June 24, 2016
A bit of an earthquake from the other side of the pond. Britain is out. At least that’s what they voted for. Voters in the United Kingdom decided to leave the European Union after 40 plus years of becoming increasingly enmeshed in the pseudo-United States of Europe.
The actual mechanism for leaving will take some time. Once the U.K. triggers Article 50, they have two years to negotiate their exit. They’ll need new trade agreements with the EU. They’ll be able to negotiate new ones on their own with other countries and trading blocks. That sort of thing takes time and often doesn’t go well. So far, the world markets aren’t excited.
Having assumed voters would choose to remain, the prospect of leaving wasn’t priced in. Stock markets fell, with money rushing to gold and U.S. T-Bills. The dollar is stronger today. The British Pound is weaker, having dropped to a 30-year low.
While voters in England and Wales voted in favor of leaving, those in Scotland and Northern Ireland wanted to remain. Just a couple years ago, Scotland narrowly decided to continue as part of the U.K. Now they may schedule another referendum to enable them to exit Britain so they can re-join Europe. Northern Ireland may wish to leave the British and merge with Ireland to the same end.
For both, as long as they’re stuck being part of something larger, it may make more sense to take advantage of the larger European market. Beyond the British isles, nationalist parties in the Netherlands are pushing for a similar referendum to leave the Union. We won’t know for a bit if this was a one off, or the day Europe crumbled, though that won’t stop people from determining that now.
Speaking of which, prepare for several days, if not more of hearing about how Brexit means Donald Trump is more likely to win the presidency than we thought. Leave voters were older, paler, and disproportionally located in the British version of the Rust Belt. The remain side was younger, more likely in thriving large metro areas, and more ethnically diverse.
From a distance, it’s easy to reach the conclusion the Trump coalition beat the Obama coalition. For decades, we’ve seen parallels between British and American electoral results. The rise of Maragaret Thatcher presaged the Reagan Revolution. Triangulating Bill Clinton showed Third Way Tony Blair a path to power. The New Democrats and New Labour were awfully similar, and equally effective at the polls.
Take the Brexit results, add a little water, stir at boiling temperatures for 5 minutes and you have our November results. Not so fast. Trump could certainly win. But that was true 24 hours ago too. Hillary Clinton is a weak opponent. That’s the single most important factor and was true regardless of what happened in Britain.
Immigration is an issue in America. It was an issue in Britain, as freedom of movement rules allow immigrants into other EU countries to travel to the U.K. without needing a visa. Brussels can decide British immigration policy too. This clearly impacted some voters. A decline in well-paying manufacturing jobs over the previous several decades mattered too. Voters didn’t want European environmental and other regulations preventing them from working.
Labour Party leader Jeremy Corbyn was officially in favor of Remain, but campaigned very halfheartedly. It’s easy to see Bernie Sanders being equally lukewarm about the Clinton campaign this fall. Many older Labour voters chose Leave. We regularly hear about older registered Rust Belt Democrats, many of whom chose Sanders in the primaries, moving to Trump. Many Trump speeches now include a specific appeal to Bernie voters to join him.
The combination of these similarities and past history sure are convenient. There’s even something called the UKIP (United Kingdom Independence Party) which came into existence specifically to push for this outcome. Their platform and leader Nigel Farage are very Trumpy in their outlook. Picturing a Make Britain Great Again slogan isn’t hard.
You’ll also read/hear comparisons between Trump and Conservative MP, ex-London mayor, and leading candidate to succeed David Cameron (who announced his resignation effective no later than October this morning) as Prime Minister Boris Johnson. Boris is bombastic. He speaks his mind, and there’s a lot on it. He began his career in the media (as a journalist) and isn’t afraid to use it.
He’s not another Trump. He’s one part Winston Churchill, another part Newt Gingrich, with a dash of Michael Bloomberg (but none of his money.) Over the next few months, he’ll get more coverage over here and the vast differences between him and Trump will become quickly apparent, even if their detractors sometimes make similar claims.
The most important difference between the British outcome and our immediate future is the combination of Farage and Johnson. Pretend Trump got the nomination but had at least one important conservative figure campaigning very strongly in the same direction. Either a less guarded Paul Ryan, a more likeable Ted Cruz or a bolder/braver Marco Rubio. They wouldn’t need to use Trump’s language, but they would push his policy platform.
That’s a whole different story. If Republicans were able to effectively combine Trumpists and #NeverTrumpers, while a some Berners defected, it would be hard for Clinton to win. That’s basically what was required to win this vote, and it’s not easily replicated on our side of the Atlantic. We learned British voters don’t trust elites any more than Americans do, but our primary process already made this very clear.
The vanquishing of Cameron and end of his political career catches him and the Tory Party up to what already happened with the GOP. He was Jeb!ed. Elites in both parties pushed for Remain. A large block of Tory leave voters required Cameron to call the referendum. It was something he agreed to ahead of the last British election. He did it to unify his party ahead of that vote and paid for it now.
Just as Republicans in 2016 couldn’t hold the Reagan coalition together anymore, Cameron couldn’t keep enough Tory components together. Johnson offers an opportunity for British conservatives to do what Americans haven’t yet, and stitch things back up under new leadership. Again, think of a more marketable Cruz, or stronger Rubio, who could have done similarly here.
Trump just isn’t a direct enough analogy, even if he’s benefitting from some of the same forces. Speaking of which, Pandora’s Box is now open. Things will change noticeably between now and November. The world economy was already weak. If markets don’t regain confidence very soon, Brexit could tip Britain, Europe, and perhaps America into recession.
How do U.S. voters respond to uncertainty? Stock prices are likely to become more volatile over the next several weeks. We’ll hear stories about the EU coming completely undone. Other countries may well schedule exit votes. Does this push them to Trump, thinking American politicians can’t keep control of things, so might as well give The Donald a try? Or do they reach out to Clinton as an island of familiarity?
Who knows. Trump has shown no ability to stay consistently on message. Clinton is heavily flawed. He’s facing a fraud trial. She’s still being investigated by the FBI. None of that has changed a bit. The world has a new, giant series of variables, but Americans have the same presidential choices as yesterday. Brexit matters lots, but didn’t tell us much about Trump’s chances.