Even More Reflections On Brexit

Day 3 After Brexit

It's certainly strange that I have so much to write about the Brexit referendum vote even three days after the event. Part of the difficulty in getting my head around it has been just how unexpected the outcome was, given the advantages EU membership conferred upon the UK.

Extraordinary also is the immense buyer's remorse being expressed by those who voted 'Leave' as a protest vote, only to find out they won. This dovetails with the strange report where Google searches for the EU went up after the vote closed, as people sought to find out what they have left. In other news related, Cornwall has sought confirmation that indeed the money they used to get from the EU would be replaced by the British government. This would be a fair cop if you had voted to stay and then against your wish been made to leave. What's particularly rich about this one is that Cornwall overwhelmingly voted to leave.

Northern Ireland is one of those issues that could turn into a disaster. The Good Friday Agreement that brought an end to long hostilities was underpinned by the EU laws and agreements whereby one side got just enough to be Ireland and the other side got be just enough to still be the UK, but there would have to be no border because they were all in the EU. That's now gone. It could very well slip-slide back into the chaos that was the Troubles with checkpoints guns and the lot (would you like some fries with your bombs?).  The horrors long thought to have been left behind in history just might come back - all thanks to this vote.

Nicola Sturgeon has already signalled a second referendum to keep Scotland in the EU which means secession from the UK. It's funny how the last Scotish referendum was argued as a session from the UK, and defeated because of the possibility of being kicked out of the EU. The Flow of ironies never cease.  This may all go to show how referenda in general are  more destructive to the polity than previously thought.

And so the news trickles in.
There was an observation made that Boris Johnson and Michael Gove didn't exactly look too excited by the outcome - more surprised and perhaps like deer in the headlights as history comes charging towards them. After all the unbelievable scuttlebutt is that Johnson might be the successor to Cameron. And Johnson being Johnson he would be aware of how difficult and mountainous the tags would be to actually managed the messy divorce with the EU, and that he would be charged with all the social costs. He would be stepping in to captain the Titanic having steered it in to the iceberg, having assured everybody on board that the iceberg represented no threat, and that the Titanic was unsinkable.
Maybe.

I'm not there; I'm not a citizen; and I sure don't have the vote in the matter, but had I been asked I would have offered remain was a better option. I've been searching my own feelings on this as it has been so unexpected that the Leave vote would win. The more I turn over the morsels of information I can find, the more I'm inclined to think the case for leaving was not made, and perhaps overstated its alleged advantages. Some people might even describe it as being built on outright lies. Let's face it, Nigel Farage was quick to rescind the £350m he was supposedly going to hand the NHS.

Farage might think he is steering the country into his vision of the future, but it's really a nostalgia trip. That being the case, the ultimate bit of the nostalgia trip might object to losing a chunk of her wealth and her realm...

Her Majesty's Role To Play

One thing I had not thought about is what the hell Her Majesty thinks of all this. Yes, as a constitutional monarch, she doesn't get a say in it, but let's face it - she is the Queen. Will she sit idly by and rubber stamp the referendum result into law? It's hypothetical but what if Her Majesty simply does not approve of the measures and refuses to sign off?  This is actually a curious question from a historic point of view.

The Brexit vote has the likely outcome of splitting apart the United Kingdom. And as per speculation during the Scotland referendum last time, Her Majesty would remain constitutional monarch to these countries, some of which will want to stay in the EU, and England which has opted out. The question then is does Her Majesty want to be the Monarch who presided over the breaking up of the United Kingdom? And if not, just how far would she be willing to go to stop it?

Writing as an Australian, I am reflecting on the rather vast 'reserve powers' of the Crown that removed Gough Whitlam as Prime Minister - and while nobody can quite claim Her Majesty had an active role in it (we know she was a sounding board as was Prince Charles), her crown certainly had the authority to make that political action stick. So what happens if the next Prime Minister puts through the bill to ratify the referendum and turns up at Buckingham Palace to have it signed off and the Queen refuses to sign? Or she actively vetoes the bill using her reserve powers? It would be utterly in-democratic, but it would preserve the status quo.

It might be inconceivable but again, from an Australian point of view, this is not a stretch. She likely has the power and authority to (pardon the pun) scotch this whole deal. If she null-and-voids the referendum result, thus keeping the UK in the EU, it would take the sharp edge off Scotland's desire to leave and solve the problem of Northern Ireland and the eventual break up of the realm. It would be a move that would hark back to Charles I or King John with its unilateral authoritarianism, but if Queen Elizabeth II wants to preserve the realm, the she might just have to bring out the bazooka. It may even start a civil war - after all, that was what happened with King John and Charles I - but the Queen as an institution is not the Queen for nothing.

It's hard to say if there is such resolve in a 90year old monarch in the Twentyfirst Century. Her reign has been successful exactly because her thoughts on politics are opaque. We simply do not know what she makes of all this business. I'm not much of a Royal-Watcher. I don't really care about the Royal family at all except as a curious historic artefact, but I do wonder what their household has been like in the last 72hours. I'm sure they would be cussing the name of David Cameron that brought about these terrible circumstances, and then turning to advice on just how much power they still have to stop this thing. Just remember, if her authority can dislodge a Prime Minister in the Commonwealth, it sure can whack some bill that emerges from popular referendum.

Let's just say, if I were a Conservative MP that didn't want Brexit to happen, you may well think that I would be talking to the Palace about such options, "but I couldn't possibly say". The ultimate 1%-er is Her Majesty the Queen, Elizabeth II. In turn, if Boris Johnson is indeed the next Prime Minister, and he really wants this Brexit as advertised, he might well need to have the resolve of Oliver Cromwell rather than the nationalist Ra-Ra of Winston Churchill. We'll certainly see.

More Thoughts On The Brexit Vote

David Cameron Opened The Door For The Far Right

It's been a couple of days since Brexit happened and I'm still trying to digest it's meaning. Some people are blaming ignorance and fear but I don't believe that covers the surge of votes that took it to the majority. Issues like the NHS have been raised but by the same token UKIP leader Nigel Farage was quick to backpedal from his £350m pledge towards shoring up the NHS.

The Tories really can't claim the vote a victory because it cost them their leader and Prime Minister. Indeed, in the tussle between rightists, the culturally inclined rightists seem to have beat out the economically minded rightists. David Cameron should go down as the worst Prime Minister in British history since Neville Chamberlain when he came home waving a piece of paper with Adolf Hitler's name on it.

And there it is, the rather uncomfortable reminder of the time the far right got centre stage in politics. Adolf Hitler of course snuck into the Weimar Republic government by dressing up his politics as a kind of conservatism - just enough to get Hindemburg to make him a partner in government. I know some of you will jump up and down and say "Ah! Godwin's Law. You brought up Nazis so this blog entry is without merit!" - but that is the very problem: The Far Right have clenched a legitimacy they need out to have been given, and they got it through David Cameron essentially kicking an own goal.

Is Farage Hitler? No. Maybe I should say No, not yet. Yet the stench of fascism and intolerance reeks in the outcome of the referendum, so much so you have to pinch your nose and pretend it is not there just to talk about the outcome in economic terms. My own view is, if it smells like shit, it probably is shit - no need to go tasting it. David Cameron is going to go down as the Prime Minister who let the Far Right into the middle of government, out of his own sheer desperation to stay in power. It's not a good thing.

Everybody Struggles For Relevance, Some More Than Others

The British Labour Party are obviously feeling like the referendum was a loss.   The worse aspect of this might be just how irrelevant they've become in Thatcherite England. Consider for a moment just how much of a sell-out Tony Blair's government was for a leftist concern. Add in the years of Thatcher herself and John Major, as well as David Cameron's stint, and you get the picture of the UK essentially living out the Neo-liberal economic programme for over a generation - 37 years if you count back to Thatcher's first win.

It's been a long time since the Labour Party sounded like the Labour Party.  Of course it doesn't hide the fact that they are very short on experience. The left utterly failed to shore up its base because the truth is that Blair-ite Labour sold those people down the river in order to win a government resembling the Tories. There's a credibility gap in going back to the very same demographic and asking them to support even more of the globalisation and free trade that has decimated those communities.

Arguably, there's a lesson right there for the left in Australia. The Rudd-Ian move to the social right carried within it the seeds of future disconnect with the ALP base.  There's a limit to what kind of political solutions can be achieved if you meet the Tories half way. Especially if the Tories insist on going far out to the right. This problem is also present in the current US elections where the Clinotnian compromises of the 1990s are not sufficient for the Democrat base because they amounted to selling out the base. The base is angry enough it would like to vote Sanders, but is willing to withdraw its support for Clinton, even in the face of Donald Trump. It is a pattern repeating around the world, whether it be the rise of both Syriza and Golden Dawn in Greece, or Podemos in Spain.

It's unclear whether the ALP under Bill Shorten can reconnect with its base. Certainly the Rudd-Gillard ALP government made a hash of it, and justifiably earned the scorned it received. The lesson in all of this is that the left struggles for relevance the more it has sold out its base in the last 40years. The credibility gap is simply too big.

What's Wrong With The Euro Zone?

In all of this I decided I'd have a quick think for myself what bothers me about the Euro Zone as it is constructed. The obvious problem is how the GFC revealed the structural problem of how the Euro currency itself is set up, and particularly how it pertains to Greece. Greece is in dire straits because it has large debts, but also because it cannot devalue its currency to balance out its relative weakness of its economy in comparison to the economy of Germany and France.

While this problem was not a problem for the UK who insisted on keeping the pound in the 90s, the fact that the Euro Zone as a whole is pushing globalisation in a way that would beggar the poorer economies is a problem. It's interesting to see if Scotland really think their welfare state would fare any better under Germany's auspices than George Osbourne. Judging from the way Greece has been handled, the last thing you might want to have is Germans in charge of your welfare state.

In general, the Euro Zone has demonstrated that some states are more equal than others. Young Greeks would do well to abandon Greece and head for Paris, Berlin and London for opportunities. Yet this reveals a structure whereby the UK contributes to the Euro but cannot directly assist Greece, all the while having to take on board economic migrants that are created largely out of the austerity that Germany insists upon. And while Germany's insistence on Greek austerity has varying degrees of legitimacy attached to it, one would think such claims would not be accepted in many parts of England suffering under the Cameron-Osbourne austerity policies of its own.

If you add in the fact that Eastern European nations have entered the Euro  exporting massive deflationary forces with their cheap labour, and with Turkey under Erdogan wanting to join, it's very much a good question as to whether it is a club within which the UK would want to stay. If that seems 'xenophobic' to some, it ought to be asked who benefits more from 'xenophilia' and blind acceptance of this cheap labour that is destroying labour value in the UK. Why should the working class continue to cop to the waves of globalisation that seemingly does not care about regional UK? It's simply not as clear cut as saying the rejection of the European Union is ergo xenophobia.

Imagine if you will, that there was a Pacific equivalent of the EU, but without the US. It might look like Australia, NZ, Canada, with the North Eastern Asian countries Japan, Taiwan South Korea. Add in the ASEAN nations, and you would have a pretty big trade bloc. The problem is labour prices across this region would be depressed because labour is very inexpensive in ASEAN. If there is free movement of people in this bloc, it's hard not to imagine there would be a flood of people heading for Sydney, Tokyo, Taipei, Vancouver, Auckland.  And if that cheap labour was depressing the wages of people in Australia, Japan, Taiwan, Canada and New Zealand, it wouldn't be very difficult to imagine a movement built upon getting out of such an arrangement.

The fact that there isn't such a bloc tells you a lot already, but it would have to be extremely obtuse to pretend the European Union which mainly featured France, Germany, Holland Denmark Spain and Italy at its start, is a very different proposition today when it also includes much of the old Eastern bloc, Greece and soon Turkey.

The Future The Young Did Not Want

Something like 70% and more of the younger voters voted to remain. It is the kind of number that reminds us of the support for Bernie Sanders among the younger voters. And just as Sanders didn't get their candidate, the younger voters of the U.K. Got the outcome they didn't want but have to live with, for much longer than older voters.

It is a stark demographic picture where Gen-X and Gen-Y combined could not beat the Baby Boomers and older generations. It's hard to tell what the fallout from this aspect of the referendum will be. One thing I can say is that we're not shooting each other in the streets in some civil war, because that's where the Spanish ended up in the years during the Great Depression. With any luck we won't be glomming into a World War.

Whatever else that can be said about it, on a demographic level, the Brexit vote is not a step towards the future, it's a blind shuffle back towards an imagined past that is not there. It's doubtful it existed and it's doubtful it will come to be as Nigel Farage seems to think. Now that David Cameron has had to resign, there will likely be an election in the UK by the end of the year. One wonders how the next vote will work out for the Tories. I can't imagine this is going to be good.

The World Of The Elite Consensus Is Ending

It's been pointed out elsewhere that the 1% who have all the money and power see borders very differently to ordinary people. The 1% move freely across borders with their capital. Compared to that, people who hang their hats on the sad identity politic of nationalism seem very quaint. This might be because in the past the 1% had their wars where they sent the people to fight and bleed for them on the basis that borders were important. It strikes me that it is somewhat silly of the elites to then be confronted by a popular vote - a revolt even - where they vote is ostensibly in favour of borders.

The promises of Free Trade are quite enticing. The problem however is that in many parts of the developed world, it means that in exchange for cheaper products, you lose your jobs to people in poorer countries. And the Elites, the 1%, the Tories and the big end of town dress up this exchange as a matter of productivity and competitiveness, but in reality it is an exchange the Elites have made, to sell down the future of their own people back home.

If the problem of the idiotic, uneducated, atavistic identity politics of such movements headlined by Farage and Boris Johnson and Donald Trump (and we should add Pauline Hanson to this pile) seems pernicious, it may very well be because the 1% have overly downplayed the importance of borders and identity, having sold it to the very same people as something of inherent value. What the Brexit vote shows is that the people won't be railroaded forever. If the benefits of "hands-across-the-waters" friendship is that everybody's living standards go down to a lower level, a lower common denominator, then you can't fault the people who say "bugger that, I'm keeping what's mine."
It's not quite as idiotic as it looks.

More tellingly, the Brexit vote reveals the middle is broken in British politics. If enough of the people in the middle are willing to throw their lot in with the likes of Farage, if enough of the working people who would have traditionally been Labour Party supporters vote with Boris Johnson, then whatever consensus that might have been in place may as well be pronounced dead. Of course in Australia, we've seen the broken middle consensus with the election of Tony Abbott in 2013, so it's not as if we don't know what this looks like. It's going to be a Carnivale of bad political judgment until such time the public gets another vote. Fortunately for us, Australia goes to the polls next weekend. Let us hope we can restore a sense of consensus by voting out this truly moronic Coalition Government.

View From the Couch - 17/Jul/2015

Greek Drama Day 2,190

I've been on holidays for a couple of days so I didn't catch much news. That was sort of the point of the holidays: to get away from it all, and that sort of included this business of blogging stuff.

Anyway... Greece seems to have gone into a political meltdown. First, the Syriza PM Tsipras negotiated for Greece a worse settlement that was on offer for Greece before the 'Greferendum'. somewhere around 30-40 MPs of his side refused to back the deal, but with cross-bench support, Tsipras shepherd the changes Greece had to make, through its Parliament. The only way to understand this turn of events is that Grexit - to the consternation of many - was simply too hard to do and Greece would have plunged into being like an African nation where nobody lends them money and nobody goes there because everything has been looted.

And believe me, everybody will be looting everything the moment Grexit happens and there's not enough of food or medical supplies or oil or cash. There won't be a police force because they won't be able to pay them; and schools will shutdown, infrastructure will shut down. How is the complete and utter capitulation better than that? At least the banks will open again.

You have to understand that the oligarchical rich Greeks who brought about the conditions of Greece to be in the Euro and so much in debt still have lots of money in those banks. All the MPs on the conservative side of politics have that problem - they need the banks to reopen even if only briefly so they can take whatever cash they can and get it out. I know it's a terrible thing to ascribe such a terrible motive to these lawmakers but these are extraordinary times. And let's not forget, conservative lawmakers in any land are the rich, if not the proxies for the rich. They will take any amount of financial pain to their fellow citizen as long as they can keep their rents going; something that's true even in Australia, but that's another story.

All this hollows out the 'Greferndum' as well as underscores why Yanis Varoufakis might have resigned at the point he did. It simply didn't matter what the Greek people - the demos! - wanted. There was no real negotiation, it was simply terms being dictated to Greece by the ECB, EU and to a lesser extent, the IMF. Leading the assault (so to speak) was Angela Merkel who on behalf of Germany essentially gave nothing and got everything. Unfortunately Tsipras now looks like an asshat clown instead of the modern day Themistocles; but all of this might be part of a greater strategy to better engineer a good Grexit rather than a bad one.

Angela Merkel and the northern alliance of countries, banksters and technocrats - the modern day barbaroi - have essentially cited the rule of law as the cornerstone from which they are making their demands and refusing to give any debt relief. Hidden in there somewhere is still the trillions of dollars worth of Greek Bond derivatives that would blow up on a Grexit, so getting this deal done without the haircuts is a great boon for them. It means Germany won't be plunged into the kind of chaos seen on the streets of Athens, and by extension it means the world markets won't be roiled in another GFC so soon after the last one.

Old World Problems

The European Union isn't looking too flash hot these days. Given the choice of kicking out Greece or keeping it and helping it as one of their own, they opted to keep Greece so they can keep kicking it which combines the worst aspect of both options. This does not look good to anybody. Since its inception in the early 90s, the European Union had argue its wide, pan-nationalistic cause against nationalist right wing nutjobs in each and every country. By approaching Greece the way it has for the last 5 years, they've opened up a front to the left as well as to the right, whereby Syriza and Podemos in Spain have now split off to the left of the EU andean demonstrate that the loss sovereignty in the EU project is a major problem for countries with great debt and great unemployment.

Inadvertently, the winningness of Germany on its own has redistributed its low-industrial high-unemployment problem to the PIIGS nations, where they don'thave the control to ameliorate the unemployment being exported out of Germany. All these countries in the advanced, old-world share the problem of not knowing where future growth is going to come from, and so interest rates have fallen to zero, just to keep the economy going and from asset prices from collapsing. In this light, it makes sense that banks become gamblers locked in a zero-sum game (low to no growth) and making money/saving money involves taking it from somebody else (hello Liberal Party of Australia).

The world is running out of growth because there are so few spaces in which to grow. We can chop down all the forests in Amazon and clear out the last remaining wildlife sanctuaries in Africa, but there is not enough space into which the globalised economy can grow. The emerging markets are a higher grower right now, only because they're starting from a lower base. Even their growth will run down, just as it has in China. It's what it means to have a developed economy.

In the absence of a physical frontier, there is only the cyber frontier until space opens up. This explains Google, Amazon, Apple, Microsoft and Facebook, and how Elon Musk is busily building up SpaceX. It should tell you something about where the smart money thinks things are at.

As for Europe, this dynamic is playing out in a new way. Europe will now cannibalise Greece to keep the rest afloat. But it also means the PIIGS are next in line to be cannibalised once Greece descends into the pit of depression. And if the same treatment descends upon the PIIGS, how soon will it become like 1930s Germany where Leftists and Fascists fight in the streets? Or there is a new civil war in Spain? Many of these conflicts now echo older ones, precisely because they're being fought over old settlements that are now being undone in the light of zero growth, ZIRP, and high unemployment. Economic settlements are only as good as the money spent to maintain them. When it becomes cheaper and expedient to let the people starve and fight it in the streets, we'll see some realpolitik and class warfare as a certainty.