The local elections here in the UK are over. Now the campaigning over the EU referendum begins in earnest.
The political stakes are high. So far this week, we’ve already been told by George Osborne and David Cameron that if Britain votes to leave the European Union, it’ll cost nearly 300,000 jobs in the City. House prices will fall. And Europe might even go to war again.
What with all the hyperbole flying around, it’s easy to forget that this little squabble at our end of the world is just a small example of a global phenomenon.
Across the world, people want change – and as we all know, even positive change tends to be traumatic.
Populism is everywhere
I’m not going to go through the arguments for and against Brexit here (I happen to think it’s a good idea, but I’ve outlined the reasons why elsewhere in MoneyWeek magazine, and we also have an exclusive interview with Boris Johnson in Friday’s issue).
What I want to look at is the underlying impulse behind Brexit. You see, this is far from a unique political phenomenon. We’ve got upheaval and nationalism and localism rising up all over the place.
Scotland might not have voted for independence, but its political landscape (if not necessarily the economic reality) has been changed drastically by the rise of the SNP.
Across the eurozone, there are movements for regional independence (Catalonia, even Venice), and a more general bucking against eurozone governance (Greece and Spain, among others).
Even a country like Iceland – where bankers were jailed and the response to the global financial crisis was essentially the polar opposite of everyone else’s – is suffering very similar political upheaval to the rest of the world.
In the US of course, we’ve got Donald Trump squaring off with Hillary Clinton. More on that in a moment.
The new president of the Philippines, Rodrigo Duterte, has even been described as the Southeast Asian Donald Trump. (Although Trump hasn’t been accused of having death squads. Well, not yet anyway.)
Even something as small as St Ives voting to ban second homes the other day – that’s all part of this.
It’s ultimately a revolt against a status quo that makes people feel uncomfortable, and a vote for change – any sort of change.
Why the financial crisis is causing political upheaval across the globe
What’s going on? This is all part of the fallout from the financial crisis. This is just what happens after major economic shocks. It’s another damn good reason to try to avoid them.
It gives the lie to former Fed chairman Alan Greenspan’s view that the central bank’s main job is to clear up after bubbles rather than popping them before they grow too big. It doesn’t account for the psychological fallout from a bursting bubble.
We enjoyed a period of feeling secure and comfortable with the way things worked. That period has given way to a sense of deep insecurity. Even people who still have jobs, homes, assets and all the rest of it don’t feel secure, because the old rules don’t apply anymore.
Tax avoidance? I think you’ll find that’s not acceptable any more, and that bit of sensible tax planning you did a decade ago might end up on the front page of a newspaper any day now.
White collar job security? Forget about it – a robot is coming to do all the legal work and the accounts and to dish out the financial advice, and you’re in your mid-40s and you have a six-figure mortgage and no pension worth speaking of and you have no idea what you’ll do once you’re on the scrapheap.
And if there’s one thing people can’t stand, it’s insecurity.
We spend most of our lives trying to get away from it. It’s the main reason why it’s so hard to change someone’s mind on views that fundamentally matter to them. If you dismantle one key component of their world view, then the entire world becomes a strange and unknowable place – and that’s hard to cope with.
It’s why we all tend to seek information that confirms our world view and our biases, even if we know that we shouldn’t, and that the sources we’re reading are definitely biased and possibly wrong.
It’s a difficult tendency to tackle and if you have a job and a family and a life to live, then opportunities for quiet, wilful reflection on your own innate biases and the flaws in your own rules of thumb are hard to find.
In any case, when someone comes along and offers a way to feel better about things, or to at least ditch the old system that’s making us feel uncomfortable – well, we’ll give them a fair hearing at least.
It’s one reason why I’d be entirely unwilling to bet on who’ll win the US election this year. Donald Trump represents change. Hillary Clinton, more than possibly any other candidate (save maybe another Bush), represents the establishment, and for want of a better word, the “elites”.
Regardless of her policies, a vote for Hillary is very much a vote for “more of the same”. And people really don’t want that. People who otherwise wouldn’t vote for Trump in a million years might well decide that it’s still a better option than “more of the same”.
Central bankers and the Ride of the Valkyries
Change doesn’t need to be negative. The problem is, of course, that when people get fed up and reach the end of their tether, that they have a tendency to chuck the baby out with the bathwater. And that’s what we want to avoid.
I don’t know how this will end. But I suspect that part of the whole process will involve a lot of money printing, and some serious discussions about what happens to all this debt that seems to lie at the heart of so many of our most serious political problems, from the US to China to Japan to Europe.
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