Brexit and Trexit

By Mel Watkins | 2016-10-01 12:00:00


Globalization is a mighty force for good—for putting more food on the table, to give it its due—and for bad, truly bad, like the fear and loathing of the Other, even the whiff of fascism, in Europe before and now after Brexit—and in the air in Trump’s America.

Can we really blame globalization for these bad things? Consider that great era of globalization in the nineteenth century when Britain’s pioneering industrialization spread to North America and Europe, raising living standards.

But how, to everyone’s great surprise, did it end? With the First World War and the utter collapse of the global economy after the financial crash of 1929, from which came, like falling dominos, fascism in Italy, Germany, Japan and the Second World War. We can read about all that in Karl Polanyi’s The Great Transformation; it should be on the reading list of the annual Davos economic summit where today’s great achievers assemble to sing their own praises and pat their own backs.

For Polanyi, it was the pursuit of the utopian self-regulating market that imploded into the real world dystopia. Of course, history never repeats itself, but neo-liberalism, with austerity for the many and gluttony for the few, became the new utopia.

And there was that financial crisis in 2008, which wrought havoc in America, and from which we emerged with not a single reform that would rule out its recurrence.

And, over the decades, the European Union had been created as a monument to economic integration on the road to fuller globalization. Except that it was manifestly undemocratic, a technocratic delight, committed to austerity, prepared to crush smaller peoples such as the Greeks—who, let it be noted, rejected Grexit only to watch their young people, seeing no future in Greece, exit in droves, taking the future of Greece with them.

Brexit has driven a stake into the heart of integration. The new narrative is disintegration. At the moment it would seem that only the far right has much of a feel for this. Which is truly scary.

David Cameron’s right-wing conservative government unapologetically practiced austerity and continued to do so in the run-up to Brexit, to the detriment of many of its citizens. These “losers” took out their vengeance via Brexit, but this cannot excuse their embrace of far right racist populism. It does, however, pose the difficult question: What alternative did they have? (At the age of 84, born and raised in small-town Ontario where completing high school was accomplishment enough, with my ancestors all from England’s pro-Brexit north country, I resent the way that my ilk in England, over 50 and uneducated, are given the back of the hand by their “betters” there and here; we are the stooped and the stupid, the aged within what has, in its extreme, come to be called in America “white trash.”)

The best that Labour, the party of the left, was apparently able to do was for its leaders to half-heartedly support the EU and, after Brexit won, for it to be rent asunder. It was de facto impeached by angered EU supporters within its caucus. With politics so polarized, the undeserving right clung to power and the left ate itself up.

As for myself, for the record, I would have voted to Remain because of my fear of letting loose the bad. That danger weighs more heavily in my mind than the economic benefits alleged to flow automatically from size, from economies of scale.

My case for not voting for Brexit only increased after it won, when here in Canada two senior members of Harper’s cabinet, Jason Kenney and Tony Clement—who happens to be, as a cottager, the MP from my home terrain of Parry Sound-Muskoka —tweeted their delight with the outcome. Kenney is seeking the leadership of the Alberta Conservatives in the hope of then merging with the further right Wildrose party in order to get rid of the NDP government. Should we now be fearing Albrexit? It boggles the mind how those who supported Harper’s neo-liberal Canadian-style corporate globalization project can so artlessly segue into its apparent opposite.

Is there a good lesson from Brexit? The mainstream media here in Canada have been replete with paeans of pent-up praise for trade agreements, sometimes even alleging that saying No to a trade agreement is saying No to trade. (Let me say for the record that I personally am all in favour of earning the foreign exchange necessary to buy the bananas I love to eat.)

No Canadian prime minister in modern times has been able to resist the pursuit of any and all trade agreements and Justin Trudeau will be no exception. But they are getting harder to come by. As well as the Law of Comparative Advantage, maybe there’s a special kind of Law of Diminishing Returns that leaves slight pickings—corporations excepted—from yet another trade agreement. It is certainly possible—let me guess, and hope, probable—that neither the Trans Pacific Partnership (TPP) nor the mammoth trade deal of Canada with Europe, the Comprehensive Economic and Trade Agreement (CETA), will survive the shocks of Obama leaving the White House and Brexit.

At some point we may have to find some other way—in that groovy new lingo—to grow the economy. In fact, notwithstanding the trade agreements we’ve signed, our economy is not doing all that well. And the big one, NAFTA, after all these years gets only 25 percent approval from Canadians. Canadian elites take note: the unwashed may get you yet. (I had no more than written this when I received, as an alumnus, the latest copy of U of T News with the headline “U of T experts call Brexit ‘a disaster’” Oh to be an expert, not to be confused with the people who have cast their winning democratic vote!)

It’s been easy to imagine that the EU was a model on the road to global governance. It was, in effect, what I was taught years ago as a graduate student in economics at MIT. We should now know better.

Let us hope that building locally and democratically, from the ground up— what England should now do—is embraced as the lesson learned from Brexit. It won’t be easy. It’s just essential.


Trexit. You read it first here on the good-enough margin of empire. Tr is for Trump. Rhymes with Brexit. Occurring at the same time, with an ocean in between, there has to be something in common.

Brexit is about Britain leaving the EU. Trexit is about the US leaving the present NAFTA, should Trump become president. He says he will “totally renegotiate” under the threat of an American withdrawal otherwise.

That’s only one of a trillion things Trump would do but it is, as Trump would say “believe me, absolutely got to happen.” His reasons are all about Mexico, and we, Canada, are simply collateral damage.

A little history helps. In 1987 the US and Canada signed a Free Trade Agreement (FTA) that came into effect January 1 1989. We, in a fit of foolishness, thought we’d signed a one-on-one deal that gave us special access to the American market. But the ink was no more than dry than the US began free trade negotiations with Mexico. We dragged our feet in getting involved but, predictably, to no avail, and the FTA segued into the North American Free Trade Agreement which came into force January 1 1994.

The US and Mexico have, of course, a common border which the American cavalry moved south in the nineteenth century, a fact not to be mentioned in polite company. While the US was concerned about trade, it was also very much concerned about cross-border migration. It wanted to move factories across the border to Mexico where wages were lower and then export back to the American market. That was bad enough for American workers. It broke the post-World War II consensus where American workers, unionized, earned a high enough wage to buy the goods they themselves produced.

Ford vs. Wal-Mart

Political economists had labelled this Fordism, because Henry Ford himself introduced a high enough wage for his workers that they could buy his cars. Fordism was replaced by Walmartization: the high wage went out the window, as did your job, to be replaced by cheaper goods for you to buy, if you could afford them.

The bill of goods that the US government sold their citizens with industrial jobs was yet more devious. It simply assumed, implied, that as jobs were created in Mexico, this would lessen Mexican migration to the US. In fact, jobs were created but were offset by more Mexicans leaving agriculture and looking for jobs in industry.

Economic historians, who were not consulted, would have shown historical evidence that, as an economy industrialized and agriculture mechanized, the exodus from agriculture increased too rapidly to be absorbed by industrialization, so that emigration increased rather than decreased.

That was, uniformly, the European historical experience. However, the descendants of those who came to America from an industrializing Europe have no sympathy for those from today`s industrializing countries, notably Mexico, now doing the same.

NAFTA was a disaster foretold, economically and politically. Recall that in the 1992 US presidential election NAFTA was a major issue. Ross Perot (like Donald Trump today, a businessman from outside the politician’s world) took on Bush the First and Clinton the First and, predicting a “giant sucking sound” from American jobs moving to Mexico, got an impressive 19 percent of the vote, almost 1 in 5.

Clinton as candidate claimed he was opposed to the trade deal and would renegotiate it, as did Chretien who had become prime minister of Canada. Both then added cosmetic clauses on labour rights and the environment and signed on, thereby, in the American case, where adding Mexico made a big difference, further undermining the credibility of politicians. The smirks of yesterday haunt us still.

Enter, from far right field, Trump. He makes Perot look sane—which he was, though clearly a man from the right. As the saying goes, second time farce. And farce is a force for the bad in politics—for bad, very bad, the worse and possibly the worst.

Let no one pretend that Trexit is a bolt from the blue. Grievances have fermented and become toxic. From the beginning of his campaign in the Republican primaries, Trump has called Mexicans “rapists” and, in a classic off-the-wall statement, said he will build a “wall” to keep them out, and will deport millions already in the US, including children born in the land of liberty.

Such sick and crazy statements have understandably led the likes of the American scholar Cornel West to call Trump a “neo-fascist catastrophe.” Incidentally, West merely labels Clinton the Second a “neo-liberal disaster.” God, apparently, blesses America in His own mysterious way.

Canadian elites, including the prime minister, like Clinton the Second, just don’t get any of this. Should Trump win, we can count on Canada to ask to return to the FTA while Mexico—“sorry about that”—is hung out to dry. Maybe we’ll settle for Trump’s promise to resurrect the Keystone pipeline, which hangs the whole world out to dry.

Mel Watkins is a retired professor of political economy, University of Toronto.

Peace Magazine Oct-Dec 2016

Peace Magazine Oct-Dec 2016, page 16. Some rights reserved.

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