What is Evidence Good For? Absolutely Everything.

Two Nations Divided by a Beverage

When something very surprising happens all sorts of guesses are made as to why that should have happened. When something very surprising happens in broadly related events it is only understandable that people will perceive there are common factors in play but only evidence can sort it out. After all, as everyone who uses statistics knows, correlation is not causation.

On either side of the Atlantic surprising, if not shocking, support for rejection of the mainstream view regarding globalisation by electorates has encouraged a look for common factors.

This ‘looking’ often to use one form of recognised human behaviour to explain the phenomena simply because its matches the criteria of behaviour that would not be expected. In the UK, with the vote to leave the EU that goes against all economic and geopolitical reason, and in the US, where the Republican Presidental candidate is a man of dubious character, no political experience and whose only claim to ‘fame’ is that of a reality tv host, electorates have voted (albeit in the UK only narrowly and in the US only in Presidential primaries) for chaos. Why would they do that?

The Ultimate Solution

One popular explanation is globalisation and its applicability to the ‘ultimatum game’.

The ultimatum game involves two players and a sum of money, say $10. The players are told the amount they have to share, $10 in this case. The “Proposer” has to decide the amount they want, say $8, leaving the “Responder” to then either accept the offer in which case they receive $2 or reject the offer in which case both players receive nothing. There is only one offer made and only one chance to make the deal. Offers where the “Responder” gets less than 30% of the sum, in this case $3, are often rejected.

There are variants of this game. If the decision to accept or reject is delayed then the sort of offers that would normally be rejected are accepted — typical of short-term emotive decision making versus long-term rational. Where the experiment is conducted where there is direct interaction between chimpanzees, then similar results occur as with humans (just another primate) but using mechanical devices ‘unfair’ results become more acceptable.

From this has developed the hypothesis that rejection of the mainstream arises from the mainstream’s acceptance of globalisation that has made a few people in both the UK and US very rich but a sizeable number, even though benefiting to a degree from globalisation (usually due to goods being of better value) have not benefited nearly as much and are angry about it.

But again, correlation is not causation.

Winners and Losers

In the US there is evidence that this may well be true. When the North American Free Trade Area (NAFTA) was proposed in 1992 US Presidential candidate Ross Perot criticised it saying that there will be a giant sucking sound going south, as jobs moved from the USA to Mexico so as to take advantage of cheap labour. For many years US politicians have criticised China for currency manipulation to keep the Yuan–dollar exchange rate competitive and with good reason.

The banks of Chinese exporters receive lots of dollars that have to be exchanged for Yuan before being deposited in the accounts of the exporters. Under normal conditions, the demand for Yuan versus the dollar would see the Yuan rise in value versus the dollar and Chinese goods become less competitive in price. However, the Chinese central bank, the People’s Bank of China (PBOC), ‘sterilises’ this situation by creating Yuan to exchange for dollars, so keeping the exchange rate competitive. These dollars are then used to buy US government debt, US Treasury T-bills, so that the US government can keep on spending. This spending will benefit those groups that rely on such spending but not those outside the loop.

To make matters worse there was the financial crisis and the bail-outs that were required to prevent a repeat of the Depression of the 1930s. Everyone benefited from avoiding such a Depression, but bankers on big wages benefited more than most. The economic recovery post-2008 has seen unemployment fall but also the labour participation rate with many individuals leaving the workforce and not seeking employment; at the same time disability payments have risen significantly, being paid out of the Federal budget.

That both Donald J Trump and Hillary Clinton have criticised the TPP trade deal is evidence of the strength of feeling amongst a large part of the US electorate against globalisation.

A similar situation arose in the EU at the turn of the century with the entry of the former Communist countries of Eastern Europe. This introduced a large pool of cheap labour that allowed firms to move production. Germany addressed this with a series of employment and welfare reforms known as Agenda 2010 and still remains the EU’s manufacturing powerhouse.

Similar, but far more modest, reforms have been attempted in the southern EU states and faced strong resistance. Especially in France where the Front Nationale wants to take France out of the EU and put it behind strong tariff barriers. The Front Nationale, in stark contrast to those who campaigned for the UK to leave the EU, is vehemently opposed to globalisation.

You Say Tomaytoe We Say Tomartoe

Globalisation and the ultimatum game are not on the UK agenda. Opposition to the European Project comes from part of the political elite, both left and right, that wishes to exploit the UK’s dysfunctional system of governance goes back decades.

The US Founding Fathers were very smart, they had no wish to exchange one King George for another King George. Consequently, they divided power three ways — President, Congress and the Supreme Court. It is for this reason that Donald J Trump would be largely a lame duck President.

The combination of the lack of political experience and his own character means his relationship with the other parts of the system will be non-existent. The UK suffers from what Lord Hailsham, Margaret Thatcher’s Lord Chancellor, described as an elected dictatorship. No UK majority government since WWII has ever been elected by 50% or more of those who vote in a general election. Indeed, in 1951 more people voted Labour than Conservative but the Conservatives formed the government. As a result of being a Parliamentary Democracy the only place a majority matters is in Parliament amongst MPs. So a Prime Minister, leader of a party with most MPs, is master of all he or she surveys.

The European Project (that has now evolved into the EU) stands in the way of such despotism as a result of the pluralism required to meet the demands of 28 (at the moment) countries and that saw the results of dictatorship at first-hand for decades.

EU governance being broadly similar to the US Congress with the Council (a Senate) and the European Parliament (the House of Representatives). The Council is made up of government ministers from member states with voting by qualified majority, i.e. the number of votes a minister has relates to the population size of the member state rather than the US Senate where each state, no matter its size, is represented by two Senators. MEPs are elected by proportional voting.

Such a block was not lost on certain politicians. Hugh Gaitskell, the Labour Party leader in the 1950s, who once declared that joining the European Economic Community (EEC) would mean “the end of a thousand years of history”. Politicians of the left, Tony Benn, and the right, Enoch Powell, both wanted control of the levers of power without European obstacles.

This then combines with the (deluded) view that, despite all the evidence, the UK is a significant military power (that pays the USA to pretend it controls nuclear missiles resulting from US technology), a powerful economy despite running a generally worsening current account deficit for over 30 years and has significant geopolitical influence that somehow derives from its non-existant military and economic power.

Then there is the view that the Commonwealth (or at least the white part of it) is a substitute for the EU as if it was the British Empire MKII. The British have always viewed the European Project as an economic one when it is, in fact, fundamentally a political one.

The European Coal and Steel Confederation, the forerunner of the modern EU, being a means of putting coal and steel production (the raw materials of modern war) beyond the control of France and Germany so they could not go to war again. It was not to improve economic efficiency.

But, as the end of a thousand years success story phrase shows, the idea of political change in the UK is not on the agenda.

Drip, Drip, Drip

For decades right-wing UK newspapers that dominate the UK print media ran a black propaganda campaign against first the EEC and then its successor the EU. The UK Foreign Secretary and leading Leave campaigner, Boris Johnson, had been a correspondent for the Telegraph and had invented a succession of anti-Europe stories.

So a referendum against a backdrop of nationalism, delusion and plain lies a certain demographic responded accordingly.

Lord Ashcroft is a highly regarded pollster and his post-vote to leave polls provide very interesting evidence as to what actually was going on. The key points being:

A majority of those working full-time or part-time voted to remain in the EU; most of those not working voted to leave. More than half of those retired on a private pension voted to leave, as did two thirds of those retired on a state pension.

Among private renters and people with mortgages, a small majority (55% and 54%) voted to remain; those who owned their homes outright voted to leave by 55% to 45%. Around two thirds of council and housing association (social housing) tenants voted to leave

White voters voted to leave the EU by 53% to 47%. Two thirds (67%) of those describing themselves as Asian voted to remain, as did three quarters (73%) of black voters. Nearly six in ten (58%) of those describing themselves as Christian voted to leave; seven in ten Muslims voted to remain.

By large majorities, voters who saw multiculturalism, feminism, the Green movement, globalisation and immigration as forces for good voted to remain in the EU; those who saw them as a force for ill voted by even larger majorities to leave.

The three main issues for those voting to leave being:

  1. Decisions concerning the UK should be taken in the UK
  2. Control of immigration and borders
  3. No control over EU decisions

The first is impossible in a globalised world, those campaigning for the UK to leave the EU very much in favour of globalisation

Non-EU migration, which the UK could control, is larger than EU migration

The EU is a club with the UK having a say as large as any, larger than most and, as with any EU state, a veto in certain areas such as trade and EU expansion

So some reference to globalisation, which is ironic as those campaigning for the UK to leave the EU are very much in favour of globalisation, but basically those who voted to leave the EU were the white retired elderly who didn’t like how the world in general was changing and voted for nostalgia. As the following graphic shows, the economic argument (that has globalisation as a given) actually won the argument in terms of remaining in the EU

And as, with Trump, a fair dose of xenophobia that politicians can exploit.

Comparing Apples and Oranges

The US and the UK are very different countries with very different histories. The UK’s moment in the sun was a global trading empire that collapsed after WWII. The US’ was a national trading empire from sea to shining sea that has been in decline for a number of years. Both were once the biggest kids on the block and can’t handle others growing up. The UK (or rather the English and Welsh) because it has to share decision making in the EU. The US because it isn’t the superpower it thought it was.

There is the common factor of nostalgia for a bygone age where foreigners knew their place. Trump will make “America great again” and the Brexiteers believe they can make the UK a global trading empire once more, with foreigners put in their place — outside the USA and UK. Significant demographics in both countries struggle with decline and change.

However, there the similarity ends.

The UK’s vote to leave the EU is the culmination of several decades of effort, especially on the right-wing of the Tory party that sees Margaret Thatcher’s ‘revolution’ being halted by a combination of EU labour, consumer and environmental legislation. Nothing to do with globalisation, in fact, as we’ve just mentioned, the UK long for their International trading empire again.

To add insult to injury ‘the great woman’ was brought down by pro-EU Tories and is committed to globalisation. In this they have been helped enormously by print media owned by right-wing owners and read by a demographic that correlates very well with Lord Ashcroft’s poll findings.

The events on either side of the Atlantic are largely co-incidental and uncorrelated.

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