Both Brexit and Donald Trump are examples of a gross misunderstanding of the neoliberal, globalized world we live in, and they will only make things worse for the common man.
Brexit, or the British exit from European Union, is emblematic of an anti-establishment trend whose American counterpart is led by presumptive Republican presidential nominee Donald Trump.
Trump, who was engaging in the struggles of the common man by making a visit to his Scottish golf courses, made a statement in support of Brexit on June 24, the day after the referendum, stating that America would be next. “[We] will have the chance to reject today’s rule by the global elite, and to embrace real change that delivers a government of, by and for the people,” he said.
This statement exemplifies Trump’s ability to co-opt the anti-establishment sentiment growing in the West and turn it into a bigoted campaign for isolationism. The same process was carried out by Brexit’s Leave campaign, which redirected British anti-elite sentiment from its rightful targets: multinational corporations. Instead, it focused enmity toward the European Union and the supposed German hegemony over British immigration policy. According to the Leave campaign, the EU was forcing them to accept too many migrants into their country, and those migrants were taking their jobs and diluting their culture. Likewise, in the U.S., Trump asserts that the Democrats are accepting too many Mexicans who take American jobs and too many Muslims who are antithetical to American culture.
Trump has built a campaign off of trade tariffs, building a wall against Mexican immigration and closing the borders to Muslims. But it is not trade or immigration policy that will improve the plight of the common worker. In fact, the immediate consensus on the economic impact of Brexit – the European equivalent of Trump’s policies put into action – is overwhelmingly negative.
Instead of attempting to dismantle institutions of international cooperation like the EU in favor of jingoistic, nationalistic self-determination, we should be focusing on the real destroyers of our democracy and national sovereignty: multinational corporations, financial deregulation and wealth inequality. The success of Trump’s isolationist ideology throughout the Western world is a result of the failure of Trump’s opposition to paint a vision of a better, brighter future that could be built out of the newly globalized world.
Yet a better, brighter future dependent on the globalization that Trump’s supporters so often loathe, and without the isolationism that they so often praise, is possible, and has been theorized by one of the outstanding economists of our time: Thomas Piketty. His plan, described in his best-selling book “Capital in the Twenty-First Century,” would create a global registry of financial assets and tax them from anywhere in the world, at a rate of 1 percent for fortunes between €1 million and €5 million and 2 percent for anything more than €5 million, in order to prevent tax evasion and regulate the international flow of capital. This plan would help control the excesses of capitalism better than any protectionist policy ever could.
Noam Chomsky perfectly illustrates why financial regulation, not trade or immigration policy, is one of the most important aspects of rebuilding democracy in the Western world.
Chomsky argues that investors and lenders can use their control of capital flows in order to hold countries’ economies hostage, through technical processes such as capital flight and attacks on currencies. They then use this leverage to influence policy makers away from policies they don’t like, which will by definition be those that benefit the common worker, such as welfare programs, but don’t improve profit margins or market access.
The French protests over the past months are a direct example of this in practice. Socialist President Francois Hollande was elected on a campaign of tax and financial reform. However after his first year in office the French upper class began moving their capital out of the country, an example of capital flight, in reaction to the proposed 75 percent tax rate on the very rich. As a result, Hollande dropped this idea and in fact has backpedaled further and further, reaching a peak this year with a proposed law reform that would “fluidify the labor market,” by making it easier for companies to fire employees. As a socialist, this policy is in direct contradiction to his political party, displaying how much influence the investors and lenders truly have.
Therefore, governments face what’s called a dual constituency – their own population and the economic elites, and the elites usually win. When multinational corporations can take a country’s economy hostage in the way described by Chomsky, it is mistaken to believe that a President Trump, with his isolationist policies, or Brexit, could effectively tackle this issue.
This is why Piketty’s plan is better able to improve the lives of working people. However, for it to work we would need more international cooperation, not less. For that reason the British public made a mistake in voting to exit the EU and we would be making a mistake if we voted Trump into the presidency. Jobs are being outsourced and median hourly earnings are stagnatingbecause of a lack of global cooperation in reigning in the negative impacts of globalization. Furthermore, in the modern slow-growth economies of today, inequality will continue to increase naturally if governments do not step in, as described in Piketty’s book. Yet Trump has so far suggested no real plans to tackle inequality. In fact he would do the opposite and instill tax breaks on the very rich.
Isolated countries can have, at best, only a very small influence on the global economy. Together, however, a new world of interconnected national political institutions can function as an effective counterweight to the status quo of free roaming capital.
To ensure that this new world becomes a reality we must not vote Trump into office in the same knee-jerk fashion with which Britain just left the EU. Many in the UK are already regretting their vote, which they cast in protest of their falling wages, rising unemployment, and dying influence on the world stage. Its economic fallout will have far-reaching consequences that will harm the average Brit far more than the controlled EU immigration ever could. Instead of trying to go back to a nonexistent, nostalgic past of a “Great America,” “Great United Kingdom,” “Great France,” and so on, we should be building a new world that is ready to effectively tackle the real challenges of the 21st century.