Friday, June 24, 2016

Shocking Brexit Result A Huge Blow For Anglo-American Capitalism


British voters' decision to leave the European Union will have an enormous impact on the global economy for years to come. I expect there will be a number of losers as a result. I think Britain eventually will rue the day it decided to leave the EU. And I think the U.S. will also suffer as a result of this momentous vote.

But in the long run, the biggest loser is the entire system of Anglo-American capitalism.

I always thought that the British got a much better deal than they ever fully realized from the EU. The fact is, a lot of the hysterical scare stories about the EU (often peddled in the Tory-leaning tabloid media) were often exaggerated, or downright false. What many ordinary Britons often failed to grasp was that Britain actually got a pretty deal from the EU over the years. It enjoyed all the advantages of being in the world's largest trading block---plus, it enjoyed special accommodations from the EU for its finance sector (a key and crucial component of the U.K. economy).

Now, those special accommodations have gone up in smoke. I'd suspect that, as a result, a lot of lucrative financial activity is going to migrate to cities like Paris and Frankfurt. London will inevitably be the loser.

A second big loser in the aftermath of Brexit is the U.S. It's not for nothing that President Obama pressured Britain to not leave the EU. Britain has long been a big advocate of the very sort of unbridled free market capitalism that the U.S. favors. Now, the U.S. no longer has Britain to advance its interests in the EU. This is a hugely significant story which I feel many commentators have not fully grasped.

Although it may not be immediately apparent, the biggest loser of Brexit is the whole system of Anglo-American capitalism. The fact is, many EU nations never really felt comfortable with the whole free-wheeling, winner-take-all, screw-the-poor, dog-eat-dog Anglo-American capitalist model. The French have derisively referred to "Anglo-Saxon capitalism" over the years. The French, along with the Germans and Italians (and most of the rest of the EU), prefer a "mixed economy" system that has elements of capitalism and socialism. It's true that some elements of this model exist in Britain, and even the U.S.---but it is in fact vastly more advanced in continental Europe.

Until Brexit, Britain was a steady and firm advocate of Anglo-American capitalism within the EU. Now that Britain is out, the EU will almost certainly move further away from the model of Anglo-American capitalism that has been hugely influential since it emerged with the Chicago school of economics in the 1970s.

I've never been a fan of the whole unregulated, dog-eat-dog model of capitalism that has dominated the economies of the U.S. and U.K. in recent decades. I've always thought the continental European model was preferable.

With Britain out, the EU will now be free to go its own way on economic policy. The world's largest economic trading block will no longer have a member state pushing for yet more deregulation and less taxes (and other hearty servings of Thatcher/Reagan medicine). It's hard to see this development as anything other than a huge setback for Anglo-American capitalism. And the mixed-economy European model (which has never really gotten much credit for its successes from the sort of free market "experts" that dominate the economics field) will now be free to develop on its own. It'll be interesting to see what results from this.

Maybe, just maybe, our corporate media and our elites will eventually be forced to acknowledge that the European mixed-economy model (while not perfect) is actually a much better system for coping with the challenges of the modern world than the unregulated Anglo-American model. In recent decades, the latter has resulted only in the enrichment of a tiny elite, while the middle class has shriveled and the ranks of the poor have soared. It's an unfair, crappy system that has failed and deserves to be tossed into the dustbin of history. Brexit is a huge dagger through its heart.


Marc McDonald said...

Hi Ed, thanks for the video. But I must say, I think these cocky "Leave" Brits will come to rue the day they backed exiting the EU. Britain actually had a good deal with the EU. They've screwed it up now. They're going to have all the disadvantages of being outside of the EU and none of the advantages.
London is going to see a lot of its prime finance jobs migrate to the likes of Paris and Frankfurt in the coming years. In fact, I'm sure the finance sectors of those cities (which have long envied London for its finance industry) are quietly celebrating today, because they know they stand to gain from Brexit.
By the way, the Brexit vote means that Scotland is going to go its own way. Scotland wants its independence and it wants to remain part of the EU. Any Brit who doesn't see this is deluding themselves. The U.K. is no more. For that reason alone, its clear that the Brexit vote is an enormous fiasco for the U.K.

AltandMain said...

A few more thoughts too about the Supreme Court:

It is not nearly as cut and dried as one might think.

Clinton is likely to nominate a very corporate Justice as well.

Marc McDonald said...

Hi AltandMain, thanks for your comment and for those links. You make some good points.
>>Clinton is likely to nominate a very corporate Justice as well.
Yes, actually, I'm sure she would. Clinton is very pro-corporate. Corporate America had record profits under her husband (and I'm sure that trend will continue under a Hillary presidency).
Still, just to play devil's advocate here: I would trust her Supreme Court picks over those of Trump.
Although Hillary is hardly a progressive, I do think that deep down, she'd like to see the end of Citizens United. Or keeping (and building upon) Obamacare. Or some action on gun legislation. If the GOP has the chance, they'll put all these issues out of reach for a generation to come.