Brexit and the “Hunger Games”

The reasons for the Leave vote in the EU referendum have been characterised in many ways over the last 2 days – many of them highly unflattering.

A few days ago I wrote:

“What is worrying in political terms is the gap between the views of the metropolitan areas and the rest of the country. Polling appears to show that Vote Remain is largely a metropolitan view, together with Scotland and West Wales (two areas who would like to leave the UK or give more power to the EU over London). Those metropolitan areas are the primary beneficiaries of globalisation. Business is the other beneficiary and will continue to seek more common rules as it makes conducting a global business easier.”

I am struck by the parallel with the dystopian novels of the Hunger Games. For those of you not familiar with this, a metropolitan elite “The Capital” benefits from and consumes the production of the various districts whose raison d’etre is to produce different goods for the benefit of Panem. The rebellion involves the districts who are responsible for computers, fishing, transport, farming , forestry, mining, manufacturing and textiles. The gap between the lifestyle of the Capital and the serving districts is enormous.

The areas of the UK which voted to Leave comprised just these areas with the exception of Scotland and Northern Ireland.

Some analysis has suggested that the resentment which led to this vote was a short term response to austerity since 2009, I think this isn’t borne out by what people have said. This was about resentments which have building up since the 90s with the consequences of globalisation, overlaid by the consequences of the expansion of the EU.

These resentments were exacerbated in the UK by the issue of freedom of movement and the significant level of immigration since enlargement of the EU in 2004. Take the example of Wisbech in Cambridgeshire. Since that date the eastern European population in the town has increased to 10,000 of the population of 30,000 –in a period of 12 years. Before we criticise these people, how would we react if that happened in our community? People complained about their wages being held down because of the greater supply of labour and being asked to work (self employed ) at £3 per hour – again how would we feel?  I recommend John Harris’s article in The Guardian on 24 June “If you’ve got money ,you vote in..if you haven’t got money, you vote out.”

Other people in other locations also focussed on “identity” which is understandable given the size and speed of these changes. People revolt not because they aspire to something but when they believe something is being taken away from them and this was a peaceful British revolt.

The leaders of EU governments brought the result of this  vote on themselves. By insisting on the sacramount  nature of freedom of movement they fed the concerns of voters affected by that freedom of movement  to vote leave – if they had offered an emergency brake instead of the minor measures in February 2016 who knows what the result would have been. It is another indication of how out of touch political elites are with the consequences of their actions.

This was clear in the UK with the position of the Labour Party which is clearly out of line with its traditional supporters outside London. Polls suggest that it may lose 1/3 of its support in the next elections. With the loss of Scotland in 2015, it looks like a party which will decline unless it addresses the contradiction at its heart of trying to represent a metropolitan liberal elite viewpoint and a traditional working class constituency who have very different views of the consequences of globalisation and freedom of movement. Who those traditional Labour voters will turn to is a key question? It is quite possible that UKIP will win some of that support.

The vote was about the EU but it also was fed by fears about globalisation. Other voters elsewhere will be emboldened by this. Political and business elites will have to frame a softer version of globalisation or risk the deconstruction of the current infrastructure of globalisation. That may be difficult to understand  when one lives in a political or business bubble, but it has to happen. That deconstruction will lead to some changes in taxation and its international framework . The role of experts will be challenged if the Armageddon like effects of Brexit which were forecast, do not materialise. Multilateral organisations will be trusted less.

Interestingly, leaving the EU will allow the UK to review its tax policy with Europe and in particular cross border flows with Ireland, Luxembourg and the Netherlands which are the building blocks of US multinational tax planning into Europe. Leaving could help address aggressive tax planning from a UK perspective.

 

The gulf between those who want a borderless world and those whose concern is local community is enormous, the UK didn’t revolt against “the Capital” with guns on Thursday, but it did revolt. Finding a concensus of how to move forward will be a difficult process.

© Chris Lenon and www.green-tax.co.uk  2014-2016. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Chris Lenon and www.green-tax.co.uk with appropriate and specific direction to the original content.

 

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