Jun 26, 2016

A 70 years road to Brexit — and how the next 20 years could turn out

I’ve been asked by some people since Thursday what I thought of the Brexit, and its consequences down the line. And I think this is the logical conclusion of a 70 years history; and only the first step in a new world. Sorry in advance for a long ‘one more post-mortem’, but I kind of need to write it down honestly.

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PAST

Let me tell you first a story of Economics, Politics and Society between 1945 and 2016 — divided in 4 time periods:

1945 to 1970’s — Liberalisation
1970s to 1990 — Globalisation
1990 to now — Differentiation
From now on — ???

Economics

After Second World War, most of Continental Europe was in shambles and both the US and the UK had to massively realign their economies and workforce participation to suit the war effort. This created the conditions for a great Reconstruction effort led by the US and the UK, 2 countries that were euphoric in their victory and quite different from 10 years ago. Many aspects of liberal societies we now know started then and there: sex equality, 2 working parents, secularism, rejection of the old ‘aristocratic’ order, the emergence of a comfortable middle class. You can read up more on that as this is a very interesting period of Economics history — and I’ll jump to my point. During that period, and until the 70’s, the world economy boomed as we needed to reconstruct Continental Europe. Social Welfare systems born during the war were well-financed as governments coffers were doing swimmingly, and the benefits of economic growth were widely shared. I’ll come back to that in the Politics part. Not everything was perfect; but economically, very good times. And this is then that a more integrated, open and mixed world started developing. But that integration was done within each nation, between its own people. Women joining the workforce, workers becoming politicians, inter-classes marriage on the rise. Social benefits, universal education access, etc;, allowing a general improvement in education, health and wealth, as well as a reduction of inequality due to the Social Welfare in place. Why would people choose to integrate more? The war effort had brought more integration, and there were no drawback to letting it continue be so. E.g. women started working in factory during the war in great numbers; after the war ended, reversing that trend would have required a change right when everyone was working anyway. Men were not competing with women for jobs then, and it would have made no economic sense to push back. Hence it became the trend to have more women in the work force.

In short:

The post-WW2 economic reconstruction boom allowed to increase wealth for all
Social Welfare inherited from the war effort and the Boom allowed the state to use that wealth to raise quality of life across the board
All aspects of society became more economically integrated, as everyone was benefiting from it and therefore there were no resistance to it.

Then this integration within each country, of each country with itself, ran its course and ceased to yield as much wealth. A kind of ‘internal integration saturation’ was reached. The Paretto of integration. Other external events happened then, such as the Oil Shocks, but I think those became so painful then only because that first economic cycle had reached its course and couldn’t weather them easily.

But by that time, the great decolonisation movement was almost completed, and the traces of the war past. Furthermore, the world was confronted with 2 different ideologies and visions of how to share the bounty — capitalism and communism. My opinion on this is simple: from an economic point of view, capitalism generates efficiency (up to a point, see later), communism doesn’t. And communism was doomed from the beginning, but held its own until the 70’s because of the post-war rebound. After that, it was a slow economical death. So at that point, with integration within western countries at the end of its main economical benefits, globalisation started taking hold. More and more, countries got integrated, sharing resources, labor, and cooperation on many different questions. This was true for western countries, and a central tenant of capitalism. This brought about great changes, but this time between countries instead of within countries. In the same way that woman integrated the workforce after the war, now foreign-born economic migrants started integrating the workforce; and with it plenty of societal changes we will see in the Politics part. The same was true with capital, with more UK money coming in France, more US money coming into the UK, etc. Again, more economic integration.

But this time, some industries and segments of population did NOT benefit from this integration. This is due to the fact that the differential between countries was much bigger than the differential within those countries. As an example, in the liberalisation period, the difference between paying a Liverpool steel worker or a Edinburgh steel worker was in the 10’s of %. The difference between a male steel worker and a female steel worker was more consequent, but still in the high 10’s of %. And more importantly, all of the changes were happening within a single country regulated by a single Welfare System, ensuring that any imbalanced generated was promptly compensated by the redistribution on a national level of wealth. Now, in the globalisation age, the imbalance was much more stark, with difference in the 100’s of %, if not 1000’s of %. A steel worker in Britain might cost 10 to a 100 times more than a worker in India or Peru. Here, I recommend to read up on globalisation mechanics, but the basic principle is this one: once the cost of investment (building a factory and educating the workforce for example) to bring an industry in a new country is lower than the cost of paying the salary differential, then this industry will move.

As such, industries requiring the less investments in education and tools where the first moved to new countries. In reality, tooling is a fraction of the cost of bringing the education level of the workforce to par — education is ultimately the main stumbling block to move an industry. Those industries started being hit in the 70’s by globalisation and relocation: coal mining, steel mills, stone work, etc. This process continued all throughout, until the 1990s, and continues still.

But workers of industries left behind in the 70’s were not initially forgotten or left to fend for themselves. The state had both the money and the incentive to provide for them. The economic benefits of globalisation were still redirected partly toward the state, providing the means. And as the great political battle between capitalism and communism was in full swing, and as such the western states had a strong incentives to ‘buy social peace’ through Social Welfare and Industry-saving ‘investment’. This is what France for example did a lot in the late 70’s and 80’s, with industry subventions (for mining and in the east and steel in the north) and a generous Social Welfare. But between the 70’s and 1990, more and more the wealth generated by globalisation was directed toward corporations rather than states, as capitalism was embraced more broadly and corporations were more efficient at it than states; and the state had less and less incentive to preserve social peace as communism was crumbling unto itself and becoming less and less appealing to populations in western countries. So more and more, the western states redirected a dwindling budget away from the Social Welfare system and ‘old’ industries and more to education and ‘new’ industries able to compete in the globalised market.

In short:

Once growth due to internal integration slowed, nations started integrating between themselves, through globalisation.
The less education was necessary for the continuation of an industry, the more quickly this industry was whole fully moved to a cheaper country, starting with heavy industry.
As more and more industries moved out, and less and less money was available to the state, resources started being diverted from the Welfare System and toward education and ‘new’ industries.
Workers from ‘disappearing’ industries started being less and less protected and helped, and more workers impacted.
All aspects of the world became more economically integrated, as most people were benefiting from it, either directly or through Social Welfare and subventions, and therefore there were only a limited resistance to it.

By the 1990’s, a massive transition had happened. Almost all heavy industries had disappeared from the western countries and moved to emerging countries; most of manufacturing was either moved to emerging countries or artificially sustained through subventions; new industries had emerged in western countries only, all of them requiring a new higher level of education, such as IT, Finances services, etc. And with less and less resources going to the state, more and more of the post-WW2 Welfare System was being dismantled.

Then in 1989 the Berlin Wall felt and in 1990 the CCCP officially ceased to exist, and with it communism as a vision for the world. This came suddenly and changed many incentives unexpectedly. Even though it was greatly diminished, the western states still had an incentive to discourage people from embracing communism. By that time, corporations also had a real influence on politics (as we will see in the Politics part) and helped the general movement to a full and unfettered embrace of capitalism.

Economically, even though the world was already integrating through globalisation, the process was far from complete and would still many decades and would always be incomplete while the CCCP existed. Once this obstacle removed, it became a free-for-all for capitalism and the globalisation movement greatly accelerated. It also started to extend beyond the nations and started becoming a transnational phenomenon. This was already the case, but it really became the primary forum for decision-making (as we will see in the Politics part) then. This is the rise of the IMF, the start of an economically integrated Europe-wide single market, multiple trade agreements, the G7s and G20s, Davos and Co. But economically, a divide that already existed but was masked by the state incentive to preserve social peace emerged dramatically. In western countries, the people that, coming out of the globalisation period, were well-positioned to benefit from the fall of communism and even more integration, whether by virtue of wealth, education or specific trade, embraced it completely and benefited immensely from it. But the people that were already side-lined by the global economy and were able to live reasonably comfortably mostly by virtue of the Welfare System and state subventions, couldn’t take advantage of it at all. And instead of a general tide raising all boats, it started a general differentiation between the new ‘professionals’ and the old ‘workers’, in terms of wealth, opportunities, access to a globalised world, etc. This time, integration started impacting every aspects of life and dramatically accelerated, but a majority of people in western countries did NOT benefit from it. In emerging countries, even though the differentiation between the ones benefitting the most and the less was even starker, at least the general benefits were felt by all.

In short:

Once communism ceased to be a vision, globalisation extended and accelerated.
All aspects of the economy started being impacted by the integration, creating immense opportunities and competition.
Those who were ready, by their education level, wealth or international reach, benefited greatly from this integration; those who missed any of those stagnated. This created a much bigger divide between the 2 groups.
New international institutions and accords appeared to manage and take advantage of this accelerated globalisation.

Economically, this is where we are now. Western countries growth and job creation is strong in high-education industries, such as IT, Finances, Consulting, etc.; all industries requiring low-skilled workers have disappeared, moved to emerging countries; and inequality of wealth and opportunity, that was greatly reduce for a while in the middle of the century, has returned and reached level not seen since before WW2. This ignores other trends that are currently active, such as the transition to a older population, driving a massive growth in healthcare industry, and some adjustment between industries and countries, such as the return of some manufacturing to western countries — but those trends are I believe smaller in scale, and a normal adjustment of the system to new circumstances, rather than the big shift in paradigm that the drive to integration is.

All of this is of course tightly linked to Politics, as we will see below.

Politics

Politics experienced a similar trend as the economy, becoming more inclusive first, then more global, and finally more international than national. But in the meantime, as the scale on which the economy was playing extended, governments around the world became less powerful and more inadequate to their regulation role. After World War 2, and before globalisation, the state was able to have a direct and massive impact on industries and the economy, as most of the economy of a country was internal. In a sense, the scope of intervention of the state was bigger or equal to the scope of the economy. It could still be regulated and impacted. Then, after the transition in the 70’s, it became harder for states to control some aspects of the economy and some of its trends, such as the transfer of heavy industries to emerging countries; but it was still powerful and well-funded and could mitigate the consequences of more globalisation. In particular, corporations were still tied to a country and could be taxed, as were individuals. But progressively, this changed — the state had less and less control over economic trends and mitigated its consequences less and less; received less and less money from its economy as fiscal dumping for corporations and individuals became more common and could spend less and less on welfare. And this was due to the fact that the scope of the state was now much smaller than the scope of the economy.

Then in 1990, all those trends accelerated dramatically. There, states chose one of 2 paths (UK or France): either drastic cuts to all of the state-related economy and public sector, to accommodate the reduced budgets, coupled with a double-down on globalisation and free-trade, as to reap as many indirect benefits as possible from globalisation; or maintain the level of funding to the public sector as much as possible, but through additional debt, and try to get shield away as much of the economy from the globalised market as possible. The first option embraced the changing landscape of the world as it happened, and as such its changes were more progressive; but it also completely gave up on a part of his population that was not ready for the new globalised world, and left them to fend for themselves without the support of the state. The second option denied the changes happening in the world, hoping that ignoring the change will make it go away, and simply delayed an eventual, even more brutal, reckoning; but it protected its population from the worst effects for the time being.

Another trend permeates the 20th century: more and more states became democracies. But as we have seen, this happened while the scope of the economy, initially similar in scope as the state, became many times bigger. To counter-balance this, there are only 2 options (making the economy smaller doesn’t seem a reasonable option): extend the scope of individual state to catch-up with the economy or create coalition of states. For democracies, the first option is almost impossible, as the main mean to extend a state is war. That left western states only one option, creating coalitions. Thus we saw more and more collaboration between countries on the economy and trade, through forums such as the G20 or the WTO. But one problem of those organisations is that even though they are composed of democracies, they are not democratic themselves. Democracies are elected and accountable; world organisations are neither.

As such, the main political trends come together: more democracies and more integration, but still less power and less accountability. And a choice between a UK-style embrace of globalisation that leaves a huge number of its population on the wayside; or a France-style refusal of globalisation that delays its impact without preparing for or mitigating it.

Social

I have talked a lot about integration — and that integration is far from being economical only. This would be just a mean. The consequences are everywhere, and on everything and everyone. Again taking the example of the UK, looking at it in 1945 and in 2016, the changes are radical. The demographics, cultural influences, foods, slang, population size, classes, etc. are all completely different, and all of it is a consequence of that integration. Those changes, as all changes, are either perceived as an opportunity or a threat by people — and this is very tightly linked to the economic prosperity of people.

Between 1945 and the 70’s, while the economy was roaring, the integration happened internally. Women became empowered and more independent; classes merged much more than before; the sexual revolution started. It was possible because the economy was dispensing its benefits to all, and there were negative correlation between those societal changes and a deteriorating situation for almost anyone. The only people that rejected those changes were the ones losing from it. In the US for example, where racial integration was more evident than anywhere else, this meant the Jim Crow South.

Then, starting in the 70’s, integration started between countries themselves- and this brought a new type of integration. For example in Europe, this was when the first economic migrants movements started in earnest. This required a societal integration of new people and culture. This was fairly easily achieved wherever the economy was working for everybody, but started to sputter where the economy was hit by the globalisation. Racial tension appeared in those areas. This pattern repeated itself all throughout the 70’s, 80’s and beginning of the 90’s, with multiple different changes, whether it be new languages, new faces, new religions, etc.

From the 90’s up until now, this pattern continued, simply accelerated, and permeating even more aspects of life — Tikka Masala became the most popular meal in the UK, a majority of music listened to in France came from the UK or the US, Spanish became the second-most spoken language in the US, etc.

I believe there are 2 ways people react to change, and that it is completely driven by their perception of its benefit for them. Not its actual benefit, but the perception of benefit of drawback. Either you see it as a positive change, and as such you will embrace it and ask for more of it; or see it as a negative change, and reject it. For our story, the change is an increase in integration, internal first, then global, and finally all-out. For people feeling they benefit from it, they will embrace it by extending their own identity to integrate those new identities. For people feeling they are dis-served by it, they will reject it by reducing their own identity to its most fundamental components and reject those new identities. This is a human reaction, and one we are all subject to — depending on the circumstances, we will either embrace or reject change and its impact on our identity.

The most simple example of application of this is racial integration. When there is a massive increase of economic migrants arrival to a country, as it has been happening for the UK in the past 10 years, your reaction will probably depend on your economical situation. If a new steel worker from Bangladesh arrives, how would you react? If you are already well-off, it doesn’t matter, as it will not impact your economical situation one way or another; if you are a young professional with a good job and a vibrant economy around you, it doesn’t matter — you are not working in steel anyway, this new arrival is not competing with you, you are therefore absolutely OK with it; if you are a worker in a different industry but have lost your job, it feels like new competition, and as such you might reject this new migrant; and if you are that same worker but the economy is doing fine, you don’t feel threaten and will welcome that change, or be indifferent.

Now, if you are feeling threaten, you reduce your identity to its most fundamental components for you. For some in the US, it might be religion, and as such that person becomes more religious and reject change on the basis of religion; for some their identity is whiteness first, and as such they will reject all non-whites when feeling threaten; etc. The important part is that you do not reject what threaten you, you reject what is different from your core identity. This is how you end up with ‘culture wars’ in the US flaring up when the economy deteriorates; and racism against non-White British in the UK when the economy is not doing well, despite the total absence of correlation in both cases.

The question becomes then: who feels threaten by the changes brought by more integration? To me, it’s the ones that lose economically in the new integrated world; and they will then express it by a rejection of everything that is not their core identity. There are many factors at work driving economic success in the new integrated world, but mainly in western countries, in order of importance:

You work in an industry/job that has not yet moved to an emerging country, either because it requires a high-level of investment in education and tooling, or a highly-specialised skill-set that cannot be found elsewhere.
You live and/or work in a city, the more connected the better, as those as the places that have benefited the most economically from more integration.
You have soft skills that are global, such as speaking English or having been exposed to many different cultures.

If you miss all of those, or are not actively trying to create one of those (by learning a new skill that is still in demand in your country for example), you end up losing economically, and more and more since the 70’s. The more you lose, the more you reject changes, all of them, and concentrate on your core identity, and the more you close yourself to the world. And since 1990, it has even accelerated, and your position harden even more.

I think there are many, many trends explained by this sorting between those benefiting from this new economy and those who do not; and the factors at play here. But that’s for another story.

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NOW

This creates the current situation across all western countries, with local variations:

Economically
All industries requiring common skill-sets or low level of investment in education of workforce and tooling have disappeared.
Industries required high-level of investment, or education, are growing more and more.
This has created 2 category of population: the one who benefited from it, and the one who didn’t.
Politically
National governments and states have less and less control over the economy and those integration trends.
International economical forum is the only place where some economical changes can be implemented, but those are non-democratic.
This has created a situation where politicians, to be elected, promise mitigation of the economical changes, but can’t, and won’t be able to, deliver on those promises.
Socially
Some people, as they benefit from the integration, embrace it, asking for more of it.
Some people, as they lose from the integration, reject it, and ask for a change to their national politicians, which can’t be delivered.
The people benefiting from the integration take looser positions on questions of identity, by abhorring racism, religious extremism or political extremism.
The people losing from the integration take harder positions on questions of their core identity, through either identity extremism such as racism, religious extremism, or political extremism.

We have two world living side-by-side, divided on many issues and that absolutely don’t understand each other! The pro-integration crowd thinks that the others are dumb old racists that should just get off their couch and learn a new trade; and the against-integration crowd thinks that all those hipsters young professionals in their London flat and their lattes are screwing them over by stealing all the NHS money and giving it to foreign countries because that way they will look cool with their friends in Guatemala and L.A.. And you know what, they are both right AND wrong. Because you are suffering economically does NOT excuse being a racist (proof: many people that don’t have much are NOT racists); because you are going to the Pride In London and have a cool Finance job does NOT make you better than people that are suffering economically from no fault of their own — check your privilege, you were probably born in the right place and with the right support system.

And to come back to the Brexit — then come around David Cameron offering to all Britons the opportunity to vote on a question that combines: British vs. European identity (‘Take our country back’); Migrants vs. Residents (‘Breaking Point’ poster and such); a return to nationalism vs. more european integration baked in economical questions (‘£350M for the NHS and the British economy’). Really? Really? Well, apparently, 52% of the UK feels that they do not benefit personally from more integration, and they just said so…

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FUTURE

Now what? I certainly don’t know. But considering all of those trends, I can try to make some educated guesses. First, some things I am certain of:

Left to its own devices, the economy will keep getting more integrated.
Every system, whether economic, politic or societal, wants to return to a stable state.
Capitalism, unfettered, inevitably leads to greater wealth inequality while generating more general wealth than any other system we know of.
Once pressure has been accumulated, it needs to be released. It does not just disappear, it requires an outlet.

and the current trends:

More differentiation between economic winners and losers of an integrated world.
Education and connection are the main drivers of success for the western world.
States have less and less economic resources for the public sector.
States have less and less power over the economy, but are more and more democratic.
Coalition of states are currently the only place with power and a level of control over the economy, but are not democratic.

Drawing from all of those, I see 3 scenarii going forward:

Back to the 30’s — possible future if we keep doing the same and there is, as of now, more people feeling they lose because of integration than win.

In Europe, some countries (Greece, Italy, Spain, maybe France) keep the Left current strategy going for a while — mitigate the consequences of not adapting to the new economy through a build up of debt and public expenditures, hope that globalisation goes away. Of course it does not, and it reaches a breaking point where one of those countries either default on its debt (my bet is on Italy) and is sold wholesale by their creditors; enact absolutely drastic cut to its public sector (already happened in Greece); or double-down on public expenditure and state economy, accelerating the default or cuts to the public sector (Spain). For all, the result is the same — a massive depression and forced adaptation to the new economy in a very short period of time, with no wiggle room to make any adjustment. Best-case scenario, one or two lost generations; worst-case scenario, a move to identity politics and nationalism.

For other countries in Europe where the Right is in power, it depends on economic performance. If it already has adapted, it will move along just fine for the time being (see Germany). But countries that don’t perform well economically and already have a right-wing government will see politicans do the only logical political move: play the identity politics and move even more to the extreme-right and nationalism (Poland, Hungary, Belgium). And that will be because as more and more people feel they suffer from the move to more integration, the more they will go back to their core identity, and the more identity politics will be efficient. Ultimately, either because the Right becomes all-but-in-name the Extreme-Right or because the Extreme-Right comes to power, you get a nationalist state. At that point, either through a general depression or breaking apart of right-wing countries, the EU is already dead. But obviously, playing identity politics does NOT address the reason for the economic pain, and actively rejects it. The next logical move becomes: closing borders, rescinding trade agreements and a ‘us vs. them’ attitude.

The big question in that scenario is what happens to the UK, Germany and France. I think the UK stumbled in it earlier than it would have because of Cameron’s short-termism, but the UK was going there anyway. A lurch to the extreme-right, identity politics, Little Englander voting Out and going their separate way from the EU. Scotland breaks apart, and the Troubles start again (can you imagine a Farage handling Sinn Fein non-violently?). 52% of the country voted Leave, and this came to pass because of the referendum now; but it would have happened anyway, through a general election and Parliament.

Germany, I think, will hold on the longest, but eventually will give in to identity politics again. As for France, it currently holds it together due to a strange combination of Left-wing government enacting a mix of public sector artificial support system (Welfare System and industries-specific subventions) while trying, by no less than a Socialist government, to pass reforms similar to the UK to re-align the French industry with the new global economy and in the process leave all people who can’t compete in this new environment by the wayside. But inevitably, either the economy will not be able to support that level of public expenditure, or enough people will feel disenfranchised from Left-wing politics to vote in a extreme-right president, nationalism and the same situation as the rest of Europe.

That’s basically 10 to 20 years from now, and from there, honestly, I can’t see us doing better than last time around.

A new gilded age — possible future if we keep doing the same and there is, as of now, less people feeling they lose because of integration than win, but nothing is done politically.

In Europe, the differentiation between the winners and the losers of the new economy continue, but with enough people feeling like they win through integration that democracies are not turned over to far-right or far-left movements. Because capitalism by its nature will generate more and more imbalance and inequality as it goes, and if nothing is done economically, we end up in the same situation as scenario 1, simply latter, and through wealth inequality rather than lose of economic clout.

A new balance — possible future if we keep doing the same and there is, as of now, less people feeling they lose because of integration than win, but the imbalance inherent to capitalism and globalisation is addressed politically.

People feel disenfranchised from national politics because it does not result in change in their economical situation. This is logical, as the economy is so integrated now that its scope is bigger than any government, to the possible exception of the US, can manage or meaningfully influence. The more disenfranchised they feel, the more they harden their positions or give up on politics, both of which brings us to the extremes. This is not a bug, this is a logical consequence of the new economy we live in. It’s useless for politicians to promise a return to the ‘good old times’ when those times are past and will not come back through national politics. Therefore, the solution is for politics to be done in a new forum that is of the same scope as the economy. At a minimum, a continental forum, at best, an international one. The latter can’t happen while there are still so many non-democratic countries or democracies-in-name-only, and the process of integration is not much more advanced. But from a continent perspective, this is achievable. This is exactly why the US perform well — not because of some quirks of their political system, but because the scope of intervention of the federal government is big enough to protect the people in its scope and it’s a democratically elected body. And this is where Europe is stuck half-way. It has a quite-integrated economy, but lack a democratically elected body that can mitigate and help with the effect of this integration (the Council and the Commission are both very indirectly elected). Until european politics become European, they will stay inefficient. They are many examples of this, but the simplest is the way Europe negotiates at the WTO as a block and is able, that way, to protect its citizens of some of the worst imbalances of capitalism while still adapting to it. This would be absolutely unachievable for any individual country in Europe.

This can happen — but it requires that:

a majority of Europeans feel they benefit from more integration
European politics takes over from national politics and becomes the main democratically elected body

If this happens, then a new equilibrium can be reached, where integration continues, with support system in place on a European level, and conversion from the old economy to the new is managed, and capitalism natural worst instincts are constraints. To me, this can only be done by managing the trend rather than reversing it, meaning more integration rather than new barriers.

It would look like this:

An Europe-wide currency — all EU members use the same currency
An Europe-wide fiscal system — no fiscal dumping between states
An Europe-wide Welfare System — wealth redistribution to mitigate the worst effects of capitalism, and helps accelerate the alignment of all economies in the EU-space
An Europe-wide economic area — free trade and movement of people and capital, as well as a common working language
Europe negotiating as a block politically and economically, whether it’s at the UN, WTO, etc., i.e. having a unique diplomatic representation.

This Europe needs to happen soon enough that it mitigates the integration trend pains before identity politics take over; and this Europe space needs to be big enough to both have influence over the global economy. The question becomes, what is the minimum number of countries that can be possible with? I would argue that at minimum this is the 6 core EU countries (Germany, France, Benelux) inside a wider economic area, and ideally it also includes all current EU states, UK included.

In all 3 scenarii

As for the US, I think they are even more divided than Europeans, but I think the trends are in their favour, with clearly more people feeling that more integration is in their benefit (yes, despite the Trumpists out there — this is just the last throw of identity politics). The GOP will go another round for identity politics in 2020, but will lose again, and then lurch back to the center, while the Dem move to the left. Globally, the world will either be in a very bad shape or getting there or in a new equilibrium, but the US is a continent, and a continent united can support itself at least, even if they won’t strive anymore, depending on the scenario.

And for the rest of the world, funny thing is, never mind what happens in Europe, it will go through a predictable path: emerged countries (China, India, Brazil) will start losing their heavy-industry to newly emerging countries (Vietnam, countries in Africa), repeating the pattern and creating a build-up of tension — that they will address in the same way as Europe (bad or wrong), generating the same result but skipping some decades off Europe’s example. So either a new equilibrium, or a flare-up of religious extremism (Middle East), Right-Wing dictatorships (South America) and Nationalism and war (Asia and Africa).

In short:

If a majority of people now feel they lose because of integration, than society is the driving force, and politics follow. They ask for more nationalism and identity politics, which does not address the reason of their economic loss. They keep losing economically, they vote more right, and still lose economically, etc, until they vote in a dictator or a fascist and we go back to the 30's.
If a majority of people now feel they win because of integration, and nothing politically is done, than the driving force is the economy force. The imbalance keep growing until the pressure becomes too great and more people feel they lose because of integration than not. We then go back to the first scenario.
If a majority of people now feel they win because of integration, and a political adaptation is undertaken now, than the driving force is politics. The imbalance gets addressed before it becomes too strong through a new political forum, continental or international, and a new equilibrium can be found.

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CONCLUSION

Brexit is a blow to Europe and puts us all in a dangerous situation. But the current trends discussed at length here all point to one choice only: either we actively pursue a very deeply integrated Europe that manages the transition to the new economy; or we let the situation continue its natural course and we end up with a divided Europe fighting, economically and possibly militarily, each other as before.