Back to the village? Globalisation is changing direction

The human mind is hard-wired to think that present trends will continue, as many a study cited by behavioural economists attests. It takes a real effort to see things another way, even when there is evidence aplenty. So it seems inevitable that technology change and globalisation will continue to hollow out society, destroying jobs while a rich elite enjoys the high life in specially protected enclaves. But a change of direction is coming.

Recently I read a review in the Economist of a book by Richard Baldwin: The Great Convergence Information Technology and the New Globalisation. This is another variation on the same old story of advancing globalisation, but it offers a narrative that is useful.

Mr Baldwin sees the advance of technology affecting the human economy in two waves. Originally mankind was stuck in a village economy, forced to produce virtually all it consumed. The first wave of technological revolution detached production from consumption through advances in the technologies of transport. Goods (and energy) could be moved cheaply and easily. Society rearranged itself around industrial centres that produced things that were distributed worldwide. But knowledge, ideas and skills did not move so easily, which meant that production was concentrated in integrated geographical clusters.

The second revolution came with information technology, which allowed the spreading of knowhow, which in turn allowed the traditional clusters to fragment. Sub-assemblies could be manufactured far away. And indeed whole factories could be transplanted from Detroit to Mexico. This proved wrenching for the developed countries, but a big opportunity for the rest of the world. It is a backlash against this process which is behind the current wave of political turmoil. Mr Baldwin seems to assume that this process has further to run, and that we should facilitate its progress.

He may be right, but we should not miss two further dynamics, both based on conventional economic theory. The first dynamic is convergence – a different aspect to that suggested in the book’s title. Just why is it that so many factories have been relocated to developing world countries? The knowledge economy facilitates the move, but does not tell us why it is happening. It happens because workers in the developing world are paid less than those in the developed countries. But why?

The reason is that developing world economies have very low productivity. This low productivity is mainly because they have very inefficient agriculture, which ties up a huge proportion of the workforce, and which is massively uncompetitive in world terms. This drags down the cost of labour. But as developing world societies adopt modern technologies, and as more of their populations flock to cities, the productivity gap between town and country reduces. We have witnessed this in Japan, followed by South Korea and Taiwan. Now mainland China is following these exemplars. This means that what economists call comparative advantage (driven by the balance between different sectors of an economy, and considered to be the main engine of trade) is equalising. It’s quite a subtle point (which I explore in my economics essay on trade on why global trade is going into reverse), but the upshot is that the economics of outsourcing overseas is becoming less attractive.

There is plenty of evidence that this trend is quite advanced. It does not mean that large numbers of manufacturing jobs are coming back to developed countries though – because many of the jobs have been automated away. It does mean that future disruptions wrought by technology (and there are more to come, especially in white-collar work) will be less international in scope.

The second dynamic comes from looking at the economic impact of consumption. Not so long ago, the world’s consumption was mainly food. The agriculture sector comprised most of the economy. Now agriculture takes up a tiny share of national consumption in developed economies, and we take it for granted. That same process is evident with so much else of what we consume. Manufacturing industry is vanishing as a proportion of the economy. Various parts of service industry are following suit. So what does that leave? Increasingly our economic activity is about interpersonal contact with people in or around our neighbourhoods: hospitals, care homes, schools, gyms, restaurants, cabs and so on.

And what about technology itself? Though we hear much about it driving a process of mass automation, including through the use of algorithms in artificial intelligence, we may not have noticed that much technology is not about this at all. It is about the empowerment of individuals. Think about what you can do with your smartphone. Think of the personal liberation that comes about through such services as Uber (though not for the drivers perhaps, admittedly). And think about additive manufacturing (or 3-D printing) that makes it more economic to have a production run of one. And think of energy technology. The idea of massive nuclear power stations at the heart of a huge grid of high voltage cables is fading, as it becomes harder to make the economics work. It is being replaced by the idea of localised renewable energy sources, much more efficient consumption, supplemented by medium-sized power stations.

Put these things together and you might start to see the village coming back together again. The centrifugal forces are becoming centripetal. Not yet, to be sure, but the idea is becoming more technologically viable. And there is human need: most people crave denser social networks where recent trends have weakened them.

The new village will be very different from the old one. The old village was very insular, with people rarely mixing with their neighbours. In the new village people will travel freely, and the interchange of ideas will be global. And the new village remains dependent on national and global supply networks and information infrastructure. But most economic activity will be within the village (which could be a small town or suburb or network of actual villages in fact- or perhaps even a large town). The old village was a prison. The new village, or the liberal vision of one, should not be.

Let me hazard a further guess at this new village economy: public services will comprise a very high proportion of what it does. Education, health care, public protection, social care; I do not think these will be marked by high productivity gains in the future, so their importance in the overall economy will rise. And much of the infrastructure that the new society will depend on will be provided by natural monopolies, many of which will end up being run publicly, if not run publicly already. That poses some big challenges for governance and tax.

Those challenges will be among the many for public policy posed by this trend. Another is the status of that liberal icon, free trade. We are stuck in an old way of thinking about it, appropriate to older phases of technological advance. We will be still be dependent on the free trade of things, even if the distances shrink: but things will be less important to us, compared to the services we receive from our neighbours. Free trade may hollow these out by sucking resources away to centres of power elsewhere. Compare a Starbucks to a locally run café.

And another point is that I am coming at this with a very optimistic and liberal gloss, but there may be darker ways that these trends can take shape, with a return to insularity.

But that said, we need to adapt our political ideas to the world as it is, and what it is becoming. We should neither expect current trends to continue forever, nor for the past to return. Not enough political thinkers are responding to this challenge.



What is the meaning of Richmond Park?

My (many) Liberal Democrat friends are ecstatic. The party has just won the parliamentary by-election in Richmond Park, overturning a massive majority from the sitting MP,  Zac Goldsmith. As the dust slowly settles, what is there to learn about the state of British politics?

Richmond Park is quite close to where I live. I have been visiting it since the 1980s, helping out the local Liberals and then Liberal Democrats, including a few visits this time. It consists of the suburb of Richmond, together with a slice of Kingston, near Richmond Park, nearly up to Kingston town centre, and including the local hospital. The seat, and its predecessors, has been the scene of epic battles between Conservatives and Liberal Democrats. After a series of close results, the Lib Dems won it in the Tory collapse of 1997, with the rather eccentric Jenny Tonge as their MP (she kept testing the boundaries of what respectable politicians it could say about the Israel-Palestine conflict, transgressing on occasion – she has now left the party). She held the seat in 2001, but then stepped down. In the high water mark election of 2005 for the Lib Dems, which gave the party the illusion that seats that could be readily handed on from one candidate to another, the Lib Dems held the seat with Susan Kramer.

But in 2010 Zac Goldsmith, a local boy and inheritor of a substantial fortune, took the seat back for the Conservatives. He held it with a crushing majority (with 58% of the vote) in the Lib Dem meltdown of 2015, though the Lib Dem candidate, Robin Meltzer, managed to hang on to second place with 18% – a feat that could by no means be taken for granted. Many Lib Dem activists sighed and suggested that the influx of rich voters meant that the seat was gone for good.

But Mr Goldsmith was an independent minded MP, who had campaigned hard against the expansion of nearby Heathrow airport – which blights an area that otherwise offers sites of outstanding beauty. This is necessary for anybody that aspires to be an MP there. When the Conservative government under the new prime minister, Theresa May, finally opted to expand the airport, Mr Goldsmith fulfilled a campaign promise by resigning and standing as an independent. But the Conservatives did not put up a candidate against him, undermining his claim of independence.

Notwithstanding the mountain that the Lib Dems had to climb, expectations on the party were high. They had surged in the Witney by election, and a similar surge might take the seat for them. The Lib Dems had been doing well in local by elections (as well as Witney) over the summer, though their national poll rating remained dismal. To prove that that this improved electoral performance had substance, many commentators suggested that it was an election they had to win. All Liberal and Liberal Democrat revivals since 1945 had been led by spectacular parliamentary by election wins. If not here, where was that boost going to come from?

But Mr Goldsmith had clout on the issue that triggered the election: Heathrow. The Lib Dems had campaigned just as hard on the issue, and the government’s decision had proved the party’s contention that the best way to prevent the government from pressing ahead was for a strong Lib Dem party in coalition. Five years of coalition had held off the considerable political pressure for expansion. (Though Lib Dems might want to ask themselves why the party showed backbone on Heathrow, but not student fees). Barely a year of even a small Conservative majority and the resistance to expansion folded. But that’s a subtle argument, and the Lib Dems needed something bigger to shift enough votes their way. And so they campaigned on Brexit. Mr Goldsmith is a prominent supporter of hard Brexit, while the constituency voted 69% to remain in the EU. That did the trick.

What does this mean? Let’s start with the red herrings. First it says nothing about the state of play in Britain’s battle over Brexit. One of the strongest Remain  constituencies voted for an anti Brexit MP. That does not change the calculations for a large majority of MPs, whose constituents voted to leave. What would change the nature of the debate is a large number of Brexit voters changing their mind. With 45% of the electorate still voting for Mr Goldsmith, there was no sign of that.

A second red herring is that the collapse of the Labour vote (they lost their deposit, polling less than their party’s membership in the constituency). This is what happens in this sort of by election, and says nothing about the party’s chances in a future general election. A resurgent Lib Dem party could be a worry, but Labour still holds the aces, and this should not be a problem for a half-way competent leadership. Indeed if the Lib Dems draw off Remain voters from the Tories, it could help Labour. That Labour voters can be persuaded to vote Lib Dem tactically does not hurt Labour at all. The reversal of this trend in 2015 was a disaster for Labour.

The first lesson I would draw is that the Lib Dems have nailed their colours to the pro-EU mast. That seems to cover about a quarter of the electorate, a big enough pool for the party to fish in in its current state. It answers the question “what is the point of the Lib Dems?”, as the Tories adopt Brexit as their own, and Labour collapse into muddle. Those Lib Dems, like me, who are inching towards some form of reconciliation will have to bite their tongues. We need to understand that this is the best way of that the party can demonstrate its open, liberal values and present itself as a bastion against the rise of nativism and intolerance. It does not quite answer the question of whether the party is going for a core vote strategy, though. If the party gets the by election bug they will be tempted to water the message down in pro Brexit constituencies.

The next lesson is that organisation matters in British politics, and that the Lib Dems still have it. It was possible to feel sorry for the Zac supporters, overwhelmed by a blitz of Lib Dem literature and canvassing, while not having adequate data themselves. Many of them felt shell-shocked, and the graceless Mr Goldsmith whinged about being crushed by a machine. This delighted Lib Dem activists. Having been written off in 2015, after being crushed by a ruthless Tory machine, to be accused of being a ruthless machine themselves is a compliment indeed. The party pulled together, mobilising old members and new, in an optimistic, cheerful campaign, led by their candidate, Sarah Olney, who only joined the party in 2015. Both Labour and the Conservatives, with their bigger and better party machines, will take note, and will not be too upset. Breakaway parties, such as some Labour members were contemplating earlier in the year, look as hopeless an enterprise as ever. Lesser parties, including the Greens and Ukip, are presented with a big challenge.

A further point of interest comes from the fact that Ukip and the Greens did not put up candidates, and instead deferred to Mr Goldsmith and the Lib Dems respectively. The former reflects Ukip’s current  turmoil, and the party is weak locally – it has created no debt on the Conservatives. The Greens’ move is more significant. They too were in a weak position, and faced being crushed by the Lib Dem juggernaut, as Labour were.  By pulling out they made a virtue out of this weakness and will have softened the attitude of Lib Dems to do electoral deals with party in future, as part of a “progressive alliance”. Under Britain’s first past the post electoral system this kind of dealing is a logical response that may well take hold. Labour came under quite a bit of pressure from many of its members to do the same. There was never much chance of this from the still very tribal Labour party with its weak leadership – and Lib Dems will be relieved. They do not want to be under any kind of obligation to Labour under its current leadership.

What we don’t yet know about this election is whether it will boost the Lib Dems national standing amongst the public. The media is starting to take the party more seriously, but it will be some time before we have enough polling evidence to tell. What is clear is that the party is in fighting form, and has a much greater political weight. That is good news for supporters of liberal values, for which it is the clearest upholder on the British political scene. If Labour and the Conservatives can take their reluctant liberal supporters less for granted as they face the challenge of the populists, it will make all those efforts by the party’s volunteers worthwhile.


Competence, cosmopolitanism and change. And fewer experts needed forthe liberal fightback

Liberals are traumatised by the Brexit vote in Britain and Donald Trump’s victory in the USA. The margins were very fine in both cases, but that is little comfort. Things weren’t meant to be that close. And more shocks could be to come. It isn’t too late to fight back. But how?

And here there is a lot of confusion. Some want to coopt the tactics of the populists and fight dirtier (like the Guardian’s Jonathan Freedland); others say that we should stick to the issues and avoid personal attacks (take this piece from Luigi Zingales, building on experience with Silvio Berlusconi); others again suggest that we follow a populist left agenda in the manner of Bernie Sanders; or perhaps stick with the centre right (such as France’s Francois Fillon or Britain’s Tony Blair). Or meet the populists half-way by conceding immigration controls and restrictions on trade.

All of these ideas are flawed. One striking feature of both the British and American situations is just how divided the public has become. Accommodating one side of the argument means creating resentment on the other. Bernie Sanders would surely have lost more votes from Hillary supporters than he would have picked up from Trump ones. Recent polling on Brexit voters show that very few on either side have changed their minds.

We should be careful about accepting the populist narrative: that they represent a rebellion by the public against an elite. Most of the people I meet are on the establishment side of the argument, and are passionately opposed to Brexit and Mr Trump. But they are very far from any elite establishment; we are as ordinary in our way as the rebels. And all any political process does is to exchange one elite for another. As Brexit and the Republicans take over, there are going to be just as many angry and resentful people as before – but they will be different people.

Two ironies strike me here. First is that Mrs Clinton was right when she accused half of Mr Trump’s supporters of being a “basket of deplorables”. Saying so was one of the biggest mistakes of her campaign, and it showed a complete lack of political judgement  because it reinforced the idea of a sneering elite. And yet it is hard to see that there will be any reconciliation with people who have convinced themselves that the problem with the US (and Britain) is that an essentially white heritage is being polluted by incomers, and that the country needs to return to the values of the past. But there is the other half of Mr Trump’s supporters, who simply lost confidence in the establishment and just want to shake things up.

The second irony comes from  a seminal moment in the Brexit campaign when leading Brexiteer Michael Gove said that people had had enough of experts – because so many experts were advising against change. And yet the liberal side of the argument was badly let down by experts – or those that were advising their campaigns.  In America those experts has parsed the 2008 and 2012 election campaigns in minute detail and thought they had cracked it. Poll analyst Nate Silver made his reputation by predicting the result with precision in 2012 long before polling day. And yet the expert strategies in 2016 amounted to picking up pennies from in front of a steamroller. They lost the wood for the trees.

What are the experts saying now? They are very quiet, but I think can I guess what they will be saying. Don’t panic. Use the confusion and resentment emanating from the new ruling elites to build up a protest vote. Normal service will be resumed.

Well the Trump administration and the Brexit-supporting Conservative government will offer plenty of ammunition to opponents. But it isn’t enough. The British Labour Party thought it had the Conservative-Lib Dem coalition on the ropes in the years up to 2015 – such was the popular anger against austerity policies. And yet they lacked a convincing alternative, and all they succeeded in doing was pushing Lib Dem voters into the arms of the Conservatives, while being unable to contain the popular backlash in Scotland. Labour are trying something different now, with a lurch to far left – and the signs are that this will be even less successful. The populists are absolute masters of blaming anybody and everybody else for their problems, and they know how to stir up their supporters and create doubts among the uncommitted.

So what to do? I think that three things need to be at the heart of any fightback: competence; cosmopolitanism and change. Competence because that is what people will soon be yearning for, especially in America as the Trump regime takes control. People like the idea of somebody that creates chaos more than the fact. So any alternative must look like a cool, safe pair of hands. And, I would add, because this goes alongside it, somebody that cares about truth, and can admit awkward facts.

Cosmopolitanism because that really is the only way forwards. The genie is out of the bottle. We are going have to get along with people of different nationalities, races and cultures. There is no future in harking back to cultural distinctiveness. We must grow more confident in our own cultures and learn more from others. Ironically even the populists are doing this amongst themselves. If there is anything that unites the half of the population that is resisting the populists, it is a belief, at some level, in cosmopolitanism. Rallying this group is critical.

Well, Hillary was competent (except at campaigning) and cosmopolitan; and that was not enough. We also need to show that we believe in change. We must accept that the establishment orthodoxy of the 2000s was wrong in many respects. The relentless quest for a narrow vision of economic growth and the crushing of human control in the name of productivity and modernisation must end. All they do is enrich a few lucky people. We need a new vision of modernisation that takes to heart that most successful of Brexit slogans: “take back control.” And our experts won’t be much help here: we need new vision.

So we need new leaders that stand for competence, continuity and change, and are able to see beyond the myopia of experts. Justin Trudeau has done it in Canada. Who will do it in Britain and America? Oh how I wish I knew the answer to that!





What TalkTalk can teach us about the modern economy

I don’t often read George Monbiot. He is far too polemical for my taste. But for some reason I read an article of his last week in the Guardian, and I found myself mainly agreeing.

The article was an attack on the idea that Donald Trump’s victory will bring prosperity back to the rustbelt. Its conclusion was that war is becoming more likely. That was not what drew me to the article, though. It was the way he invoked society’s failure to deal with complexity as one of the real cause of its economic and political malaise. And here he is onto something very important. He links to an article by blogger Paul Arbair as his source, which he rates as “the most interesting essay I have read this year”. Well, see for yourself by all means, but I found that the article uses a lot of words to say not very much that is new. Attentive followers of this blog may remember that I have raised this issue myself, through the book by Cesar Hidalgo, “Why Information Grows”.

The thesis runs that the human mind can only handle a certain amount of complexity, and that we find arbitrary ways of trying to make our lives fit within that limit. The result is that we are continually hitting sub-optimal solutions, and we find the world running away from us. In Mr Arbair’s and Mr Monbiot’s view this human capacity to manage complexity is one of the main limiting factors to our current society’s development. I agree.

Let’s now try to make this less abstract. Over the last few weeks I have been trying to get a new landline installed for my 90-year old aunt, who lives on her own and has never succeeded in grappling with mobile technology. How she lost her phone line in the first place is another revealing story, but the issue for now is how to get a new connection. This has involved dealing with a major phone company, TalkTalk – though I am sceptical that their competitors manage these things any better. This initially involved an hour-long phone call, which I could only start by working out how to break the system so that I could talk to a human being – albeit that the human being only spoke with an accent that I could understand 75% of the time over my mobile connection (my aunt herself, when her consent was needed at one point, could understand almost nothing at all). Whether intermediated by a human or not, it meant navigating a set of pre-mapped options, without access to any real context. For example we were told that she could not have access to her old phone number – but I had no idea what the problem with this was. On the date installation was due I called again (even though the line offered to check progress required you produce a current TalkTalk number to proceed – before a number had been allocated!) and was then told  that the whole order had been lost. I started the process again, though, having thrown my toys out of the pram, I was talking to somebody more senior with a stronger command of English. I was given a distant future date for connection, which was blamed on BT Openreach, whose lines carry the calls. This date is later today; we will see what happens.

This story will be familiar to anybody who negotiates the modern world. At every turn you are made to conform to a simplified structure that makes as few concessions as possible to context. Navigation requires a degree of cunning on the customers’ part or  they end up in a dead end. It often takes the customer a lot of their time – though suppliers limit any time spent by their operatives. And disappointment is usually blamed on somebody else. Companies that use a more contextualised, intelligent approach can’t compete in the market, apparently – or else they only can do so if part of an exclusive service aimed at the wealthy. There is a limit to the complexity that a company like TalkTalk can handle, and you must pay that price if you want to use their services. Many people, like my aunt, could not hope to navigate this system without somebody to do it for them. The many failures that this approach leaves are simply shrugged off.

Now let’s reflect that so many politicians and economists tell us that one our society’s biggest problems is a lack of productivity growth. But more productivity means more experiences like ordering a new phone line with TalkTalk. To most people it is simply replacing one imperfect world with another that is not necessarily better. Is it really any wonder that progress is so slow?

In my view, this kind of problem – information processing and our capacity to deal with it – lies behind many of our society’s problems, including the rise of inequality between people and regions. It hollows out jobs while leaving many human problems unsolved. And yet amongst the intellectuals who analyse society’s problems it seems largely unrecognised. We lack a clear language with which to communicate and analyse it. One important question, for example, is how much artificial intelligence can help, or whether it can help at all.

What is the way forward? We need to recognise that limits to handling complexity affect how efficient political and economic organisations can be designed. You have to be able to manage complexity somehow. One favoured method, used by the likes of TalkTalk, is to create a system of simple scope but far reaching extent – able to deal with a small number of needs for large numbers, millions, of people. This thinking is grounded in the way modern societies have embraced the world since scientific discovery took hold in the 18th Century. You tackle a large scope by breaking it into pieces and then examining each piece in depth. This gets you a long way – but how do you fit the pieces back together again?

The other to tackle complexity way is to broaden the scope but reduce the reach – deal with smaller numbers of people, but handle a much broader array of issues. This is a commonly used technique in business and politics. The 1990s craze of “business process reengineering” was based on the idea – I built a large part of my professional career applying it to financial services. But it has fallen from favour. It would be interesting to understand why –  I think it is because there are strong incentives for business leaders to increase the size of their organisations, because their own wealth and prestige grows with it. This delivers a natural bias towards large organisations of narrow scope – even though these are not necessarily the most efficient. Our legal, political and regulatory systems have in inbuilt bias towards such large organisations too. When the BSE crisis hit the British meat industry in the 2000s, for example, the men from the ministry simply assumed that small abattoirs had to be closed down, and so produced regulations that made it virtually impossible for them to operate.

Which is not to say that the world does not need big businesses, and big government too – but we need to rebalance these to make small government and small businesses more viable – because these will deal with more complex problems more efficiently.

But what on earth will it take to make people realise that?


Britain’s economic outlook is dismal. We need a new direction.

Yesterday the British Chancellor of the Exchequer, Philip Hammond, gave his Autumn Statement. It was his first big set-piece in that role, and the time the government has attempted to set out its financial plans since the country voted to leave the European Union. Amid the noise and kerfuffle that such events generate, it is easy to miss the big picture: Britain’s politicians have no answer to a dismal outlook.

What drives my pessimism? The most important piece of public life that I am involved with is schools. Looking back over the last decade there is much to be proud of in this patch of inner London. The professionalism and dedication of school leaders and staff have grown. The imagination they have used to reach out to disadvantaged children is wonderful to see, and the results impressive. Where once teachers vehemently defended their little classroom empires against any outside scrutiny, and blamed poor results on social conditions, I now see a new generation of professionals, willing to accept advice and scrutiny, and enthused by a team mission to ensure that all pupils achieve potential. Political credit needs to be spread widely. The New Labour government started the process by putting pressure on London schools to break out of the tyranny of low expectations. The Conservatives sharpened the focus on teaching quality. The Liberal Democrats’ Pupil Premium policy led to a step-change in the treatment of disadvantaged pupils, and will be their most enduring achievement in coalition. But the clouds are gathering.

Education funding is being squeezed. London schools are funded generously by comparison with many parts of the country, and so the pressure is being applied there sharply. Teaching Assistants, who do not have professional qualifications, are feeling the squeeze the most – just that section of society that is finding it hardest to make ends meet. And services, slowly but surely, are under threat. Children’s Centres, which provided pre-school support, we the first to be hit. Now nurseries are under threat. A system that was tackling the gap between the haves and have-nots is slowly being dismantled. And this picture is being repeated across public services generally. Health and social care services are gradually failing to cope with the steady rise in older patients. Neighbourhood police teams have been cut drastically, choking the process of community links and intelligence gathering. And so on. All this is slowly creating a society divided by education and the lottery of property ownership.

The Chancellor offered us no hope of relief. The government budget deficit is still 4% of GDP, a level not usually thought of as sustainable. A large current account deficit shows that the country as a whole is consuming more than it is producing, as it has been for the last two decades. To be clear, neither of these deficits is a cause to panic. In current global economic conditions they look quite sustainable for a good while yet. But they show that there are limits to what the state can fund. In conventional analysis what is needed is a bit of economic growth, and more productivity from British workers. But, for all sorts of reasons, that productivity growth has dried up globally. Mr Hammond boasted that growth in Britain compared favourably with other developed world economies. That is not good news, because it demonstrates that the country’s problems are deep-seated and unlikely to be solved by a bit tweaking here and there. We are all in the same swamp.

What we need to understand is that these problems follow from profound changes in the world around us. Developed world populations are aging – by which I mean that the proportion of older people is rising and leaving the productive workforce. Technological change is wiping out working class jobs, pushing economic rewards towards a minority of professionals and the owners of capital. Globalisation was making things worse in some ways for developed economies, but provided solutions in others – but in any case it is slowing down as the Chinese economy in particular matures.

And to this rather gloomy picture we are adding wonton acts of self-harm. Climate change is helping to destabilise the world, creating waves of refugees. In Britain, Brexit will make things worse. It is not that economic integration of the type offered by the European Union was helping particularly, but the act of leaving the union is creating a colossal distraction for both government and businesses.  It has also given populism, a turning inwards and the rise of charlatan political leaders bent on self-aggrandisement, a big lift, Donald Trump’s American isolationism promises to do more harm than good both inside and outside the USA.

Politicians  left and right are responding mainly by trying to turn the clock back to imagined happier times. The right imagine a world of self-sufficient, ethnically homogenous nation-states undistracted by the pressures of global integration and technological change. The left fondly recalls a time of institutional Keynesianism and an ever-expanding state. Neither confronts the challenges of technological change and the need to heal fracturing communities.

So what about hope? We have some things to play with. The current younger generation is the best-educated and most cosmopolitan ever in the developed world. By and large they are not fooled by the lure of the past – one reason why they are so disengaged by current politicians. That their expectations of an easy, inevitable and prosperous life are being dashed means that at least they will be open to positive change. Technological change has its plus points too, by enabling cooperation and personalisation. The advance of renewable and energy-efficient technologies offers plenty of hope too.

But we do need to start thinking of different ways of organising political and economic activity. Ways that offer less power to corporate monopolies, and better able to tax and recycle their profits (perhaps the most persuasive reason for staying with the European Union is  its ability to confront the multinationals). We also need to place less faith in highly centralised systems that struggle to deal with complex problems, while concentrating political and commercial power. We  need better schools, better public healthcare, and stronger, local public services to support struggling communities – and controlled by those communities rather than the whims of politicians in a far-off capital.

As blogger David Boyle wrote recently, we are in a dark tunnel, but we need to press towards the light at the end of it, not try to turn back.



The European Union needs more political integration, not less

In yesterday’s FT former French president Nicholas Sarkozy suggests reforming the European Union, and then offering Britain the chance to rejoin it. This does not look a practical proposition, but it is a useful thought experiment. How should the Union be reshaped?

First of all, we must get past the current British obsession with Brexit. This is shaping the debate in an unhelpful way. Remain supporters are too uncritical of the current EU. Of course they say that the EU should be reformed, but their ideas about how are as sketchy and muddled as Brexit campaigners’ ideas about Britain outside the union. And the EU has much deeper problems than the sorts of things that were upsetting British voters. It is not the right place to start when trying to understand where the EU needs to change.

Indeed the EU is beset by three more serious problems than Brexit: the Eurozone, refugees, and populist governments. These are the issues that most concern Mr Sarkozy. He wants a separate governance structure for the Eurozone that will allow further integration of economic governance. He wants a more coherent immigration policy, with a consistent, contribution-based, system of entitlements to state benefits. And he wants to reduce the competencies of the EU Commission so that it bumps into national governments less often.

But we need to take a step back further than even that. Just what is it the we need the EU to do? Its foundation is the idea that European nations benefit from a degree of political and economic integration. There are two groups of overlapping benefits: political stability and peace; and higher material standards of living.

Political stability and peace remain solid achievements for the EU. That these should not be taken for granted can be seen from the wars involving the former Yugoslavia, and from the aggression emanating from Russia. Ethnic tensions can still lead to wars. States with powerful armies can still seek to get their way by force, allowing corrupt elites to perpetuate their power. Furthermore the EU has been part of a dramatic extension of constitutional, democratic government, firstly in Spain, Portugal and Greece, and then in the former Soviet bloc. But these gains are fraying. Populist governments in Poland and Hungary are undermining constitutional democracy. Other governments are failing to deal with corrupt elites. The EU struggles to confront external threats, because to do so it needs consensus – and weaker governments from smaller powers are tempted to use Russia’s aid in propping up their corrupt elites. Other countries are too far from the source of trouble to show much solidarity.

One striking thought emerges from this. To confront these problems the EU needs more political integration, not less. It needs a more powerful executive with more EU funds to allocate; it needs more power to police the use of these funds, and be able to apply sanctions to countries that fail to meet standards. It also needs to forge tough deals with such troublesome neighbours such as Russia and Turkey. It needs new institutions to confer democratic legitimacy. It probably needs integrated armed forces. The founding fathers of the EU (before it was even the EU) always foresaw this, but others, led by Britons, have been in denial.

Times have changed. The biggest political problem for Europe is posed by the rise of Russia, with its championing of old-fashioned corrupt elites and nationalistic politics. But Russia is incomparably weaker than the old Soviet Union. The latter could not be confronted without US leadership. The US is in retreat, but, nuclear weapons apart, Russia is not so strong that a politically strengthened Europe, based on Germany and France, cannot stand up to it. Russia’s attempts to undermine Europe provide the pretext to unite it. The smaller states of eastern Europe need to understand the choice between a Russian-aligned, weak and corrupt system, or joining the road to something much better. I suspect that they already do if you push them – and that gives a strengthened EU the basis for a mandate.

Economically though, the case for more integration is not so clear. Free movement of people and trade has surely been of enormous benefit. Some interesting work has shown how even brain drains can help the  countries losing workers – the emigrants are replaced, causing greater social mobility. But the pace of change has caused enormous stresses. And, in some countries at least, regional inequalities have become a major headache (Britain is perhaps the worst – if one puts Italy’s primarily down to weak institutions in the south).  This is a complex problem, but I think that greater regional and local autonomy is critical, and the union’s third great freedom – movement of capital – may need some hedging. I suspect that the real problem is not the balance of power between the EU and member states, but the balance of power within the larger nation states. But some of the EU’s single market rules are getting in the way – the limitations on state aid for example.

Then there is the Euro zone. This deserves, and will get, a post (or several) in its own right. Suffice to say that though most Anglo-Saxon commentators regard this project as the essence of madness, it is not dead yet. I believe that floating currencies tend to reinforce and increase inequalities – an argument I need to develop another day – but that fixed exchange rates and weak political governance are a toxic combination, as has been proved on countless occasions, in and out of the Eurozone. The political stresses brought about by the crises in Greece, Cyprus, Portugal and Spain show a degree of failure. (There are successes too: France and Germany have experienced steadier and more equitable growth than Britain has outside the Euro). Mr Sarkozy is right that some form of further integration of economic management is warranted, but a reconciliation between French and German approaches will be needed to make this work.

So where is all this leading? In the extreme France and Germany might lead a new United States of Europe, with much deeper political integration, based on a proper constitution, and, perhaps, a democratically elected president. This will no doubt be tied to the Euro currency area. This new federal state would be surrounded by a looser economic zone, with surrounding countries participating on an à la carte basis.

An interesting question is whether less extreme versions of this idea could unlock enough of the benefits to make it worthwhile. There would be a highly integrated core of countries, alongside a number of less integrated ones.

Where would that leave Britain? Much as I would like my country to be part of further European political integration, politically the country is completely unready for it. Brexit may even be helpful for Europe in the long term, as the country has been a major brake on political integration. If the country does join in, it must be on the basis of a project that is primarily political, not economic. That would be a sea change from how the EU and its forerunners were presented to the British public (by its supporters, that is; opponents have always painted it as a political project with the real goal of a super-state). More Britons are ready for that than used to be supposed, but they are still a minority. But as Britain finds that leaving the EU is no answer to its deeper political and economic problems, and more Britons equate the “good old days” with a suitably idealised membership of the EU (just as they do now with the days before membership) perhaps that might change. On the other hand, for Millennia inhabitants of our island have had some notion of special destiny, separate from our continental neighbours to whom we owe so much. For now we are destined to be observers rather than shapers.





Making America small again. Trump’s victory marks the decline of the USA

“Make America Great Again.” That was the slogan of Donald Trump’s insurgent campaign to take the US presidency. It resonated with many Americans. They felt that the US had been subject to serial humiliations in its international dealings, and that Mr Trump’s more robust and confrontational leadership would help to reverse it.

But politics is full of paradox. To exercise power is to diminish it. Power accumulates to those who understand restraint. In Britain English and Welsh voters took to heart the slogan of “Take Back Control” and voted for Brexit. The country is now basking in the thrill of exercising direct power in its relations with its fellow European neighbours. And yet the result will be a medium-sized power adrift in a friendless world, seeking to trade freely when everybody else is becoming more protectionist It will be more rather than less subject to the whims of foreign powers. Britons may prefer it that way, but they will come to understand that the keys to “taking back control” actually lie in Westminster and their local council chambers, rather than in Brussels.

So it is in America. Mr Trump’s supporters will revel in the assertion their country’s direct power. And yet he will exercise this assertiveness in order to carry out a retreat. The result can only be diminishment, relegating the US to the middle part of a medium-sized continent.

Let’s look at some specifics. Consider the Trans Pacific Partnership (TPP): the multinational trade deal put together by President Obama. This was a central element of his Asian diplomatic strategy, designed to collect a number of Asian countries into America’s orbit in trading terms, conspicuously excluding China. Mr Trump (along with many Democrats) denounces this as a bad deal and will scrap it. That leaves a vacuum into which China is ready to pounce. It plans its own version of a free trade area, involving most of the same countries. Mr Trump has also questioned the value of America’s military alliances in the region. The clear message to countries there is that they must acquiesce with China’s increasingly imperial ambitions. The Philippines’ President Duterte looks a little less eccentric in his pivot to China. The USA is suddenly a much less important country.

Mr Trump’s promised assertiveness in trade relations with China makes little sense either. It comes at an important moment in the evolution of China as a nation. It has built its economy on international integration, especially with the US, and developed a large trade surplus in the process. But there is nothing particularly beneficial in a trade surplus – it implies that a country’s citizens are consuming less than they could – an act of self-denial. A trade surplus has political advantages – it makes you less beholden to foreign creditors – but China is already powerful enough for this not to matter much. So it is in the process of carrying out an economic pivot to  develop its consumer economy, and away from integration with developed economies – though the scope for integration with less developed economies remains. An economic model where it exports less to America and integrates more with other Asian countries, and even African ones, suits it just fine strategically. Mr Trump means to hurry it along, but it will disrupt the US economy more than the Chinese one.

In Europe the issue is not so much trade. The proposed trade deal between the US and the European Union, TTIP, looks dead in the water without any help from Mr Trump. The main issue for Europeans is military and diplomatic support for the European countries against Russia in particular. Mr Trump has said that the current balance involves America in a disproportionate level of commitment. He has a point. If America steps back from its military commitments, and caves in to pressure from Vladimir Putin to create and extend a Russian sphere of influence, then it will put European countries in a very tough position. It is not very clear where this will lead – but one thing is very clear: America will be less important to Europe. This is not necessarily a bad thing for Europe, but it will be very uncomfortable.

And then there is economics. We are still guessing what will emerge from Mr Trump’s presidency – but there could well be a short-term lift for America. Some form of fiscal stimulus is in the offing. Mr Trump and his advisers hope to lure in US corporate profits that are stacked offshore for tax reasons, and to use the proceeds to fund infrastructure investment. Unlike many of his Republican colleagues, Mr Trump will be reluctant to cut state handouts, like pensions or healthcare – though health insurance is under threat. This could give a short term lift to the US economy . And, as this week’s Economist points out, much of this gain will be at the cost of other world economies.

That should please Mr Trump’s supporters. But the problems will start quickly. The stimulus is badly timed. In many aspects the US economy is running at close to potential output. All the stimulus might do is suck in imports and push up prices. But there may well be a lot of hidden potential in the US economy – more workers could be drawn into the workforce, and other workers could be made to work more productively. But if Mr Trump is serious about rolling back free trade and driving out foreign workers, then he will cut the capacity of the US economy when it needs to be increased. A financial crisis is in the offing.

The truth about the American economy is that, far from being taken for a ride and funding lavish lifestyles of foreigners, American consumption is being supported from abroad. This is what a trade deficit means. A transition to a more self-sufficient economy, as wished for by Mr Trump’s supporters, will entail economic shrinkage. Americans may rail at the loss of jobs in many industries, but they exchanged these for cheaper products, made abroad or with automated technologies, or both. Reversing that means reducing living standards.

Except that most Americans could still end up better off. If the country can share out income more evenly, with lower profits and higher wages, and more of those wages paid to middle and lower level employees and less to the top layer, then this shrinkage need not be painful to the majority. But what chance is there of a Republican administration, run by senior businessmen, achieving that? To Mr Trump exploitation is simply good business practice, and profits are reward for enterprise. There is no sign of a mindset that wants a different distribution of the fruits of economic success.

America and the world is in for a rough ride. But strategically it has been clear for a long time that American power, relative to the rest of the world, is in decline. That is not such a bad thing  – it results from a fairer distribution of the world’s wealth. After the diminishment of Europe, it is now America’s turn. Mr Trump’s victory marks a big step along that journey. But it should surprise no follower of politics that he is claiming to do the opposite.


The centre collapses. What should liberals do?

Unlike on 23rd June (the day of the British referendum on the EU) I went to bed with a sense of quiet foreboding on Tuesday night. And that foreboding was confirmed by the shocking news of Donald Trump’s victory in the US presidential election.

It is a bad year for liberals. Some liberals did support the British vote to leave the EU, of course, and persist in saying this was a good thing. Well, maybe, but the campaign was not fought from the liberal centre, it was fought and won by those who persuaded the illiberal to vote in their masses – which is similar to Mr Trump. Meanwhile, illiberal governments face no serious challenge in Hungary and Poland, and in Turkey President Erdogan is crushing all forms of opposition, liberal and otherwise, following the example of President Putin in Russia. It does not seem so far-fetched to imagine that Marine Le Pen will take the French presidency next year. There are major populist uprisings in the Netherlands and Italy.

All this points to a collapse in the political centre. What do I mean by that? The centre is a set of political assumptions about the way the world should be run which has become the conventional wisdom of our governing classes, and which is shared by many political groupings. Those who did not support this centre used to be branded as extremists and pushed to the margins. Or sometimes parties would talk as if they were challenging the centre, but quickly adopted its principles once in power – France’s François Hollande comes to mind. Centrist principles incorporate free trade, free movement of capital and free movement of workers – an unmistakably liberal combination. Globalisation, and the economic growth that went with it, were embraced. Social liberalism ran alongside these principles, with the promotion of diversity at all levels of society. In Britain, Tony Blair’s enthusiastic embrace of these centrist values was the key to his taking the Labour Party to three election victories in 1997, 2001 and 2005. The Conservative victory in 2015 largely came about because it persuaded electors Labour had turned away from the centre – though, in a portent, the avowedly centrist Liberal Democrats were crushed in the process.

But Mr Trump’s campaign was based precisely on a rejection of the centre. He painted a picture of a politically corrupt and complacent elite who had let people down, and imposed social liberalism onto unwilling subjects. This brought previously apathetic voters out of the woodwork, and persuaded many who had voted for the left in the past – blue collar workers in particular – to change allegiance. By comparison Hillary Clinton struggled to raise enthusiasm for her campaign; this apathy may actually have been more important than enthusiasm for the insurgents. It would be wrong to blame that on her personally. She was in fact a strong candidate, but she represented a ruling philosophy that people have lost faith in. President Obama may be more charismatic, but his intervention seemed to have little impact. He seemed to be part of the problem.

Could the left have achieved a similar success with its own anti-establishment campaign? This is what Democratic contender Bernie Sanders attempted; and it is what Britain’s Jeremy Corbyn seeks to achieve. Like all counterfactuals this is impossible to prove. Many of the criticisms against Messrs Sanders and Corbyn – their lack of so-called “credibility” – seemed to positively benefit Mr Trump. But I think the rebellion is about more than changing personalities and attacking the political elite. There are overlaps in policy; Mr Sanders wanted to clamp down on free trade and attack big business – just as Mr Trump  does. But he also stood for big government and social liberalism. These do not resonate with the disaffected. It might rally a lot of younger, urban people – but not the white working class. It would not have been hard for the Republicans to paint Mr Sanders as in fact being part of the liberal elite, who would bring with him socially liberal values, more interference in people’s daily lives, and higher taxes.

But for all that, the liberal left shares a disillusionment of the conventional centre with the conservative insurgents. They see the economic gains going to a lucky minority, while working class, and many middle class, people face increased insecurity – especially if they are young. The trouble is that the left lacks a convincing policy agenda to address it. Their solutions have a lot of the “same old” about them. And in particular they lack ideas on how to promote a thriving business environment, beyond more active demand management through fiscal policy, also promoted by Mr Trump, it has to be said.

So how to respond? Of course Mr Trump and his associates equally lack a convincing policy agenda to address the concerns of the left-behind. They will throw them some socially conservative red meat, but it is hard to see their economic policies making them better off. Meanwhile many social benefits, starting with health insurance, will come under threat. This gives the left the raw ingredients for a fightback. The developed world is becoming more socially liberal, so liberals must hold their nerve. And as conservative economic and foreign policies fail to gain traction, there will be more sticks to beat the conservatives with. Competence may come back into fashion.

But the left still needs a convincing policy agenda of its own. The old centrist agenda needs to be picked apart and put back together again. In my view this means a strengthening of local communities. Somehow a flourishing global economy needs to cohabit with flourishing local economies. Our hope must be that as Mr Trump as his conservative allies test their economic ideas to destruction, it will open people’s minds to fresh ideas. But those fresh ideas need to be fleshed out.



The government has made an error by not condemning attacks on the rule of law

Last Thursday the British government suffered a shock defeat in the High Court. It ruled that the government could not invoke Article 50 of the Lisbon Treaty, launching the process of exit from the EU, without parliamentary approval. Reaction to this has split along partisan lines, depending on whether you think Brexit is a good idea. But the reaction of some Brexit supporters is pure hysteria. This posed a challenge to the government that it has handled badly.

The case itself arises because Britain lacks a written constitution – so constitutional principles evolve in a rather haphazard way. The government’s case was founded on a curious combination of a brand new constitutional principle, and an ancient one.

The new principle is that sovereignty rests with the people, and that the referendum result was a clear expression of the will of the people, to which the state executive may conform directly, bypassing parliament. This is a perfectly viable idea. But it is not one that has been established in British law – and, indeed, it did not form the basis of the government’s legal argument, though it served to give it moral authority. The current principle is that parliament is sovereign, not the people, though parliament is subject to popular election. I am no fan of parliamentary sovereignty, though it makes some people misty-eyed – ironically it was much invoked as a precious British institution by Brexit campaigners during the referendum. Actually I see the sovereignty of parliament as a potential threat to freedom, and it should be subject to constitutional constraint, like all other parts of government. These restraints include such things as the Human Rights Act, and, indeed, the country’s treaty obligations to the European Union, which I view as a helpful restraint against corruptible power, rather than a dilution of democracy. One of my fears for Brexit is that it reduces the checks and balances of our constitution.

Still, parliamentary sovereignty is the rule, and it should only be changed through a due democratic process via parliament itself. And parliament has been very careful not to subordinate itself to referendums, which are an increasingly important part of our democratic system. They are always described as “advisory” – an act of consultation rather than authority in themselves. There is an ancient debate here between the virtues of direct democracy (such as referendums) and representative democracy (where elected parliaments have primacy). We haven’t resolved that debate properly – or if we have, it is in favour of the representative sort of democracy.

The ancient constitutional principle invoked by the government is that sovereignty derives from God to the anointed King or Queen, and from them to the Cabinet, a committee of the Privy Council. Parliament, or the People, are mere subjects of the royal whim (and, revealingly, “subjects” is the word commonly used in place of “citizen” in government language). This constitutional principle was heavily compromised by the Glorious Revolution of 1688, when parliament sacked King James II and passed the crown to William III and Mary II jointly; parliament further invoked its supremacy to secure the succession of Queen Anne in 1714 to George I. But the principle lives on under the Royal Prerogative, which is the basis of much executive power, including, relevant to this case, the making of treaties with foreign powers. The court decided that Article 50 would in fact involve a breach of Acts of Parliament rather than just the termination of foreign treaties, and so the government could not use the royal prerogative. Anybody who remembers the fraught parliamentary debates, from 1972 onwards, at each stage of the evolution of Britain’s membership of the EU, will not be surprised that it can’t just be unmade at the whim of the Queen’s representatives.

The court case isn’t over. There is an appeal to the Supreme Court, as is only proper in a case of such importance. But most think the judgement will be upheld. Talking to a senior lawyer when the case was brought originally, I was told that the High Court was likely to find for the government, but that the verdict stood a good chance of being overturned by the Supreme Court. So the government’s case looks weaker than it first appeared. You will gather than I am not particularly surprised.

So here we have a constitutional challenge being resolved in a civilised and proper way. That makes the reaction of some Brexit supporters very striking: they are saying that it is outrageous for unelected judges to intervene to thwart the clearly expressed will of the people. Suzanne Evans, a Ukip leader, has been particularly voluble, suggesting that the judges concerned should be sacked. But the Brexit newspapers, the Telegraph, the Express, the Daily Mail and the Sun in particular, are no better. The Mail sought to undermine the authority of the court by pointing out that one of the judges was openly gay.

This attitude reflects the views of much of the pro-Brexit public too, to judge by some vox-pops on the radio and social media comments. But it is in contrast to the equivalent populists in the US. These treat the US Constitution as holy writ, and nobody challenges the right of the Supreme Court to limit the actions of politicians or the state, or even to overturn the results of referendums, which happens frequently. Such is the difference that history makes.

What we have instead reminds me a lot of fascist attitudes in Europe before 1939, as practised by Hitler, Mussolini, and others, and advocated by a number of political groups in other European countries. The referendum was a favourite device of these dictators: a way of proving that they derived their authority from the will of the people. They saw the law as an instrument of executive power.

Of course we should not make the mistake of assuming that all Brexit supporters share such fascist tendencies, and we should remember that another key ingredient of fascism, the advocacy of a superman leader, is absent. Indeed pro-Brexit Tory MP Stephen Philips disagrees with the government on this, and has resigned in disgust at his party on this and other issues. But there seems to be a hard core, represented by Ukip, many Tory hardliners and a group of right-wing newspaper owners that are happy to undermine the independence of the judiciary. And that hard core holds the initiative, largely because the government lets them. The government response to the attack on judges has been limp; indeed one minister, Sajid Javid, actually joined in. Belatedly the Prime Minister and the Lord Chancellor affirmed their respect for the judgement, but failed to condemn the attacks made by their colleagues and the press, or create any kind of media splash.

This is a tactical error. The government’s best hope in pushing through Brexit is to take the heat out of it all. They had a major victory when Japanese carmaker Nissan was persuaded to keep investing in their British factory. This supported the general idea that the Remainers are stoking up a fuss about not much. Now the Remainers have something new to be angry about: the government’s complicity with an attack on the rule of law. Many liberals will be taking the Brexit slogan “We want our country back” for their own, so disgusted are they about the rise xenophobic and intolerant attitudes. Liberal Democrat campaigners trying to make the Richmond Park by-election about Brexit must be delighted.

Still, Remain supporters need to be careful. As yet there has been no major shift in public opinion. Most of the public will be unmoved by this rather abstract debate about the British constitution. That shift will only arise when there is a concrete threat to jobs, living standards and public services. Most voters assume the country will muddle through without too much damage. The government’s victory on Nissan was so important because it staved off one such concrete threat.

Incidentally that leads to an intriguing question. How was the government able to make the assurances it did to Nissan? It suggests that it is in fact aiming to achieve a version of “soft Brexit” with the UK staying in the EU customs union, and remaining subject to some EU jurisdiction – while the mood music is pointing to “hard Brexit”. This would explain why the government is so reluctant to say much about what it is trying to do.

But raising the political temperature on Brexit is a bad idea. The government needs to tread a middle course between the Brexit extremists and those that seek an opportunity to reverse the referendum result. A firm rebuke to those attacks on the judges would have been just that. And now it is too late.



Leave and Remain liberals will need to heal their rifts or the conservatives will take over

If we ever imagined that June’s referendum on Britain’s membership of the EU would end the arguing, we would have been much mistaken. I have taken part in this arguing enthusiastically, but it is time to take a step back. Where are we heading?

Let’s start with the Remainers. A recent poll has shown that few people who voted to remain in the EU regret their vote. They mostly believe that the results of Brexit will be highly detrimental, and many continue to protest. But what for? The vote for Brexit was narrow, but decisive within Britain’s political system. Most English and Welsh MPs have seen significant majorities for Leave in their own seats. The Remain vote was inefficiently distributed, with majorities mainly in London and Scotland, which is now politically marginalised by the rise of the SNP, a process that is likely to lead to that country’s breakaway. The vote is widely seen as an English and Welsh revolt against London, and the bulk of MPs are minded to heed it, and no general election will change that. The chances of stopping Brexit look thin – and would entail an ugly fight with Leave supporters that would do nothing to heal a divided nation. Only if the cohesion of the Leave side starts to break could alternative possibilities emerge – and there is no sign of that. Some leave voters express regret or apprehension, but this is very soft and is not a political move of any significance.

So why can’t Remainers move on and make the best of it? Because so many of them regard it as a matter of values. Remainers really don’t like the values of the stereotypical Leave supporters, whom they see as being illiberal – though not all are, of course. They get the anger of white working class voters, but blame it on national government failure not EU membership, and do not find that it is an excuse for narrow-mindedness or, as they see it, stupidity. Real venom is reserved for the many middle class supporters of Brexit – seen as a combination of the awkward squad, who always criticise and never take responsibility, and people who can’t accept that the world moves on. The rise in hate crime since the vote only convinces Remain supporters that they should stand up for their values. One way of looking at this is the popular model of grief, which sees denial followed by anger, bargaining, depression and only then acceptance. Remainers are stuck somewhere between anger and bargainings. They know that moving on means depression, and we are scared of the abyss, so are stuck on anger and bargaining.

What of the Leave side? It is possible to have some sympathy for them. The boot is on the other foot now. They are the ruling elite, receiving all the brickbats instead of giving them. Much of what is said against them is spurious or speculative, with an intention to stir up trouble rather than anything constructive. They find that nearly half the population is angry about the cause they support, and they don’t know how to handle it.

What Brexit supporters need to understand are the dynamics of change management: any disruptive change is going to be stormy. On one model I was taught in management training, change in an organisation goes through four distinct phases (clearly related to the five phases of grief). First there is denial. People think that the change doesn’t really affect them – it is about other people. Inexperienced managers mistake this calm for acceptance and think things are going well. Then comes anger, as the effect of the change sinks in and people realise that their comfortable ways will be threatened. Management is often accused of being clueless by people who haven’t understood what the management is trying to do. The next phase is chaos. As the change moves into implementation, things start to go wrong; people feel lost in an unfamiliar environment. Management’s reputation remains low. Finally things settle down and we have renewal. You have to understand that this pattern is inevitable in any meaningful change. In a well managed change there is still anger and chaos, but they are short-lived. In a badly managed one the change can be derailed, even if it is ultimately a good idea.

This is what is happening over Brexit. Brexit was always going to be disruptive: if you supported Brexit, this is what you signed up for – there’s no point in being annoyed about it. We have moved on from denial to anger: that’s progress. But the next phase is chaos – this has to be embraced rather than deferred, because otherwise we will never move on. The chaos phase will probably start with the invocation of Article 50 of the EU Treaty, which makes departure all but inevitable. But how to minimise the downside? The process has not been well planned (or planned at all, some would say), so getting through it quickly will be impossible. Brexit supporters need to keep moving things on so that things can start to settle down in a new reality. This requires a relentless focus on problem-solving, and not arguing about why you are doing it. But Brexit politicians tend not be strong on problem-solving – they are the disruptive types who like to blame others for anything that goes wrong, rather than sort things out themselves.

But within this chaos, there is a clear threat to liberals. Liberalism does not command majority support, but neither does its antithesis. If liberals form the right coalitions they can be politically dominant, as they often are. But the Brexit coalition is dominated by conservatives. Liberalism has been split. Most are Remain supporters, but many supported Leave. Leave liberals see the EU as an institution whose flaws are so deep that they threaten its avowed liberal values. They seek to combine liberal values with stronger self-determination.

So the threat is that conservatives dominate the ruling coalition, while Remain liberals absent themselves in a sulk. The result will be illiberal measures such as: excessive immigration curbs, which in turn limit the opportunities for Britons in the rest of Europe; conservative social policies, such as selective school admissions; and, in all probability, increased austerity as government finances come under pressure. Worse than all this there will be a prevailing political culture of blaming outsiders for the country’s mounting problems, resulting in a rise in intolerance of ethnic and religious minorities. Liberals of all stripes must resist this.

In the short term the anger of the Remain side may serve a useful purpose for liberals. It will weaken the Brexit conservatives, many of whom vastly overestimated the ease of transition, and certainly played down the difficulties during the campaign. But at some point Remain liberals will surely have to admit defeat and team up with the Brexit liberals to define a liberal Britain (with or without Scotland) outside the EU, and appeal to Brexit voters sceptical of the conservative political establishment.

How will this come about? Not by refighting the referendum. The two sides will simply have to agree to differ on the wisdom of leaving the EU. But liberals should find common ground in political and economic solutions that will make the country a better place. Political reform; devolution; improved education for all; better public services; and better support for communities disrupted by changes to technology and trade. Reconciliation will be hard, but if liberals don’t the conservatives will set the agenda.



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