BREXIT: The End of the Washington Consensus and Globalization?

Analysis from Reporting San Diego

June 24, 2016 (San Diego) The United Kingdom has voted to leave the European Union. This is not a minor thing, and Brussels is worried about this spreading like wildfire across the European Union (EU). The financial markets are reacting in a negative way, as the world of finance has relied on a paradigm of neoliberal globalization for close to 40 years. There is panic around the world. Why? The Washington Consensus might be coming to an end. This is a plan to erase borders and create a global market, led by Washington and London. One of the two partners is vowing out.

This globalization plan. This making the world flat, has shattered some borders and taken away some national sovereignty. Arguments made by the leave campaign in the United Kingdom included the following:

  • Some regulations that in the past were in the hands of even national governments have been placed ins the hands of distant bureaucrats, in the case of the EU, in Brussels.
  •  Decisions on immigration have been taken away from the home government and placed in the hands of those same distant bureaucrats. There is a question whether open borders will remain, and whether UK expats will be able to continue to live in the rest of Europe.
  •  The UK is expected to stop further immigration.
  •  Globalization has helped those in London (which Incidentally voted to remain) but not the working classes in the rest of the country.

The leave campaign was also a right wing project that relied on xenophobia and a fear of those distant bureaucrats. It also split the British Conservative party, with the more moderate wing of the party wanting to remain in the EU, while the right wing wanted to leave. Prime Minister David Cameron was on the remain side, and has already announced that he will step down.

There is another interesting effect. Both Northern Ireland and Scotland also voted to remain, and this might also lead to the dissolution of the United Kingdom. There were voices in Northern Ireland overnight speaking of lack of representation. In fact, Manfred Weber, an ally of German Chancellor Angela Merkel said overnight. “Those who want to stay are welcome in the European Union.”

Brussels has already announced that they want to take care of this as fast as possible. Part of it is to reduce the uncertainty of a large partner leaving, but also to reduce the contagion. Other right wing leaders across Europe have announced their intent to hold similar referendums, whether it is Michelle Le’Pen in France, or for that matter Polish and Dutch officials. Poland is currently led by a right wing party.

So how about the United States? How will this affect our politics? How about our economy? The first indication of how this will affect our politics was Donald Trump’s statement that we are next. What did he mean? That be the North American Free Trade Agreement (NAFTA,) and other free trade agreements. We cannot help but wonder if Trump also meant the World Trade Organization?

Trump wrote this on his Facebook page:

Statement Regarding British Referendum on E.U. Membership

The people of the United Kingdom have exercised the sacred right of all free peoples. They have declared their independence from the European Union, and have voted to reassert control over their own politics, borders and economy. A Trump Administration pledges to strengthen our ties with a free and independent Britain, deepening our bonds in commerce, culture and mutual defense. The whole world is more peaceful and stable when our two countries – and our two peoples – are united together, as they will be under a Trump Administration.

Come November, the American people will have the chance to re-declare their independence. Americans will have a chance to vote for trade, immigration and foreign policies that put our citizens first. They will have the chance to reject today’s rule by the global elite, and to embrace real change that delivers a government of, by and for the people. I hope America is watching, it will soon be time to believe in America again.

Hillary Clinton underscored the stakes for this election and the need for a steady hand in government. She said “this time of uncertainty only underscores the need for clam, steady, experienced leadership in the White House to protect Americans’ pocketbooks and livelihood, to support friends and allies, to stand up to adversaries, and to defend our interests.”

What none is talking about is that the BREXIT vote is driven by similar dynamics as our current politics. There is a certain air of xenophobia as well as the economic fears for the middle class. The Washington Consensus, and the neoliberal economic policies adopted by Washington politicians have not been good for the middle class. Areas that used to have good union paying jobs in the rust belt have suffered job losses of historic proportions. The economy has been transformed into a service economy full of low paying service jobs.

The dynamics are similar. BREXIT surprised observers. We are not discounting the election of Donald Trump as the next president, since his message is very similar to that of the leave campaign.

It is also a revival of old nationalist instincts and class resentments. After all, the promise of a flat world has not been fulfilled for working class and middle class people. Well except for the few at the top, who have seen wrath concentrations like we have not seen since the 1920s.

The world did change overnight. The question is by how much?

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Categories: Brexit, Uncategorized

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