The Pandemic Depression
The Global Economy Will Never Be the Same
The referendum on the United Kingdom’s membership in the European Union has underlined the profoundly divided state of England. My middle-class friends and family based in the country’s south continue to bemoan the outcome of the referendum in tones more suited to a family bereavement than a political event. Meanwhile, in the north of the country where I grew up, there were celebratory street parties with revelers full of delight that voters had risen up and given the establishment a good kicking.
Although the referendum revealed a riven country, it did not create it. It simply provided many voters who had effectively opted out of British politics an opportunity to get back in. Their opinions may be unpopular in some quarters, but their mobilization cannot be ignored.
The Leave campaign’s dismissal of experts tallied with a pervasive mistrust of the establishment among those left behind by globalization. One incident at a town hall event sticks in my mind. A couple of colleagues and I were in Newcastle, in the northeast, discussing the fact that the vast majority of economists agreed that Brexit would lead to an economic slowdown. A two percent drop in the United Kingdom’s GDP, I said, would dwarf any savings the country would generate from curtailing its contribution to the EU budget. “That’s your bloody GDP,” came the shouted response, “not ours.”
In deprived areas of the country, where jobs are insecure, wages are depressed, housing is scarce, and education levels are far below those in London, there is a profound unease with the kind of aggregate statistics bandied about by experts. Membership in the single market may have increased the GDP of the whole country, but it didn’t make a difference everywhere. Boston in Lincolnshire provided the Leave campaign’s biggest victory—76 percent voted for Brexit. The median income here is less than £17,000 ($22,600), as compared with £27,000 ($35,900) across the 20 local authorities where support for EU membership was strongest. For all the good that membership might have done for the economy as a whole, inequality has worsened. As one woman in Yorkshire put it to me, “I don’t mind if we take an economic hit. Our lives have never been easy, after all. But it will be nice to see the rich folk down south suffer.” Dramatic falls in the value of the pound or national income mean little to people who are already struggling.
Distrust of aggregate data was most marked in discussions about immigration. Again, the economic studies are quite clear. Migration has had a—small—positive impact on the British economy, with the impact of EU migration being still more positive. Yet there are areas of the country—take rural south Lincolnshire—where large influxes of seasonal migrants completely alter small communities. It is here that struggles for places in school or for appointments with doctors are a reality. And it is here where people are rightly suspicious of claims that migration is an unalloyed benefit for the country.
On top of the scepticism of the data was a palpable desire to “stick it to them” on the part of those who have felt excluded from politics for so long. As elections have increasingly become little more than a competition to woo the middle class, the concerns of those in the Labour heartlands have been drowned out and forgotten. From the 1980s, the United Kingdom has embraced an economic model that served just enough of the population to keep the major parties in power, while condemning the rest to gradual decline. The decision to allow workers from Eastern and Central Europe into the country with no transitional controls was not something that ever garnered much support in the left-behind communities, yet London did little, if anything, to compensate them.
The referendum surfaced the pre-existing fractures in English society.LABORIOUS VOTING
The politics of the referendum were complicated. The Conservatives were profoundly divided and a majority of the prime minister’s own constituents voted against him. It is Labour, however, that arguably faces the toughest challenge in the years to come; it was in the traditional Labour stomping grounds that the Brexit revolt was most striking. The party had, until this point, managed to patch the split between its supporters in cosmopolitan, prosperous London and those in the traditional heartlands in the north through the electoral system.
The United Kingdom’s first-past-the-post voting system systematically disadvantages third-party challengers to the Labour-Conservative duopoly. Voting takes place by constituency, with the party receiving the largest number of votes winning. All other votes, therefore, count for nothing, which systematically disadvantages smaller parties. The upstart United Kingdom Independence Party (UKIP), for all the 3.8 million votes it received in the 2015 election, secured only one seat in Parliament. Little wonder that Labour grandees came to believe that their core voters had nowhere else to turn. And so they ignored them.
Enter the referendum, which surfaced the pre-existing fractures in English society. It was a contest in which every vote counted. And 37 percent of those who voted Labour in 2015 voted Leave in the referendum, despite the party line being pro-Remain. In areas of East London, Leave polled significantly higher than UKIP did in the 2015 general election, in which it was the only political party that advocated Brexit. In that vote, UKIP finished second to the Labour party. By contrast, in the referendum, Leave brought in 70 percent of the vote in Havering, 62 percent in Barking and Dagenham, and 63 percent in Bexley. Meanwhile, in the North West, around Liverpool, UKIP scored only 9.7 percent of the vote in 2015, but Leave garnered 51.5 percent in the referendum (precise comparison is difficult because the units used for the referendum were not the same as the constituencies by which general elections are organized).
Equally striking were differences in voter mobilization. People who do not usually bother to turn out for general elections (why would they in safe Labour seats, where their votes hardly matter?) came out for Brexit. In the North East, Gateshead saw Leave winning with almost 59 percent of the vote on the basis of a 70.6 percent turnout (as compared to 59 percent in the general election). In nearby Hartlepool, Leave managed to gain 70 percent of the vote on a 73 percent turnout (as compared to a 61 percent in 2015). In short, then, the Leave win was, in part, an expression of voters’ unwillingness to continue being ignored.
REMAINS OF THE DAY
The backlash from disappointed Remainers has been immediate. To date, a petition to annul the result on the grounds that turnout was below 75 percent and the winning side received fewer than 60 percent of the votes cast has received over four million signatures. Some members of Parliament have suggested that there should be a second referendum, or that the result of this one could be overruled by a parliamentary vote (the vast majority of British parliamentarians support Britain remaining within the European Union).
Such talk is misguided and dangerous. To be sure, one-off referendums are not an optimal way of deciding complex political issues, and are even less so when there is no defined threshold for turnout or margin of victory. As leading economist Kenneth Rogoff has argued, it seems bizarre that such a crucial decision could be made by 36 percent of eligible voters. Further, the Remainers are also right to claim that the Leave camp proved adept at twisting the truth; its claim, painted on the side of its battle bus, that the United Kingdom pays £350 ($465) million per week to the EU was simply and provably false. And it is doubtless true that some people had not thought through what their vote would mean.
The notion that large numbers of pro-Brexit voters are experiencing buyer’s remorse is both unproven and irrelevant.However, all that is in the past. Political campaigns are not usually beacons of honesty and straightforwardness. And the notion that large numbers of pro-Brexit voters are experiencing buyer’s remorse is both unproven and irrelevant. Voters knew the score before the referendum. It was a one-shot deal. The four million signatories of the petition are dwarfed by the 17.4 million who voted for Brexit. And it is hard to avoid the feeling that much of the Remain camp disappointment comes from people who are simply not used to losing votes that might negatively affect their own lives. As Manchester Professor Rob Ford put it, the English middle class is simply experiencing what UKIP voters have had to put up with for years.
The fundamental problem with the idea of ignoring the outcome of the referendum, however, is political. The referendum was, in part, a political protest against a system that no longer adequately represents its people. Overturning the result, therefore, would simply make matters worse. And the backlash would hit the Labour Party worst of all. Many of the places where the Brexit campaign triumphed are areas in which Labour had been holding off a challenge from UKIP. Part of UKIP’s appeal—apart, of course, from being the only party in favour of a proposition that 17 million people supported—is its insurgent nature.
To simply overturn the referendum result would, therefore, be to open the door to a political crisis that could see a surge in popularity for the far right. None of which is to say that the EU issue is now closed. Months, perhaps years, of difficult negotiations lie ahead and it is hard to predict what the outcome will be. And although the British people stated quite clearly in the referendum what they did not want—EU membership—they were not given the choice to decide what kind of relationship with the EU they would prefer. So it is eminently possible that a second referendum might be called to approve whatever settlement is secured.
At the moment, politics in England are quite ugly. The referendum coincided with—and helped trigger—an increase in xenophobic and racist incidents across the country. The chair of the National Police Chiefs’ Council recently stated that the number of hate crimes reported to British police online had increased more than 500 percent in the week after the referendum. And there is no escaping the fact that the behaviour of some elements of the Leave campaign contributed to this new unsavoury national mood.
Yet that fact should blind no one to the opportunity that recent events have presented. Whatever the flaws of the process, the referendum represented a unique democratic moment. Seventy percent of eligible voters turned out to cast their ballots, including, as we have seen, many who do not generally bother to stir themselves on election days. On trains and in pubs, around family dinner tables and the workplace watercooler, it had people talking about politics in a way seldom seen.
The kaleidoscope of British politics has been well and truly shaken. It is up to the country’s leaders to rearrange the pieces into a coherent pattern. And central to this task will be addressing the real concerns of many of those who voted against European Union membership.
Certainly, the referendum result will affect their ability to do so. If the economists’ predictions are correct, Brexit will reduce the resources of the British state and hence its ability to act. Yet the levers that need to be pulled to address the kinds of issues that the vote revealed rest, nevertheless, in the hands of the British government. Training, education, the provision of adequate housing, and ensuring a more equal distribution of the spoils of globalization are all matters for which the British government has primary responsibility. Each would, in its own way, help to bridge the chasm that has grown between the globalized middle class and the white, blue collar working class.
The rest of the world should watch the British response to this challenge with interest. The forces of reaction and revolt are on the march, whether via the Front National in France or the Trump presidential candidacy in the United States. In all these places, established parties, rather than dealing immediately with the legitimate grievances that have generated such anger, have waited until hurt feelings have grown into political movements capable of challenging longtime incumbents.
As ever, no one would choose to start from here. The referendum will have severe consequences for the British economy and British society. Yet it can still serve as a wake-up call. Politicians need to respond to the howl of protest that woke them in the early hours of June 24. No longer can they simply plug their ears. Let that be the legacy of the European Union referendum.