Umair Haque wrote . . . . . . . . .
Something cosmically, tragically funny happened today. Do you know who Nigel Farage is? He plays a character, also called “Nigel Farage.” That character is a sober gentleman of the British Establishment. The kind who wears finely tailored suits and pocket squares. And “Nigel Farage” — the character, the man, take your pick — was almost single-handedly responsible for what turned out to be one of the greatest calamities in modern history: Brexit.
Today, Nigel got up on a stage, and said: “Brexit has failed.” Shrug. Hey, who would’ve think? Maybe you see the painful irony. You could almost hear the rusty gears of thought clunking into motion. This comes after years of lampooning Europeans, immigrants, refugees — everyone, really — as not British enough, in order to basically set up the Big Lies of Brexit, the slogans that would incinerate a nation’s rational mentation. We’re going to “take back control!” “Britain First!” “Brexit means Brexit! (Whatever that one even means.) To basically make poor, bewildered Brits, barraged by this arsenal of mendacity, believe that fantastic illogic that…giving up the right to live and work in Europe…was going to make their lives…somehow…better
When Britain’s top Brexiter admits that Brexit’s a failure…LOL. What now?
Let me give you an analogy. A metaphor. You go to a doctor. A quack. He gives you pills. You take them for a while. Instead of feeling better, you feel worse, much worse. The quack doctor says: so sorry, my treatment failed. Meanwhile, it turns out, those pills gave you cancer. This is where Britain is now.
There are a hardy, foolish few who still think Brexit was a Great Idea. But they’re dwindling by the day. Because, well, Britain’s in tatters. Britain’s still not ready to give an ounce of credit to figures who were critics of Brexit — nope, no media coverage for us. Still on the blacklist. But the average person’s cluing into the sheer destruction of Brexit because, well, the state of Britain is disastrous, and I don’t say that lightly.
Do you know what happens if you call the doctor in Britain — a real one, not Doctor Nigel? You’ll get a message, odds are, saying “no appointments are available.” LOL. Now what? You…just…keep calling. And maybe, if you’re really, really lucky…you’ll get one. In a month. Three. Six.
Brexit destroyed Britain’s real crown jewels: the NHS, the BBC, and membership in the EU. And each of those acts of wanton, mind-boggling self-ruin are going to have a price. That price is going to take generations to pay. This is the part that nobody in Britain wants to discuss, because, well, we critics are still on that pesky — whoops, better not say it — blacklist, persona non grata, perhaps as unwelcome as the “boat people” its government is currently blaming for all of the country’s problems.
Brexit took a few years. But its consequences are going to last generations. Britain is now on a path, set firmly in stone. Decline is far too kind a word. Wreckage is probably more appropriate, and let me explain to you why, in detail, so that I’m not accused of being a “Scaremonger,” even though Nigel’s eating his words, and all of those coming from critics of nationalist manias like Brexit, like mine, have proven to be all too painfully true.
Let’s think of the NHS for a second — and use it as an example of all of Britain’s public services, from trains to waterways. They’re all in shocking states of disrepair. What happens now? Britain’s economy is now smaller. It’s going to keep shrinking until a new post-Brexit equilbrium is reached. That’s going to take a decade, and on current estimates, the economy’s going to be maybe 20–30% smaller than it would’ve been without Brexit. Or get this:
The Government’s economic watchdog, the Office for Budget Responsibility, has said that the post-Brexit trading deal reached with the EU will reduce Britain’s long-run productivity by some four per cent, compared with if the UK had remained in the bloc.
It added that both exports and imports will be around 15 per cent lower in the long run than if Britain had stayed in the EU.
Britain’s economy is flatlining and shows no signs of any significant pick-up.
What do smaller economies not get to have? Nice things! Like functioning public services. Like cutting edge healthcare systems, next-generation infrastructure, high speed rail — Britain’s sole project for that is now delayed until, LOL, 2045 or so, because there’s no money. Not a coincidence. A relationship. Proof. An example of exactly the relationship at work here, that all us hated “scaremongers” warned about: a smaller economy was going to hurt people.
By costing them a functioning social contract. Now that Britain’s going to get poorer, for at least a decade or so, until at last the contraction stops, and it’s a withered shell of what it could have been — what sort of social contract’s left? Not much of one, is the answer to that question. A post-Brexit Britain can’t really afford a proper NHS, at least not the way it used to be. High speed rail? Nope. Next-generation infrastructure of the sort, that, for example, Biden’s investing colossal sums in? Not that, either, because, well, that’s what a shrunken economy means. It’s for this reason that we critics used to warn: Brexit is austerity by any other name.
It’s already coming true. But the scale and scope of the problem is vastly underestimated. Even if the next election is won, thankfully, by Labour — Britain’s conservatives having been in power four times as long as Trump — Labour’s hands are going to be tied. Where is it going to find the money for the kind of social contract that a pre-Brexit Britain once proudly enjoyed? With an NHS that was the envy of the world? With then world-leading infrastructure? That money doesn’t exist in a shrunken economy.
And so living standards have to fall to levels lower than before Brexit. That’s what’s happening now: living standards are cratering at the fastest rate in recorded history. LOL. That’s not some kind of coincidence. It’s cause and effect. Living standards have to fall in tandem with a shrinking economy, and all those have to settle somewhere lower, much lower, than before Brexit ever happened. That’s what calamity means in a modern context: undoing decades of progress, in one mania, one sudden explosion, one tantrum — that costs you your future.
So: problem number one. The economy’s shrinking, and it’s going to keep shrinking, and that has real consequences, such as a a catastrophic plunge to much lower living standards. That brings me to problem number two. How do you undo this? Well, in a normal country, you’d go out and raise investment, and put that to good use. You’d go to other countries, global markets, etcetera, and raise funds to put towards a better social contract — and increased trade would play the dominant role.
But Britain can’t do that, for a very simple reason. Nobody trusts it anymore. See how none of the “trade deals” — the very ones that figures like Doctor Nigel — promised would happen overnight, as the world beat a path, screaming to outrun itself, to Britain’s newly opened door…have materialized? Not even America’s interested, and that’s a sign to the rest of the world, because what America says tends to go. You can’t deal with these people. This country’s lost its mind. We can’t do business with a country we can’t trust. And these guys? Not only did they renege on the EU, then they went even more bonkers. Instead of getting their act together, they swung so hard to the right that there’s now a Nazi — sorry, I mean Nat-C — conference in London, which the government’s a part of.
It’s not just the economy — Britain’s reputation is also in tatters. And that carries a heavy price, too.
Would you trust Britain? If you were an…international investor? The PM or President of another country? LOL. Anyone — and I mean anyone — with even the vaguest modicum of common sense would be not just cautious about dealing with a country that acts in bad faith, but profoundly uneasy about it. Their advisors would warn them off. And then would come the real deal-killer. You’d be seen doing business with someone of a dubious reputation, and that’d affect yours. For good reason, too. What if Britain reneged on its deal with you, people would ask — how would you make good with us?
Britain now carries a burden it didn’t used to have before: reputational risk. Of the kind we don’t normally see — ever — in advanced, wealthy (formerly, anyways) societies. Normally, reputational risk is something that attaches to “emerging markets” — nations that are trying to develop, but institutions and investors and other nations are still a little unsure of. Because of course undoing centuries of stagnation in a decade isn’t easy, and people will ask: is this for good, for real, are your institutions robust enough, are your people really interested in democracy, is your economy stable enough? It’s a long set of questions, a demanding one, and that’s why losing a reputation is a big deal. To lose your good name, in this world, is a colossal, tremendous mistake — but that’s what Britain did.
That’s why the only “trade deals” haven’t materialized. The only ones it’s signed, tellingly, are with, really, former colonies, who are doing it out of a sense of politeness, more than anything else, trying to lend a helping hand, perhaps, to a drunk, crazy uncle. But the rest of the world? When it looks at Britain? It sees a nation that poured gasoline all over a sterling reputation, and set it alight, hooting and hollering in glee. And then it asks itself: those guys want to do…business with us? Are they crazy? Are we?
So tomorrow’s governments aren’t going to be able what advanced nations usually do: find investment. Without that investment, there’s going to be little to no way left to really stanch the bleeding of a shrinking economy and falling living standards, because the social contract will have to reduced to a level that’s associated with poorer countries. What rescues the NHS? Nothing does. It’s finished, more or less, now — for all intents and purposes, when you can’t get a doctor’s appointment, it’s done. It is dying as an institution, as a system, slowly, and that is an example and illustration of the dynamics at play here. But the idea that it will or can magically be fixed is a pipe dream: a country with such a shattered reputation that it’s now effectively a pariah isn’t going to be able to find the investment to restore its social contract to what it once used to be. Brexit means austerity by any other name: perma-austerity.
“Rejoining” the EU isn’t really a goer, either, sorry to have to tell you. Not only will no party really take it on, put yourself in the EU’s shoes. Would you want Britain back? For what? What would it bring to the table now? A diminished economy, a politics raging with fanaticism, and a people who not so long ago were happy to insult and scapegoat you? Sure, in life, bygones should be bygones. But in politics and international relations…they rarely are, and for good reason. Alliances and friendships take centuries to build. But ripping them up in acts of rage and hate takes moments, and when that happens, it speaks to and for the character and sense of both parties.
That brings me to problem number three. What did we critics used to warn of, most painfully, at least, for us? What was so insanely foolish about Brexit — to us economists — that it made us tear our hair out, like watching someone deliberately infect themselves with a terrible, wasting disease, just because an infomercial said so? Britain’s a net importer. Worse, it imports all the necessities of life, more or less, from food to energy to water-cleaning chemicals and so on. Britain once had easy access to all that from — of course — the EU. But now? Shortages are a way of life precisely because a net importer…suddenly…can’t find enough to import. LOL.
That, too, is going to have a shattering price, one which Britain still doesn’t really fully grasp. If the world doesn’t trust Britain — and you can see that’s the case — yet Britain needs to keep on importing basics…where does that leave it? In the midst of an inflationary shock that’s going to last a long, long time. Because what’s left to it is paying higher prices for diminished access to those very imports. Inflation’s a trend globally, of course, but it’s catastrophically bad in Britain, precisely because of all the above: this is what happens when a net importer blows up its relationships with an entire world.
What does inflation do? It makes central banks raise interest rates. What does that do? It costs people money. Everything from mortgages to credit card payments to car payments skyrocket, disproportionately. So people get poorer. Hard, rapidly, in ways they can’t quite understand a reason for.
Now. How do you solve all this? This is a generational problem. You can only really solve this problem by importing less, and exporting more — or you just accept falling living standards and skyrocketing prices for an era. But to reset your economy in those biggest of terms takes — again, wait for it — investment. You don’t suddenly magically become a net exporter.
Let’s take a simple example — there’s only one country that’s gone from poor to rich, really, ever. That’s South Korea. It did it by becoming a net exporter — today, Samsung and K-pop are household names. But that took decades of investment. Decades of careful thinking. A strategy about what to export, to whom, and why. It didn’t happen overnight, and it wasn’t a coincidence. See the point for Britain? It should make you shudder: because resetting an economy takes that long, decades, a lifetime, the consequences of Brexit are now a generational problem for Britain.
This is why British living standards are falling so fast. This triple whammy. Public services destroyed. Reputation in tatters. No investment to be found. No trade deals to be had. If Britain were a person, we’d call all this a poverty trap. You were a high flier once. Then, in a fit of rage, of hubris, you gleefully threw away your career, stained your reputation, made enemies of your friends…and…now what? Now you have to adapt. To a lower standard of living. You have to find some kind of new equilibrium.
Britain’s discovering Brexit was a mistake. Here and there. In drips and drabs. But it still hasn’t really grasped the scale of the castastrophe. Brexit set in motion a set of vicious cycles that will take generations to undo. The act of destruction lasted a year, two, five. But recovering it? That will be the work of a lifetime, for a country. Britain doesn’t understand that part. It still thinks that there’s a solution to be found, a magic bullet, some kind of fairy-tale answer to the wicked witch of Brexit. But there isn’t. Brexit means Brexit. Catastrophe means catastrophe. They happen in minutes, but their consequences last for decades. Sometimes, they last forever.
Source : Eudaimonia and Co
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