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Ireland's political and cultural magazine
5 8 July 2016
L
ast month, the UK referendum on membership
of the European Union posited a seemingly
simple question and delivered an obviously
complex outcome. The vote on June 23 came in
with a massive turnout of 71.8 percent, the
highest for any UK-wide vote since the 1992 general
election. In the end, England voted by a strong margin
of 6.8 percentage points in favour of
Leave, while Wales voted by 5 per-
centage points in favour. Scotland
opted by a 24-point margin for
Remain, and Northern Ireland voted
Remain by 11.6 percentage points.
Gibraltar voted 95.9 percent in favour
of Remain, best in the class, pro-EU.
Based on voter turnout-adjusted
figures, eight out of the ten largest
voting area across the UK posted
majority Leave vote, with London
(ranked number two in the total
number of voters participating) and
Scotland (ranked number eight)
being two exceptions.
The results were divisive. Widely
reported results from Lord Ashcroft’s Polls show that
only 27 percent of voters age 18-24 were in favour of
leaving the EU, with 38 percent and 48 percent Leave
support for 25-24 year olds and 35-44 year olds,
respectively.
In contrast, 56 percent of 45-54 year olds and 57 per-
cent of 55-64 year olds were pro-Leave. 60 percent of
those aged 65+ voted against the EU membership.
The problem with inter-
preting the above results is
that they are unadjusted for
turnout figures. Based on the
analysis of voting data, voter turn-
out strongly increased with age. According to the
Financial Times (FT):“The generational divide on Brexit
has been common knowledge
throughout the campaign, and is
apparent in the demographic data,
even if only weakly”.
The main factors driving voter
decisions were socio-economic:
education and occupation (with
higher educational attainment and
occupational position being the two
statistically strongest determi-
nants of propensity to vote
’Remain’); followed by the share of
people holding a passport. The
fourth factor was labour earnings.
As the FT put it: “Before the vote
several polls identified a common
finding: people intending to vote
Leave were much more likely than Remain voters to say
they felt Britain’s economy was either stagnant or in
decline”.
In simple terms, the Brexit vote reflects the relatively
more complex socio-economic divisions of the modern
UK as opposed to the commonly-touted Leave voters’
age-determined anti-immigration sentiments, xenopho-
bia and nationalism. The key forces shaping the anti-EU
Welcome to reality:
EU wasn’t serving
least well-off
Evidence proves increasing poverty
and immigrant economic threat
meant Brexit made sense for the
UK’s working class
Five out of seven
key shocks
between 2000 and
today are directly
linked to European-
wide policy choices
OPINION
by Constantin
Gurdgiev
INTERLOPER
BREXIT
July 2016 5 9
sentiment in the UK, as much as in other member
states of the EU, are rooted in the realities of the
modern economy: the post-Global Financial
Crisis status quo of income and wealth divi
-
sions, and the underlying evolution of the global
marketplace for labour and skills.
The voter characteristics that defined Leave
supporters, according to most economic litera-
ture, also determine earnings in the advanced
economies. Most importantly, education and
occupational choices drive two key earnings-
related risks: labour productivity and the degree
of worker substitutability by technology. In
simple terms: lower-educated and less-skilled
workers face more downward pressure on their
earnings, higher volatility of earnings, a lower
correlation between their own productivity and
their earnings and higher risk to their jobs from
automatisation, robotisation and technological
displacement. They are also more exposed to
direct competition from migrants.
Based on recent research from the Resolution
Foundation, published in February, it is clear UK
middle-class earnings have been effectively
stagnant since the early 2000s. This develop-
ment took place during the period of EU
enlargement, increased migration, and the push
towards political harmonisation, exacerbated
by the Global Financial Crisis and the Great
Recession. Over the same period, the EU was
shocked by the Euro-area sovereign debt crisis
and the subsequent external migration crisis.
Five out of seven key shocks between 2000 and
today are directly linked to European-wide
policiy choices.
This, in the words of the Resolution Founda-
tion analysts, fuelled the electorate’s
“disillusionment at the economic and political
status quo”.
Since 2002, over half of middle-class UK
households across the entire working-age popu-
lation witnessed “falling or flat living standards
[as] two-thirds of the growth in average working-
age income has been wiped out by rising
housing costs”. For the growing population of
renters, the decline in private incomes net of
housing costs was larger than increases in earn-
ings. Meanwhile, home-ownership has dropped
16 percentage points for Millennials, compared
to Generation-Xers, controlling for age. The bulk
of home-ownership decline took place in mid-
dle-income households, with ownership trends
relatively steady for the poorest and the wealthi-
est households.
In a way, the Brexit vote was symmetric with
voter tendencies across a number of countries.
In its annual report for 2016, Sweden’s Timbro
Institute documented the relentless rise of polit-
ical populism in Europe: “Never before have
populist parties had as strong support through-
out Europe as they do today. On average a fifth
of all European voters now vote for a left-wing or
right-wing populist party. The voter demand for
populism has increased steadily since the
millennium
shift all across
Europe”.
Which, of course, also reflects the dire lack of
resonant pragmatic leadership. After decades
of delegation of ethics and decision-making to
narrow groups or substrata of technocrats - a
process embodied by EU institutions, but also
by national institutions - European voters no
longer see a tangible connection between them-
selves (the governed) and those who lead them
(the governors). The Global Financial Crisis and
subsequent Great Recession have exposed the
cartel-like nature of the corporatist systems in
Europe (and increasingly also in the US).
Again, Timbro notes: “2015 was the most suc-
cessful year so far for populist parties, and
consistent polls show that right-wing populist
parties have grown significantly as a result of
the 2015 refugee crisis…Today, populist parties
are represented in the governments of nine
European countries and act as parliamentary
support in another two”. The net outrun is that:
“…one third of the governments of Europe are
constituted by or dependent on populist
parties”.
The official European (and Irish) Kommentar-
iat are keen on blaming nationalism and
xenophobia for these trends. But the causality
is likely to flow the other way: the failure of the
European political elites to draw in large swaths
of voters to their status quo-supporting
Lower-educated and less-skilled workers
face more downward pressure on their
earnings, a lower correlation between their
own productivity and their earnings, higher risk
to their jobs from automatisation and more
exposure to direct competition from migrants
Eurocrats must
start relating to...
...ordinary people
6 0 July 2016
economic and social policies is
resulting in the adoption of
extreme positions by
electorates.
This explains, for those who
haven’t seen it, why populism in
today’s Europe spans both
sides of the political spectrum.
The fundamental failure in
Europe to face this alarming ten-
dency of voters to favour political populism over
centrism is evident in the Brussels and national
reactions to the Brexit vote. Here, Ireland’s own
Peter Sutherland stands as a great example. In
an interview with the Irish Times in the wake of
the Brexit vote, Sutherland claimed that: “from
an Irish perspective, … [our] only strategy, eco-
nomic and political, has to be reinforcing the
European Union and being part of the inner core
of that European Union. We cannot sit on the
sidelines saying nice words to everybody. We
have to have clear political direction”.
In this passage, Peter Sutherland dispenses
several major dubious conjectures, all positing
significant risks to the European Union. At no
time does he address the need to reflect on the
Brexit vote or to respond to it with European
reforms. Instead, Sutherland promotes preserv-
ing the status quo of the EU, the very
dysfunctionality that has contributed to the
Brexit vote and is generating
huge centrifugal forces within
a number of the remaining 27
states, independently of
Brexit.
Peter Sutherland asserts
that reinforcing the European
Union in its current state can
be the only positive objective
for Ireland. Moreover, he
believes, this happens to hold no matter how
unworkable it might be for the EU itself. Aptly,
Mr Sutherland identifies the EU’s ‘inner core’ as
the only focal point of the EU worth supporting,
ignoring a simple fact that today we already
have a four-speed Europe: Europe of the ‘Ger-
manic’ or ‘Northern’ Core, the Nordics that do
not belong to that Core, the Euro Periphery, and
the Eastern European ‘fringe’.
Put differently, Sutherland’s claim that Ire-
land should align with the ‘inner core’ of the EU,
in fact risks sustaining more divisions within the
EU. Welcome to Europhile Dogma 101, where
one’s starting position determines the exegesis
of the argument. No matter what reality or his-
tory throws your way.
Irish and European lessons from the Brexit
vote cannot be based on false propagandistic
sloganeering (symmetric to the sloganeering
that dominated pro-Leave mythology before the
Brexit vote) - ascribing the Referendum decision
to ignorance, stupidity, venality, nationalism
and other divisivenesses. In order to wrestle a
positive outcome from the Brexit shock -we
must consider the deeper causes of voter
detachment from mainstream politics. Causes
economic and social, and institutional, both
European and national.
The Brexit Referendum result should act as a
catalyst for deep and swift reforms of the EU, to
create a tangible and stronger bond between
European voters and their political representa-
tives, and to move away from the status quo
where un-accountable technocracies initiate,
instrument and implement policy decisions
regardless of the, sometimes express, will of the
people. In order to contrive this win-win out-
come, we need to start by developing a
co-operative resolution-mechanism for Brexit.
In the wake of the UK Referendum, a leading
neoliberal organ, Foreign Policy magazine,
stated that: “The world is entering a period
where once-robust democracies have grown
fragile. Now is the time to figure out where we
went wrong”, Frankly, I couldn’t agree more.
If Europe fails to produce a co-operative reso-
lution of Brexit, the threat of political
opportunism and populism will tear the EU
apart. The Sutherlands of this world have noth-
ing in their weaponry to stop this.
Two-thirds of the
growth in average
working-age
income has been
wiped out by rising
housing costs
BREXIT
UK leaves EU... destination unknown
