “leave” alternative could not really serve those that voted for it. But, once the choice is made…there are no good options…as Ms. Lagarde suggests.
And, this will be true for the “populists” that run the government in Italy. And, it will be true for those that elected Mr. Trump as the US president.
The spread of information, the speeding up of innovation, globalization, all, are going to take place. As history shows us, these things cannot be overcome…only slowed down, at best.
These things, however, do bring suffering on those that cannot, or will not, do what is necessary to “keep up” with the changes that are being made. Government policies to stimulate the economy to put people back into the jobs they have lost will not help these people in the longer run.
But, democracy, and modern technology, give these disaffected the opportunity to voice their discontent and cause some change themselves if those in power do not recognize or handle the causes of this disequilibrium. This movement has been going on in the developed world since the 1960s.
It has just been in the last couple of years that they have actually taken over the government in some countries, although their influence has been felt in other nations…like Germany and the Netherlands, to give two examples.
I tend to agree with Ms. Lagarde, Brexit is not going to be good for the UK. I don’t believe that there are any paths leading to a solution that will not cause a good deal of harm to British citizens, especially those that voted in favor of “leaving.”
So, we must look on to the pain now being experienced in the UK and learn from the experience. Hopefully, the lessons learned in this effort can be applied elsewhere so that we recognize the dislocations and disequilibrium that globalization and innovation bring and so that we can move to counteract the suffering caused by such advancements.
The world is going to move on. We must move with it, but help as many people as possible move with it as well.