What Brexit Signals About the U.S. Economy, Markets and Politics
first published in The Street | Jun 27, 2016
In reality, no one running for president has the solutions, just as there are few solutions being offered by the established parties in the U.K. The old-style socialism and high taxation of a Vermont Sen. Bernie Sanders has been tried and tested many times in the past and always shown to be highly destructive of growth.
Donald Trump is merely a simple and probably dangerous demagogue who very few people think has serious political or economic views or insights. Hillary Clinton is herself the establishment. The scion of what is effectively a dynastic U.S. family, she lacks the charisma of her husband and will just hold on timidly to the status quo.
This is the reason that the work of, for example Thomas Piketty is ultimately so unhelpful — because while he has identified increased wealth inequality in the West, he has totally unoriginal old-style high-tax socialist solutions. Meanwhile, unfettered libertarian capitalism (a la Rand Paul) creates these wealth inequalities in the first place and leads to capitalism imploding on itself eventually.
Meanwhile, the media stir the pot, with partisan reporting that reduces political debate to its lowest common denominator. The media also feed on beating up on those who run for high office, so why should anyone of any real talent do it anymore?
The truth is that a radically new political economics is needed for this technological age, which is genuinely a second industrial revolution. Manufacturing is going the way that agriculture did many years ago, with intelligent machines now being used extensively.
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In the long term it isn’t even an issue of losing manufacturing to the emerging markets. We will just never globally need large portions of our population to be involved in the manufacturing process, given the extraordinary developments in modern technology and robotics.
This ultimately leads virtually the entire population left in services industries of some kind, with a few wealthy elite owning the technology and intellectual property that will power all the systems. It is how we deal with the political economics of this new world that needs to be addressed by our politicians and economists.
There may indeed be solutions and fine new patterns of economic life, but few politicians are addressing those now. The “masses” are, therefore, as fed up with the liberal establishment on the East and West Coasts as they as with Wall Street fat cats.
The very ideas of the left and the right may need to be abandoned or radically altered as they themselves were just products of the industrial revolution.
And so while, for now, our politicians can provide no new answers, the frustration grows, certainly in much of the Organisation for Economic Co-operation and Development, among those who are alienated by all the economic entropy. As the frustration grows, many people just want the fall of the establishment, in whatever form.
So in the U.K. they vote for the Brexit, a massive kick in the teeth to the London elite. Meanwhile, in Greece there is support for the extreme left wing, Tsipras, while in France it is growing support for the extreme right wing, Le Pen.
And likewise in the U.S. there have been a uniquely high level of radical presidential nominees this year: Ted Cruz, Sanders and Trump.
It is fundamentally all the same phenomena: social and political dystopia caused by radical economic entropy. And it won’t stop, and perhaps may get worse, until the Western world finds new ways to live with our fundamentally changed politico-economic circumstances.