Brexit: A Rejection of the EU & A Rejection of Globalisation

July 17, 2017

 

Britain’s vote to leave the European Union last year, reinforced by the recent General Election which saw 86% of voters back parties on manifesto commitments to leave both the EU and Single Market, made it very clear that the British electorate have rejected the European project. They reject subverting our democracy to anonymous bureaucrats; they reject the move towards a European superstate; they reject the mechanisms of the Single Market that have crippled British industry in favour of multinationals, and they reject the open borders and mass immigration that are such core planks of European integration.

 

All this broadly represents a rejection of globalisation by the British people. It is no coincidence that the Remain vote was by far at its strongest in the leafy suburbs and cosmopolitan neighbourhoods of financial centres like London and Edinburgh, and particularly amongst students and the well-off. By contrast, it was the British working-class which won the day for Brexit, seen in the extraordinary Leave vote in Labour’s heartlands of Northern England. To the former group, open borders means travel opportunity and a source of cheap labour, while to the latter it means wage competition with Eastern Europe. To the former, the Single Market means cheaper consumer tat and cheap investment opportunities; for the latter it offers little such compensation for the loss of national sovereignty. Ultimately, it all comes down to who benefits and who suffers from globalisation, both driven by and manifested in the sort of politico-economic supranational blocks that the EU (or elsewhere in the world, the likes of NAFTA) have come to be.

 

This means that it is absolutely vital that we do not lose sight of the fact that the Brexit vote was indeed a vote against the broad forces of globalisation. This point has to be stressed because in the ranks of the political and media establishment, pro-Brexit voices seem to totally fail to reflect this fact. High-profile champions of Brexit, perhaps most notably figures like Danial Hannan, Douglas Carswell or Boris Johnson, support quite unreservedly the move towards a porous world where national borders are little hindrance to the movement of goods or people. The problem with the EU, they tell us, is not that the Single Market’s free movement of goods and people is of itself damaging the UK economy; instead they say the problem is that the EU prevents Britain from building similar ties across the globe. Their main issue with the Single Market is that it is too restrictive in limiting these things to Europe, and what they would have is something of a global Single Market in its place, forged once we are freed from the EU’s Common External Tariff; their focus is trade, but all three figures mentioned are also openly pro-mass immigration. [1]

 

This is quite the reverse from what most ordinary pro-Leave voters wish to gain from leaving the European Union. It seems highly unlikely that any Leave voter in such pro-Brexit bastions as Stoke, Bolton or Sunderland voted the way they did because they were particularly excited at the prospect of new trade deals with Indonesia, Brazil or South Africa, or because they are concerned that third world immigrants are being discriminated against in favour of Eastern Europeans as Carswell bewilderingly suggested [2]. The world these average Leave voters live in is very different to that of Johnson or Carswell or Hannan, shaped as it is more by the loss of industry and social collapse than by the comfortable and superficially prosperous world of London and the South East. These figures are simply out of touch with the people they are supposed to represent, and ultimately they support all the ills of the EU without the EU itself, and what they would replace it with would hardly be more palatable.

 

For Leave voters, particularly in the pro-Brexit heartlands of Central and Northern England and Wales, they voted the way they did largely out of a sense that we have lost control of our country, of its borders and its economic self-sufficiency, and that we are poorer for it. They have witnessed the collapse of national industry and its replacement with a very tenuous service-based economy that has brought little benefit to the country outside of London and its environs; a direct result of Britain’s incorporation into a Single Market which by nature reduces what were previously more independent and self-sufficient national economies to mere cogs in a larger system, each specialising in one or two things (in the UK’s case, financial services based largely in London) . They have seen the multinationals move in, aided by the EU’s abolition of tariffs and its competition laws. They can see that there’s a new order, a new globalised world where labour and capital and culture and just about all things can move almost unhindered. They can see it and they can see that they are suffering because of it, and the referendum and recent General Election result makes it clear that they don’t want it.

 

We must therefore have voices within the pro-Brexit camp to make it clear that people voted for a more intimate, cohesive and self-sufficient society protected by substantial national borders to tame the excesses of globalisation, and to effectively control the movement of goods, capital and people. This was, prior to the past few decades, the most basic function of the nation state and absolutely central to its integrity. The mandate for Brexit absolutely must not be twisted into the vision of ‘globalisation on steroids’ as articulated by Hannan and co.; a vision that would see British workers and manufacturers in increasing price competition with the third world as its goods flood our market, free from tariffs to protect British producers. Their rhetoric has often been adopted by the pro-Brexit movement, and this should be cautioned against: the SNP made the mistake of looking to European Union as an alternative to UK Union, yet in attempting to moderate their stance or seek credibility in a ‘safe’ alternative, they betrayed their very ideal of independence. All those who oppose the mechanisms of the Single Market – the free movement of goods, capital and people and the elimination of national borders – must avoid making the same mistake in seeking new ‘open border’ deals with the rest of the world as an alternative to Europe, lest they end up arguing for everything they opposed about the EU.

 

THE CASE FOR PROTECTIONISM

 

To ensure that this does not happen, we in the pro-Brexit camp must make the case for a meaningful national border; one which will regulate the flow of goods, capital and people into the country in a way that is in accordance with our interests. While controlling immigration has always been debated, some may be surprised to hear talk of controlling trade, rather than seeking free international trade as far as possible. Because most high-profile pro-Brexit voices have been of the ‘porous borders’, pro-globalisation mentality, it is often taken as a given in discourse that free trade is, almost without qualification, a good thing.

 

It does indeed have the effect of producing cheaper consumer goods. If you break down national borders, stop putting tariffs or levies on imported products and allow a larger international market to replace a national one, then labour, raw materials and the goods they produce can be moved around more efficiently to meet production needs or supply demands. A Thai manufacturer can buy manufacturing equipment from Germany, not available in his own country, without paying hefty tariffs on it, and he can therefore produce cheap goods using cheap Labour, which can be sold to German consumers at lowers costs than they would have been had they been produced with more expensive German labour.

 

All very good, and everybody seems to win. But it does seem clear, that as the globalised world of porous borders marches on, this economic system does bring with it certain disadvantages. It also means that while the above rule works fine in theory at the global level, it doesn’t necessarily work at the level at which people exist in their everyday lives: the town, the community or even the nation. For example, when in Britain our heavy industry ceased to be able to compete with that of the third world (in this example, more down to trade union abuses, competition laws, ideologically-motivated privatisation and even things like green taxes, rather than market forces), a whole economic system across large parts of Britain was destroyed and has never been replaced. The abstract forces of the market did not cause these areas to simply re-adjust and rebuild their economy in a new, more efficient and profitable way. Instead they became wastelands, marked by a legacy of deprivation and decline. Men who had spent their lives working in pits or factories – tough, but ultimately stable, honest and dignified jobs – had neither the skills for the new service economy nor the means to acquire them, and for the few that did, perhaps not the stomach to endure the new jobs on offer (call him soft, but this author has nothing but sympathy for a man who served most of his working life in our once serious national industries, and could not bring himself to serve burgers at McDonalds or work a check-out at Tesco). Such sympathies aside, these men largely simply did not have the means to be free, rational agents in the free market and to act according to its rules.

 

In other words, global free market principles, just like socialism, may work perfectly in theory, but fail to account for the complexities and base needs of human life and society required for people to function as actors in the way that these theories assume, and base their models on.  The rather messy solution will be one in which free enterprise exists within a framework of borders, tariffs and other regulations to ensure that the market serves the needs of society. Had we given our old heavy industries this protection like most other developed nations often do (look for example at how Germany subsidises its typically profitable heavy industries during rough patches) we may still have a serious manufacturing economy today. This is the sort of pragmatism, in contrast to the Left’s idealism, which once defined the Right, before it was hijacked by the idealism of free market libertarianism and other pro-globalisation ideologies. This pragmatic patriotism can be seen in everything from the protectionism of the early Whigs, to the One Nation ideals of High Toryism in the Nineteenth Century, to the Post-War Keynesian consensus following the Second World War. It is a fine tradition; distinctively British and we ought to recapture it.

 

The borderless world of free trade brings theoretical problems as well as the above mentioned practical issues. How, for example, can governments meet the challenges posed by international business while government itself is largely limited to the national level? The borderless world leads to a race to the bottom in order to attract investment from businesses with few barriers to upping stakes and setting up stall abroad. We see this in the outsourcing of British jobs to the third world, often from employers who were happy to take advantage of our infrastructure and investment to grow and prosper before heading off.

 

The sheer size of the global market also allows for increased specialisation, increased division of labour and increased wealth and the means of producing it in the hands of those few business that lead each sector of the market. Larger market size should therefore be considered a mixed blessing in that while things will overall be produced cheaper and more efficiently, that prosperity will be much more concentrated that it would have been had it been broken into several smaller markets at the national or regional level. As the market grows, so does the level at which business operates; a dynamic that has a trickle-down effect right down to the local level. Everything is bigger. If this all seems rather lofty and abstract, consider that that this is the overarching mechanic at work each time a cherished local business in a local high street is forced to close down after an ugly international supermarket chain sets up base on the edge of town. Where the local businessman employed assistants, the supermarket may install automatic checkouts. As the size of business shoots up, it carries its wealth away with it; this is undoubtedly a downside of the move towards an unrestrained global economy.

 

What this means essentially is that by limiting the size of a market, you limit the extent of its more chaotic qualities, such as the fluctuations and the inequality that it produces. This measured criticism of aspects of the free market should not be dismissed as left-wing. Quite the contrary, it is a defence of the economic reality which existed in Britain for most of its history: one defined by markets operating at the local, national or at most regional level, typically tamed to a large degree by protectionist measures and the sheer cost of transporting goods globally prior to the 20th Century. To wish to preserve this intimate and more ordered state of affairs, and to oppose the move towards a chaotic, borderless world, is fundamentally conservative. [3]

 

It is also the case that while the borderless world may make the economy more efficient at the global level at which its principles are applied, this doesn’t mean that there are not winners and losers balancing each other out at lower levels, and in particular the national level. Consider our own case here in Britain: we are haemorrhaging money out the country because, as a finance and service based economy, we produce little in the way of physical goods and have to import these from elsewhere. We therefore have a massive international balance of trade deficit with the money that pours out of our country going to strong manufacturing nations. Britain is, right now, a loser from globalisation. Rather than introducing even more price competition by seeking totally free trade with the world beyond Europe as Hannan or Johnson (or Davis or Leadsom or just about any prominent pro-Brexit voice) would have us do, we should be protecting our industries from unmatchable foreign competition (in particular unethical practices like the dumping of cheap Chinese steel) to allow them to grow and establish themselves, and for our economy to diversify and move away from the boom-and-bust of the finance and service sectors.

 

RECOVERING FROM FOUR DECADES IN THE SINGLE MARKET

 

We must, in saying all this, recognise the fact that decades of membership of the Single Market has put us in something of a quandary, because it has resulted in our economy becoming heavily intertwined with that of Europe. There are British producers and suppliers who are reliant on very marginal supply chains in Europe that would cease to be viable if the UK was to trade with EU states purely on WTO rules, with the EU applying its Common External Tariff to British trade, and Britain applying its own tariffs in return. We have producers and suppliers who, if their existing trade ties with Europe became untenable, would not be able to find similarly priced alternatives in the British market. This is a sad legacy of our loss of a serious manufacturing economy, and one which will require responsible management to remedy.

 

To say this is not talking Britain down. Anybody who supports our exit from the European Union must believe in Britain’s potential to flourish as a sovereign nation. But another fundamental point that is central to support for Brexit is recognition of the fact that EU membership has been bad for Britain. And if you recognise that EU membership has been bad for Britain, you have to acknowledge that it has, temporarily at least, damaged our country in some way. And one very fundamental way in which the Single Market damaged Britain was in transforming it from a diverse and relatively self-sufficient economy to a mere cog in the large European market, a process that has been at work for 40-odd years and that has transformed us into a sort of financial services hub for the continent, bereft of much in the way of serious industry.

 

Brexit gives us an opportunity to rebuild a diverse, substantial national economy, but that won’t happen overnight. For the sake of our producers and suppliers who do rely on marginal supply chains with EU states, it is worthwhile seeking some kind of trade deal with the EU to at least limit the tariffs which will be introduced once we actually leave. It should be remembered however that EU membership includes trade deals with many countries outside the EU, and we may wish to review some of these deals upon leaving, taking into consideration the threat of price competition on the one hand, and the need for certain goods or resources which we wouldn’t have access to on the other. Generally speaking, we should give primacy to similarly developed nations when seeking trade deals, and in particular those with which we have significant historical and cultural ties such as Canada, Australia and New Zealand.

 

Although seeking a trade deal with Europe may be mutually beneficial, it must not in any way lead to us compromising the Brexit process, and our total exit from both the EU and the Single Market. The British electorate voted overwhelmingly for both of these things in the recent General Election, with an incredible 86% of voters backing manifestos committed to leaving both the EU and Single Market, while the anti-Brexit nationalist parties like the SNP and Sinn Fein, along with the Lib Dems, all polled poorly. And it is equally important that the government recognises that the Brexit vote showed many peoples’ discontent with the broad trend of globalisation and the move towards a world of open borders and all that comes with it: multinationals, mass immigration, and so on. These are genuine concerns and must shape the path that we forge following our exit from the European Union. It is time that voices within the pro-Brexit camp began to emerge which could make the case for a more balanced approach to trade, recognising the place for both free trade, and where appropriate, measured protectionist policies. This was historically the British way, and we ought to consider pursuing it once again.

 

 

 

 

[1] This claim about Hannan in particular may seem surprising to readers; for some basic information see http://www.huffingtonpost.co.uk/entry/daniel-hannan-mep-bbc-newsnight-evan-davis-vote-leave-immigration_uk_576e723de4b08d2c5639423a; also http://www.dailymail.co.uk/news/article-3659802/Tory-Brexiteer-Dan-Hannan-insists-quitting-EU-does-NOT-mean-dramatic-cuts-number-immigrants-coming-Britain.html

[2] http://www.talkcarswell.com/home/want-immigration-equality-vote-leave/2968

[3] Fellow anoraks may consider that prior to the Thatcher-Reagan embracement of globalisation, protectionism was regarded as a fundamentally conservative and patriotic principle, championed most strongly by the Tory Party. In earlier days, when the Tory and Whig parties first emerged, the Whigs were in fact even more vehemently protectionist, owing in part to the fact that Britain’s chief source of trade, France, was distrusted by the Whigs because of its absolute monarchy.

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