Home > EMU governance > My Grain of Salt on Brexit and on the Risk of XXxit

My Grain of Salt on Brexit and on the Risk of XXxit

Much has been said, already, and even more will be said in the coming hours/days/weeks/months/years, on Brexit. I have little to add. So here is what I see as a series of notes to self. For those who are already tired of reading pages and pages, I can summarize what follows in a sentence: We should focus more on policies than on institutions

  1. The long lasting skepticism about the EU that always permeated British society across the board, has eventually been compounded by the recent dreadful performance of EU member states in managing the crises that have hit our communities. A sparse and incomplete list would include the stubborn insistence on the wrong policy mix (austerity cum reforms) which yielded a double-dip recession that no other large economy experienced in the past decade; the obsession with debt and deficits when the economy was in desperate need for public support to aggregate demand; the despise of democracy shown when dealing with the Greek referendum last summer; the slow moving ECB that only took action years (not weeks, years) after the other central banks; the bullying of small countries in crisis, in negotiations that really were not one, but rather a take-it-or-leave-it; and finally, maybe the mother of all policy mistakes, the cynical and illogical management of refugees crisis. Show that to voters who always were half in and half out, and it is no surprise that they want to walk away.
  2. The EU has been made the scapegoat for choices of the UK government, that was reelected just a few months ago. Osborne and Cameron embraced austerity and government downsizing wholeheartedly, they did not need the EU for this. If it is these policies that the British voters wanted to sanction, then they cast their vote in the wrong elections.
  3. Which brings me to those who today happily see Brexit as the beginning of the end of the EU, and with it of austerity and reforms. I am afraid they are delusional here. Neoliberal policies existed before the EU, and they will exist after. They are the making of governments (and academics), that will not vanish together with the EU. Rather the contrary. Let’s not forget that one of the main selling points of the Leave camp has been that EU regulation chokes UK businesses. If you want to scrap neoliberal policies, rather than fighting the EU, that is a mere vehicle, you should fight the governments that propose them . Remind me of that old story about looking at the finger rather than at the moon?
  4. My feeling is, and I am afraid to be proven right, that the disintegration of the EU would make it harder to protect social justice, workers’ right, the welfare state. Small countries would be even more exposed than the EU as a whole to competitive pressure from the rest of the world. And competitive pressure in the past never turned out to work in favour of labour and wages.
  5. The fact that neoliberalism has very little to do with the EU is proven by the rise of populism well beyond our borders. The global problem is an increasingly dysfunctional economic system. If you kill growth and prosperity, if you increase the social divide, if you boost inequality, then it is no surprise that the first guy saying “life was better before” is given a chance by voters. In normal times, a somebody like Farage (or Le Pen, or Trump, or Salvini) would have very little traction with the voters. Today they give the cards of the political game. And in Europe the game is made easier by the existence of a perfect scapegoat, that is far and immaterial, the EU.
  6. This is why I would also resist the temptation to blame the voters as irresponsible, conservative, irrational, nostalgic, uneducated. The age or education divide of the Brexit referendum is all over the web. But I see them both as proxies for the really relevant divide, which is between the winners and the losers of the past few decades. The same divide that emerges in the US (where paradoxically the losers put faith in the typical winner), and in all the other EU countries.
  7. How to win the hearths and minds of the losers? How to claim their confidence back? Should that not be by definition the essence of a progressive agenda? The way out is to end harmful policies, and to re-transform the EU into a symbol of social progress. Easier said than done, of course; but I see no alternative. What I have been writing in this blog since 2011 tries to explore possible ways to do so. We should stop looking at institutions (the Stability Pact, the euro), and focus on policies, fighting the wrong ones and supporting the right ones. EU institutions are certainly dysfunctional. They are certainly biased towards excessive reliance on market mechanisms (that prove over and over again how far they are from the academic ideal of perfect efficiency). But once again, they can be twisted, and even changed, if only a political will to do so emerges. In a sentence, even within the current institutional framework, if there was a clear political consensus towards abandoning austerity, we could do so. The problem, I will never get tired of repeating it, is not the Stability Pact. The problem are governments that fail to put it on hold or even to change it.
  8. (This is just a sharper restatement of 4). We should stop fighting the EU (or the euro) as the cause of our troubles. We should spot the forces that within each country fight for a radical change in policies, and work to give them a majority. If we do so, the EU will cease to be a problem, and will hopefully become again a force of progress. If we don’t, no Brexit or XXxit will bring to us prosperity. Rather the contrary.
  9. Of course I am thinking in particular of large countries. The Syriza experience in Greece proves that “rejection of austerity in a single country”, especially if it is small and in trouble, cannot work. A new paradigm for policy making should emerge in France, in Germany, in Italy. That would allow a meaningful debate at the European scale.
  10. All this said, given how self-referential are our elites, how self-indulgent, how superficial in their approach to policy, my “gloominess” is doomed to persist.
  1. JANSSEN@tuac.org
    June 24, 2016 at 1:59 pm

    Yes Francesco but may I kindly recall my earlier of a meeting with Luca Visentini, GS of ETUC ? Would be one opportunity to start thinking about a ‘new paradigm in policy thinking in France, Italy, Germany’


    Ronald Janssen

  2. Nihal El-Megharbel
    June 24, 2016 at 8:21 pm

    Very interesting! couple of questions: (1) Do u think, other countries will follow? or the lesson will be quickly absorbed, with voters regretting what they did?
    (2) What will be the short implications on British economy?, more importantly for us, (3) what will be the impact on British business working in Egypt? (a selfish question :D)

  3. June 25, 2016 at 6:21 am

    England has more than its share of losers. Nine out of ten of the poorest areas in northern Europe are in England. That is not the sign of a successful economic scheme. One surprise to me is that the vote in England didn’t break on the traditional north-south line. I watched the results on a map and expected to see that same divide the conquering Romans had noted, but it never appeared. In England it was mainly London versus England. That can’t be a good sign.

    I’m glad to see you recognize that this wasn’t about people carefully thinking everything through and making an intelligent decision. Given the age split, it seems to have been a lot of people who were promised things, voted the right way, then never got them. It’s like the follow up to the famous marshmallow experiment which showed that if someone learns they can’t trust you, they aren’t going to trust you to give them the second marshmallow.

  4. Sigmund
    June 25, 2016 at 2:18 pm

    I whole heartedly agree with you. It is a huge mistake to chalk this up to pure racism and stupidity. People voted against something that hasn’t worked for them in a number of years. They have observed the incompetence, small mindedness, and outright vicious behavior of the Eurpean elites since the start of the Euro crisis, and decided that this a failing club and I don’t want to be a part of it. Unfortunately, as you say, part of the Brexiters crowd wants to pursue even worse policies so they prayed for rain but will receive a flood.

    Probably no good will come of this, especially since every commenter Imhave read on this, apart from here seems hellbent on learning the wrong lesson.

  5. Börje Widerberg
    June 26, 2016 at 5:57 pm

    The problem is more with the EU than with the UK. The fact that for a long time made EU attractive to both old and aspiring members was that EU was an economic success. Since 2008 it´s no longer that so the union has lost it´s attraction. What´s needed to regain economic growth is probably one or two really grand projects that can focus the people on something positive. My vote goes to 1) a new decentralized and renewable based energy system and 2) a grand project to further economic development in the countries bordering on the EU without the ambition to make them EU-members. And on the same time realize that the parts of the EU that´s beyond repair has to go, eventually in exchange for someting other and better. The obvious case is the EURO. The only way to salve it is a fullblown ” United States of Europe ” and most europeans don´t want that. If we don´t make a clean sweep here the whole EU probably has to go also.
    Börje Widerberg

  6. June 26, 2016 at 8:56 pm

    May I compliment you on this excellent summary and analysis

  1. June 25, 2016 at 2:51 am
  2. November 22, 2017 at 11:21 am

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