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The world's financial losers are revolting…

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Kiwithrottlejockey
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« on: June 28, 2016, 02:00:09 pm »


from The Washington Post....

The world's losers are revolting, and Brexit is only the beginning

By MATT O'BRIEN | 7:14AM EDT - Monday, June 27, 2016



THE WORLD has enjoyed an unprecedented run of peace, prosperity and cooperation the last 25 years, but now that might be over. At least when it comes to those last two.

That, more than anything else, is what Britain's vote to leave the European Union means. A British exit, or Brexit, will make the country poorer in the short run, perhaps in the long run too, and might drag the rest of Europe down with it. That's because Britain is essentially ripping up its free trade deal with the rest of Europe. But of far greater concern than just dollars and cents is that this is the most significant setback in Europe's 60-year quest for “ever closer union,” and the most shocking success for the new nationalism sweeping the Western world.

Brexit, in other words, is the end of the end of history.

That, of course, was Francis Fukuyama's famous idea that, with the end of the Cold War, capitalist democracy had not only defeated communism, but also every other ideology. It was supposed to be, as he wrote, the “final form of human government.” And insofar as democracies tended to work together, this implied the future would be one where competition wouldn't lead to conflict, but would rather replace it. Tariffs would come down, money would move across borders to where it was needed most, and workers would too. This meant, then, that governments weren't the only ones that would become more alike. People would as well. They'd stop being citizens and chauvinists, and become consumers and cosmopolitans. You'd have nation-states without the nationalism.

For a while, this seemed true enough. Democracy spread, war lessened and economies opened up. In turn, international groups like the European Union and World Trade Organization codified it all. As any Mumbai taxi driver could have told you, the world really was a Thomas Friedman book.

Or at least it looked that way, if you didn't stare too closely. If you did, though, you would have noticed the cracks in this liberal international order. For one, financial capitalism didn't always work so well for countries. Money moved in and out of them at the speed of a mouse click, inflating and then popping bubbles along the way. From Mexico to Argentina, Thailand to South Korea, Hong Kong to Indonesia, and, eventually, the United States to southern Europe, these capital flows magnified the economy's boom-bust cycle, with an emphasis on the bust.

For another, global capitalism didn't always work so well for workers in the United States and Europe even as — or, in some cases, because — it pulled hundreds of millions of people out of poverty everywhere else. In fact, the working class in rich countries have seen their real, or inflation-adjusted, incomes flatline or even fall since the Berlin Wall came down and they were forced to compete with all the Chinese, Indian and Indonesian workers entering the global economy. You can see that in the chart below, put together from economist Branko Milanovic's data. It shows how much real incomes have increased — or not — for the whole world between 1988 and 2008. Now, the way to read this is to imagine that everyone, as in everyone in every country, was lined up from highest to lowest income. The richest people in the richest countries (and every other one for that matter) would be in the global top 1 percent, the working class in the richest countries would be around the 80th percentile, and the middle class in middle-class countries like China would be at the 50th percentile.

Globalization didn't create a lot of losers, but the ones it did were concentrated in the countries that were the driving force behind it.




This was a political powder keg. If rich-world workers were losing ground even when times were good, what would happen if we got hit by one of the financial crises the new global economy seemed to spawn every few years? Well, things would get ugly. Although, in truth, they had already started to. Right-wing populists like Pat Buchanan in the United States, Jean-Marie Le Pen in France and Jörg Haider in Austria had scored surprising near-victories, if not actual ones, in the late 1990s and early 2000s by focusing the working class's incipient ire on a “foreign” enemy besides outsourcing: immigrants. This antagonism reflected economic anxiety, cultural fear and even racial resentment. Displaced workers felt like immigrants were taking jobs and benefits that should have been theirs. They were worried about losing the one thing — their national identity — the market couldn't take. And, a lot of times, they just didn't want to be around people who didn't look, sound, or worship like they did.

It didn't take long, then, for the West's triumphal globalism to fuel a nationalist backlash. In the United States it's Trump, in France it's the National Front, in Germany it's the Alternative for Germany and, yes, in Britain it's the Brexiters.


SO Britain's “leave” campaign was about what you'd expect, especially considering that immigration had doubled the previous 20 years as people from the E.U.'s poorest east had come looking for work. Brexiters called to “take back control” from Brussels's bureaucrats. They warned that Turkey is about to join the E.U. — it's not — and flood the country with immigrants. They said that Europe's refugee crisis has pushed them to a “breaking point” in a poster reminiscent of Nazi propaganda. And they promised to earmark the funds now being sent to the E.U. for what they claim is the overburdened-by-immigrants National Health Services instead. Never mind that they overstated how much money that'd be by a factor of two. Their basic argument was that Britain could only stop this influx of immigrants if it ditched the E.U. and its rules mandating the free movement of people and that the elites had failed the people by forgetting there was a Britain outside of London. The only real surprise is that all this happened in Britain and not some other E.U. country, since they were smart enough not to adopt the euro and thus avoided the worst of Europe's double-dip recession.

If he were around today, Louis XV might amend what he said to this: Après Brexit, le déluge. That's not, though, because of what Brexit might do to Britain's economy, but rather to everyone else's politics. Now, of course, it is true that leaving the E.U. without getting a new trade deal almost as good as the one it has now will make Britain permanently poorer. And it is also true that the uncertainty over what any future agreement will look like will put the brakes on business investment and possibly push Britain into recession. But the economic fate of one little island isn't what has global markets on edge. It's whether the rest of Europe will follow Britain out of the E.U. and into their own portmanteaus. In other words, whether Brexit will beget Frexit, Itexit and Nexit.

It might. Right-wing populists, after all, in France, Italy and the Netherlands have already called for their own referendums on E.U. membership. And if they win, it wouldn't just tear the common market apart but the common currency as well. See, unlike Britain, all those countries use the euro. So if one of them were to leave, two things would happen: First, they'd have to change all the money in their economy, and, second, every other euro country would worry that they'd be next. That, in turn, would set off a slow-motion bank run across Southern Europe as people tried to get ahold of their euros before they could be turned into, say, liras that wouldn't be worth anywhere near as much. It'd be the mother-of-all financial crises. Which is why German, French, Spanish and Italian stock markets all fell much further than Britain's did after it voted to leave. Indeed, those markets dropped 6.8, 8.0, 12.4 and 12.5 percent, respectively, on Friday, while Britain's “only” declined 3.2 percent.

Brexit, it turns out, is more about Europe than it is about Britain.


THIS could be the beginning of the end of the euro, the European Union and the liberal international order itself. Like the French Revolution, though, it's too soon to say. Britain may yet back away from the brink. And Europe may yet fix the flaws in its currency and its bureaucracy to head off any more nationalist uprisings. Neither of those is likely, but we can't rule them out — just like we can't rule out the opposite. Brexit really might be the end of the E.U. if France and Italy follow Britain out the door; it might also be the end of the U.K. if Scotland and Northern Ireland decide they'd rather be part of the E.U. (or what's left of it); and it might even be the end of our era of economic integration if it helps propel populists to power across the continent who only care about putting their people “first”.

The E.U. may certainly seem to deserve this fate. It has let an economic fire burn across Southern Europe for nearly eight years, its only response to that has been to pour some gasoline on it, and it seems to think it has done its job now that that is down to just a smolder. Now, its first mistake was ignoring the economists who warned that creating a currency union without a fiscal union to go with it would end, well, as badly as it has. Its second one was ignoring the evidence that things were indeed going bad just as predicted, and blaming irresponsible governments instead. And its last one was all but blackmailing governments into slashing their budgets out of the misguided belief that this would get their sputtering economies growing again. It didn't. It was the economic equivalent of tossing a drowning person an anchor instead of a lifeline, because you thought they needed to get stronger and not bailed out. Which made the E.U. Europe's bête noire.

The sad irony of all this is that the E.U. was built to prevent the very kind of nationalist fervor its economic mismanagement and political heavy-handedness are provoking now. The dustbin of history exists for a reason.

And yet, and yet. It's easy for a generation that has only known peace and relative prosperity to forget that the arc of the political universe is long, and it bends toward wherever you point it. If that's toward chauvinism and isolationism, well, that's what you'll get. Europe's countries will end up with metaphorical walls around their economies, and eventually physical ones around their borders. Hungary's nationalist government is already well on its way with its razor-wire fences. This is a dangerous time for Europe. It has had walls before. It doesn't want them again. The only thing, then, that might be worse than the E.U. is the people who want to get rid of it. The same could be said of globalization. It might have made growth less inclusive and less sustainable than before — at least in rich countries — but it's hard to say the alternative would be better. We'd be a little poorer, and poorer countries would be a lot less able to grow.

The liberal international order isn't working for too many people, but, on balance, most economists would say it's still worth fighting for. After all, there are much worse alternatives. If we want to avoid learning that firsthand, though, we're going to need to build bigger safety nets for globalization's losers, and, in the case of the E.U., make it more responsive to voters. Otherwise, we might get the toughest lesson of all.

History doesn't always move forward.


• Matt O'Brien is a reporter for Wonkblog covering economic affairs at The Washington Post. He was previously a senior associate editor at The Atlantic.

__________________________________________________________________________

Related media:

 • PHOTOGRAPH GALLERY: Britons react to cutting ties with the European Union


https://www.washingtonpost.com/news/wonk/wp/2016/06/27/the-losers-have-revolted-and-brexit-is-only-the-beginning
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Kiwithrottlejockey
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« Reply #1 on: June 28, 2016, 10:49:00 pm »


from The Washington Post....

Brexit is not just Europe’s problem.
It highlights a crisis in democracies worldwide.


By DAN BALZ | 4:30PM EDT - Monday, June 27, 2016

Photograph: Scott Heppell/AFP/Getty Images.
Photograph: Scott Heppell/AFP/Getty Images.

LONDON — Britain's political system remained in turmoil Monday, virtually leaderless and with the two major parties divided internally. But the meltdown that has taken place in the days after voters decided to break the country's ties with Europe is more than a British problem, reflecting an erosion in public confidence that afflicts democracies around the world.

Last Thursday's Brexit vote cast a bright light on the degree to which the effects of globalization and the impact of immigration, along with decades of overpromises and under-delivery by political leaders, have undermined the ability of those officials to lead. This collapse of confidence has created what amounts to a crisis in governing for which there seems no easy or quick answer.

The debris here is clear. The Brexit vote claimed Prime Minister David Cameron as its first victim. Having called the referendum and led the campaign to keep Britain in the European Union, he announced his intention to resign the morning after the vote. The results also now threaten the standing of Labour leader Jeremy Corbyn, who faces a likely leadership election after seeing more than two dozen members of his leadership team resign in the past two days.

Alastair Darling, a former chancellor of the exchequer, outlined the extent of the crisis here during an interview with the BBC's “Today” program on Monday. “There is no government. There is no opposition. The people who got us into this mess — they've gone to ground,” he said “How has the United Kingdom come to this position? We have taken this decision and have no plan for the future.”

The seeds of what has brought Britain to this moment exist elsewhere, which makes this country's problems the concern of leaders elsewhere. In Belgium and Brazil, democracies have faced crises of legitimacy; in Spain and France, elected leaders have been hobbled by their own unpopularity; even in Japan, where Prime Minister Shinzo Abe faces no threat from the opposition, his government has demonstrated a consistent inability to deliver prosperity.

Anthony King, a professor of politics at the University of Essex, said the underlying factor is that many people no longer believe that, however imperfect things are economically, they will keep getting better.

In the face of that change in public attitudes, he said, much of the political class “is behaving the way it used to behave, the old arguments, the old fights, the adversarialism.” That has created what he called “the palpable disconnection” between political leaders and ordinary people. “That is true across much of the democratic world,” he added. “How do you put that right?”

The problem is especially acute here at the moment and threatens to grow worse in the near term. A longtime analyst of politics here, who spoke on the condition of anonymity because of his position, said: “If you thought your [American] politics were a mess, we can outdo you anytime. I've never known it in any way, shape or form as bad as this.”

Britain's political system faces months if not years of instability. Cameron originally recommended that a new prime minister be in place by early October. On Monday, the party committee overseeing the rules for the selection of a new Conservative Party leader to succeed Cameron accelerated that timetable, calling for a decision to be made by September 2nd.

Boris Johnson, the former mayor of London and the leading voice in the campaign to leave the E.U., is seen as the favorite to succeed Cameron. But he is a controversial figure and faces resistance inside the party.

The selection of a new prime minister probably will be followed by an early election — almost four years ahead of the next scheduled election — because the next prime minister will need a public endorsement as they begin the process of negotiating a withdrawal from the E.U.

For the Conservative Party, the prospect of an election as soon as possible is attractive because of the chaos within Labour and the prospect of enlarging the narrow majority won in May 2015. It is the prospect of a crippling defeat that caused many Labour members of Parliament, long unhappy with Corbyn, to move swiftly against him now.

A left-wing backbencher, Corbyn was propelled to the leadership position after Labour's wipeout in the 2015 general election. He won on the strength of support from the unions and particularly from rank-and-file members of the party.

Today, Labour is in a vicious civil war, split between its grass-roots membership and the party's elected leadership in Parliament. Its future as a viable and effective opposition party is under threat at a time the country most needs one.

The party's deputy leader told Corbyn on Monday that he has lost the confidence of the parliamentary party. But Corbyn has fought to fight on and might have enough grass-roots support to fend off a challenge.

The reality is that neither party enjoys a particularly stable coalition. Tim Bale, a professor of politics at Queen Mary University in London, argued that as cultural issues — here symbolized by immigration — have risen to the fore, they have put pressure on a party system long organized over economic differences of more or less reliance on free markets rather than government's hand.

Labour saw many of its strong areas outside of London vote strongly in favor of leaving the E.U. Meanwhile, Cameron was relying on the votes of Labour districts in London to help prevent that from happening.

“In other words,” Bale said, “there's possibly a mismatch between the party system we have and the party system we need.” But he added that history and institutional inertia mean there is no prospect of any realignment.

It will be left to the leaders of the next government to pick up the pieces after Thursday's vote. But those who led the “leave” campaign to break with Europe and who are likely to lead the government by this fall will be challenged to live up to the promises they made in the weeks before the referendum. Already they have backed away from some of the more questionable assertions of the campaign.

That governing challenge could fall most heavily on Johnson, if he becomes the next prime minister. The normally flamboyant former journalist appears somewhat chastened by what lies ahead. In a column in Monday's Telegraph newspaper, he sought to present himself as someone who would try to unite a sharply divided country and smooth over some of the issues that were at the heart of the Brexit debate.

He argued that the government would be able to take back control of immigration — the issue that above all animated the actions of many supporters of Brexit — while maintaining many of the economic benefits it now enjoys by being a member of the E.U.

“Britain is and always will be a great European power,” he wrote, “offering top table opinions and giving leadership on everything from foreign policy to defense to counter-terrorism and intelligence-sharing.”

But so far there is no plan for implementing any of this from those who led the campaign to leave. To some outside observers, that is a recipe for more voter disappointment and a further decline in confidence in leaders and institutions. As Bale put it, “The time seems right for another betrayal.”


• Dan Balz is Chief Correspondent at The Washington Post. He has served as the paper's National Editor, Political Editor, White House correspondent and Southwest correspondent.

__________________________________________________________________________

Read more on this topic:

 • British, European leaders debate timetable for exit negotiations.

 • Young Brits are unhappy with the Brexit outcome, but did they vote?

 • French right-wingers eye own E.U. exit vote.


https://www.washingtonpost.com/world/europe/will-brexit-change-the-behavior-of-politicians-in-britain-and-elsewhere/2016/06/27/f4317494-3c75-11e6-9e16-4cf01a41decb_story.html
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« Reply #2 on: June 29, 2016, 01:24:12 pm »

Its just that the people have had a gutsful of lying, cheating  political troughers.
Lets face it, if politicians and beauocrats were decent people, none of this would be happening
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Kiwithrottlejockey
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« Reply #3 on: June 29, 2016, 10:15:09 pm »


Ah, but the people who vote for the idiots who are the alternatives will regret it in the end.

For example, Trump....the people who vote for him will pay for it when Trump starts heaps of wars in the Middle East (as he has promised); builds a wall on the Mexican border, then when the Mexican government tells Trump to “go fuck himself” when it comes to payment, the US taxpayers will be stuck with the unpaid bill; when their cheap domestic help from Mexico suddenly disappears when Trump deports all of the Mexicans who do the jobs Americans refuse to do; when Trump slaps tarriffs on all the consumer goods produced outside the USA, resulting in Americans having to pay more for those goods; etc, etc, etc.

I suppose those Americans who voted for Trump will then whinge about thinking their arses are on fire, eh? 
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