Archive for the ‘Brexit’ Category

When the Leader Stumbles

November 18, 2017

“The US is in the middle of a political meltdown, unable to manage a domestic agenda or a coherent foreign policy. The White House is in turmoil; congress is paralyzed; and the world is looking on in astonishment and dread.” (Jeffrey Sachs, 2017)

 

Trump manages to capture the headlines on almost a daily basis. Future readers will wonder what important news items did not get covered as Trump feeds the media raw meat, and the public eagerly devours it, partly because it tastes so good. The President has the knack for drawing attention to some new issue especially when the questioning on others gets too uncomfortable. His information sources appear to be cable news channels and a coterie of close advisers who themselves have had little experience of governing, although some, as military leaders, may have had impressive careers. As the days pass, the hope is that these don’t get fed up and decide to leave early, although in many countries the citizens shudder when the generals take over.

 

It will be interesting to see who was offered senior positions in the Trump administration and refused, who accepted jobs and their respective qualifications. It seems clear that senior levels of the US federal bureaucracy are being weakened by a failure to make appointments and the selection of poorly qualified people.

 

Canada’s proximity to the US is seen by most Canadians as offering enormous economic benefits. Arch nationalists may disagree, but many countries, at least in the past, would have eagerly swapped places with Canada in order to have ease of access to US capital and other markets. Now our neighbor is a flailing (failing?) nation with the attributes described by Jeffery Sachs.

 

In today’s world there are trained suicide bombers returning from the Middle East, others home-grown who never leave home and can learn details of their trade from the internet. Drones can be purchased from Costco and toy stores; trucks are available to rent. It is surprising that terrorists have not struck more soft targets like stadiums, bus and train stations and airports.

 

Managing these situations requires cooperation and trust between governments. Unfortunately, this is not what is happening as turmoil mounts in the US with isolationist forces on the rise, while the threats require international cooperation. Similar populist pressures advocating isolationism are growing in Europe both with Brexit and in individual countries. There are no easy solutions to the issues that give rise to these pressures, but it would be nice to know that mature grown-ups are trying to manage them. US observers tell us this is now not the case.

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Brexit and all that (2)

July 6, 2016

What would the reaction have been if the UK vote had been 52/48 in favour of staying in the EU? Almost half the UK population would still have wanted to leave and would have continued to lobby for such an outcome. The message seems to be that there is extensive dissatisfaction with the status quo, as there is in the US for different but related reasons. But the historical and geographical circumstances differ.

Think back to 1945 and the end of WW2. For at least the next 35 years there was a period of global prosperity with rising per capita income reasonably distributed in developed, and in an increasing number of developing countries, as well as in countries ravaged during the war. This postwar fiscal stimulus prevented a return to the dirty thirties.

Politically, the postwar period contained a number of regional wars, Algeria, Korea, Malaya and Vietnam being examples, while colonies gained independence in Africa and Asia. The Soviet and Chinese empires remained mired in their communist molds, each of which was broken but with differing outcomes. China has since experienced rapid economic growth with an economy promoting exports of manufactured goods, while Russia has depended on export earnings from energy and other natural resources. The politics of the two communist systems differ.

The next 35 years, say since 1980, saw major technological change especially  the introduction of computers and the internet affecting many industries such as communications, transportation and manufacturing as well as resource based industries. Around 2008 there was a global recession with the slowdown affecting countries, industries and occupations differently. While Gross Domestic Product grew in most countries, it did so unevenly,  in that some citizens  made a great deal of money, while many saw their real incomes either stagnate or shrink, leading to dissatisfaction and the general malaise found in both Europe and North America. Supporters of Trump and Sanders in the US, and those unhappy with the EU are a reflection of these events. Immigration and the crossborder flow of refugees and displaced persons are other factors affecting both areas in ways peculiar to their locations.

Brexit has understandably forced attention on conditions in Western Europe. Meanwhile the rest of the world has not stood still. Islamic terrorism in the Middle East and parts of Africa, Chinese naval actions in the South China Sea, Russian moves in eastern Europe, and the nuclear factor in countries like North Korea, Iran and Pakistan are also cause for concern. The list of political/economic factors could easily be lengthened, one of which is cyber-terrorism (for a future posing)..

A summary of these issues illustrates the context within which Brexit is taking place in a domestic and international setting. If the vote had been no, the context would have changed very little, with the same set of dissatisfactions remaining. For a fuller listing of these see the web report by Maudlin Economic, posting for July 2nd, 2016.

I have no idea what will happen. There are too many factors at play. It easier to forecast the result of a World Cup soccer game, a Wimbledon tennis match, the Tour de France, or even a chess game than it is to assess how world events will evolve.

In the UK, I will watch how the political parties and parts of the country respond, and how other European countries react to the British vote and what follows. It already seems that the EU Council of Ministers, if not the EU Commission made up of officials, recognize that something needs to be done. The fallout from the US November election is even more difficult to forecast.