The Brexit Mess

The Brexit clock is ticking. In less than 85 days, Britain will leave the EU with or without a negotiated departure at 11pm GMT on 29^th March. At this moment, a negotiated deal looks unlikely – so a no-deal exit is the likely outcome. This would save £35 billion in payments to the EU but would also create a degree of chaos.

Some are still hoping for a second referendum in the belief that a vote held now would lead to the end of Brexit and for Britain to stay in the EU but this cannot be held within the timeline available, unless moves to leave the EU are stopped in their tracks (which, the European Court, ruled was possible). Others are looking for some movement from the EU members on the terms of the deal, especially as they relate to the Northern Ireland – Irish border, something which the EU has repeatedly said it is unwilling to do. Yet others are just wishing for this whole thing to be finished, one way or another, so that the country could get back to focusing on the issues that matter – jobs, healthcare, education, community development, and housing.

Let us just play out the scene. Britain walks away from the EU with no deal. It then has to deal with the “mess” that this creates – legal issues will dominate together with economic logistics, especially in terms of the movement of goods across borders and the movement of people. It is also widely thought that there would be a run on the pound – essentially a devaluation, which would make UK exports more attractive. Here is a list of the reported consequences:

  

• ·          Goods crossing EU borders would be subject to WTO rules, would take longer   to cross and would become more expensive.
•        EU citizens living and working in the UK would be in a legal limbo, though the   UK government has offered reassurance that nothing would happen “immediately” – there are some 4 million EU citizens living in the UK.
•       UK citizens living in the EU (like my brother and sister) would also be in a position of significant uncertainty, though much depends on the attitudes of national governments, many of whom would not want to lose the revenues which such residents bring. Some countries, like Germany, have already offered a time-limited offer to Brit’s so that they can continue their residency.
•       In Ireland, the Irish government would be under EU pressure to exert EU authority at the border in terms of the movement of people, goods and services. The Irish government, not wanting a return to the “troubles” would be reluctant to do so.
•       The EU would experience a significant and substantial budget problem, having lost a major contributor and the £35 billion the UK promised in a divorce settlement.
•       UK laws, currently intertwined with EU laws, would need to be repealed and rewritten quickly – nothing much has happened here. For example, the recognition of professional credentials earned in an EU member country may by subject to dispute. The current plan is simply to incorporate all existing laws in force from the EU into UK law.

The EU has already issued a plan for a no-deal, which would permit flights originating in the UK to land in the EU. But other consequences are being looked at, for example for ease of access to drugs manufactured in Europe, the movement of funds between banks around the world and the continuation of EU funded research in British universities. Britain would, however, lose some EU subsidies – for example the £3 billion paid annually to farmers in the UK.

This covers the immediate EU-UK logistics, but what about the politics of this? Can Theresa May survive the failure of her negotiated settlement if this is what occurs? If she cannot, who will replace her from within the Tory party? If the Tories lose the confidence of the house, given that they are a minority government, will there be a snap election and if so, who would win? What difference would a new government make to the situation?

It is these last questions that create the sense of uncertainty and chaos in UK politics. It is a real crisis – worse than 1956 Suez crisis, worse than Edward Heath’s 3 day week and worse than the Miners strike. What is quite remarkable about the predictability of it all. There are no surprises here. The EU was never that interested in negotiating anything that favoured the UK or dealt with the real challenges of this – just read the book by Yanis Varoufakis (former Greek finance minister) cataloguing his attempts to have a meaningful negotiation with the EU (The Adults in the Room) – and the UK Tory party is so divided over Europe, which is why the referendum was called in the first place.

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It is a mess. It is an unholy mess and it will get worse before it gets better. Without divine intervention – or the intervention of The Queen (requiring the formation of a government of national unity) – this mess will play out on March 29^th. Mark this date in your diary.

The Coming US Presidential Election

The next US Presidential election is on November 3^rd, 2020, with the first phase of this process beginning shortly after the January 2020 new year celebrations end. This means that within weeks from now, candidates will start to declare their intention to run.

Donald Trump has already done so. His election machine, now a combined operation with the Republican National Committee (RNC), is up and running, with banners printed and a new slogan – Keep American Great.

On the Democrat side, Elizabeth Warren has clearly and firmly signaled her intention to run and many others are about to do so. In the frame are Jo Biden, Bernie Sanders, Julian Castro, Beto O’Rourke, Sherrod Brown, Jeff Merkley, Michael Bloomberg, Cory Booker, Amy Klobuchar, Kamala Harris, Kristen Gillibrand, Terry McAuliffe, Deval Patrick, and many others. Indeed, there could be a very complicated field of up to twenty candidates.

The problem is, unless something dramatic happens, Trump-Pence will win. They have command of a solid base of support, they have the levers of power and Trump, in particular, knows how to command the news space. Indeed, his campaign strategy is to dominate the news (good or bad) so that his name recognition is total and he can leverage “free” coverage to get out his message. His base does not seem to care whether he is lying or telling the truth, whether he is serious or not and whether he is behaving responsibly or not. Some have even suggested that he is sent by God to “save America”.

The democratic national committee (DNC) challenge is not just to find someone with a personality that resonates with the public, but to develop policies which do so. Therein lies the problem. Trump has no policies that are describable – policy comes in 150 characters each morning, depending on his mood. The DNC needs a systematic policy frame that captures what Americans need – universal health care, border security, a growing economy, care for seniors and a revival of the US education system. The DNC won’t do this. They are, like the media, preoccupied with the cult of personality – of finding a democrat Messiah.

One other development could also occur – an outsider with already strong public recognition could enter the field, win primaries and run as a Democrat. George Clooney, Angelina Jolie, and Oprah Winfrey have all explored the idea, however briefly. Clooney is a serious campaigner, having worked hard on issues in Sudan, Darfur, and other atrocities and is an active liberal, married to one of the world’s leading human rights lawyers. A decision by him to step on the election stage would change the metrics of the game, but in the end, he would lose – Democrats find it difficult to unite behind a single leader and platform and to stick to it for a year and a half.

Some have suggested that Hilary Clinton will make a third run for the White House in 2020. She has lost this race twice – once to Obama and once to Trump. She’s done. Finished. She can have more influence on the policy side and from the sidelines than she could if she ran in the primary races. Yet, she is permitting the rumour of her candidacy to circulate and she has refused to rule out a third run in interviews conducted as recently as last month.

What the US needs is a vision for the post-truth, post-exceptionalism stage of its history. This vision has to speak to a renewal of its democracy and institutions, a restatement of its global intentions, a focus on reducing the rapidly growing levels of income inequality, a restoration of the public good (especially in health and education) and a recognition that the US does have a trust problem. What the DNC needs more than a charismatic leader is a platform that inspires and encourages Americans to vote. There is no sign of this appearing. This is the major reason Trump, unless something happens, will win a second term.

American Exceptionalism After Trump

One big idea dominated the 20^th century in the United States – “exceptionalism”. The idea is simple – the US is the greatest country in the world and the greatest country the world has ever seen. The idea had its origins in the writings of Alexis de Tocqueville in his Democracy in America (1835/1840) but was later used extensively as a leitmotif for USA political rhetoric.

The problem: it was never true. The US has no systematic approach to ensure access to health for all of its citizens, has out of control gun-use which results in more deaths each year from gun violence than the rest of the world combined, incarcerates more people per capita than any other developed nation, has no truly functioning democracy (according to former President Carter), and performs poorly in its education system when compared with other nations around the world -  outranked by 38 countries in math, 24 in science, and 22 in reading in the 2015 OECD PISA results. 

The US also used genocide to secure white supremacy in the early history of the country – killing, raping and seizing the lands of indigenous people. It practiced slavery and fought a civil war over the issue. It has fought wars all over the world and, though it made major contributions to securing peace in Europe, lost in Vietnam and has not done well since the Korean war, despite unusually large expenditures on its military.

And now it cannot be trusted to keep agreements made from one day to the next. The recently negotiated replacement to NAFTA – the USMCA. – is under threat over issues connected to the Mexico border. The US has unilaterally pulled out of agreements related to climate change (the Paris agreement), tacking ISIS (pulling out of Syria), trade (pulling out of the TTP) and weapons security (pulling out of Iran and the Russia nuclear agreement). It has also abandoned the widely supported and UN agreed strategy for an Israel: Palestine two-state solution by abandoning the idea of Jerusalem as the “shared space” of that solution.  Trust in the US government is now at an all-time low, according to Edelman's annual trust survey.

Many see the US economy as its greatest strength. Yet the economy is essentially a system that favors elites, creates massive inequality and leads to a shift of public assets to private purses. 43 million Americans (13.5% of the population) live in poverty, including 15.3 million children. Some 15.6 million households live in a condition of food insecurity – they do not know where the next meal is coming from. In 2015, the top 1 percent of families in the United States made more than 25 times the bottom 99 percent did. Inequality is growing, not shrinking, in the US. The top 1% now own 39% of all of the wealth in the US - a 6% increase since the beginning of the present century. One example of this is CEO pay. In 2015, CEOs made 286 times the salary of a typical worker and 299 times more in 2014. Compare that to 1978, when CEO earnings were roughly 30 times the typical worker’s salary.

Donald Trump’s “Make America Great Again” (MAGA) feeds off the leitmotif of exceptionalism, but his approach to “enacting” MAGA is making explicit just how “broken” the United States are. In particular, he is showing just how broken its democracy is, how broken its legal system is and how broken its military is. As for the economy, the tax cut enacted in 2018 increased income inequality and the power of the wealthy. His international actions – trade wars based on a complete misunderstanding of trade deficits (a construct so basic it is a topic covered in high school economics),  support for dictators over democrats, reneging on agreements made in good faith, distrust of his own advisors, backroom dealings (Russia, North Korea) which have no substance – also show how broken US foreign policy is.

Trump is not the cause of the US current state, he is yet another [compelling] symptom of it – the collapse of the leitmotif of exceptionalism and the emergence of a new construct of the US as a fragile and damaged democracy.

As China begins to take on the role of a shaper of the world, we should look to Asia for leadership. China has never pretended to be a democracy and has a focused, long-term strategy to reshape the world. Consider these facts:

• China is in the process of surpassing the US economically. By one measure, 35% of world growth from 2017 to 2019 will come from China, 18% from the US, 9% from India, and 8% from Europe. By 2050, the top five largest global economies are most likely to be China, India, the US, Brazil and Indonesia. These shifts in economic geography demonstrates that the world is changing quickly.
• China is leading the largest urbanization and infrastructure development scheme on earth. Already in its fifth year, the $900 billion "One Belt and One Road" (OBOR) project includes new roads, shipping lanes and building projects stretching to over 65 countries. The idea is to literally rewire global trade from China throughout Asia, the Middle East, Africa and Europe. While details are hazy, OBOR is being financed by Chinese state banks, with a modest strategic contribution by a new Chinese-backed Asian Infrastructure Investment Bank in partnership with other institutions.
• China is set to become a global green powerhouse. China signaled its intention to take the lead on climate change reduction after signing the 2015 Paris climate agreement. By 2025, most new cars in China will be fully electric vehicles. China is aggressively cutting coal usage. Already, over 60% of high speed rail in the world is in China (10 times the length in Japan, for example). China also recently committed to achieving blue skies in all of its major cities within three years. The changes are already being felt: the air in Beijing is 30% cleaner this winter than last winter. 
• China is also setting the global pace on a digital economy, including cashless payments. In major cities, up to 90% of all commercial and retail transactions in convenience stores and cafes are occurring through Alipay and Wechat. E-commerce delivery in large Chinese cities through Alibaba is the currently the fastest in the world. One company, Alibaba, racked up sales of $25 billion in just one day – dwarfing the returns of so-called Black Friday and Cyber Monday in the US. 
• Chinese universities are also vaulting to the top of the international rankings. Two schools – Peking University and Tsinghua University – leapfrogged from well below the top 200 to the top 30 within five years. There are another 40 universities that are not far behind and are set to enter the elite in the coming years. While Chinese students are still seeking out educations in top schools in North America and western Europe, soon they won't have to.

As the influence in the US declines and the US becomes intensely focused on its domestic challenges, we can expect to see turbulence in global markets and global politics – we already see this in relation to the Middle East, the EU and Brexit and the new tensions across Asia and India.

The next decade will be one of America introspection and rethinking – all aspects of the US “system” of democracy (sic) will be “up for grabs” as the nation adjusts to the post-Trump world in 2025 after his second term it will need to rebuild its understanding of what America is and, more importantly, what it is not. That debate has started. What it needs now is both political leadership and thought leadership, both of which seem remarkably absent.