Reflections on Income Inequality as the most significant, yet overlooked, economic component of Brexit
While there is much more to Brexit than the economy, the economy is relevant, though not in the way typically presented in the media.
Patrick Collinson, writing in the Guardian before the vote:
“The mundane reality is that a Brexit is likely to result in either a small net economic benefit or a small net economic loss… What will Brexit mean for the pound in your pocket? Like the economy, the boring answer is that it probably doesn’t mean much at all. Your pension, if you’re a private sector worker, is largely down to the performance of the stock market. Most of the big FTSE 100 companies are already fantastically globalised; the profits and dividends from the likes of BP or Glaxo have relatively little to do with the UK economy. Britain in or out of the EU will have a limited impact on their earnings… The next few months will see hysterical claims about the economic impact of a Brexit by both sides, and both can be safely ignored. My vote will come down to the pros and cons of the EU political project. This is one issue where it’s not about the economy, stupid.”
Mr. Collinson’s conclusion does seem rather simplistic considering most people know by this point that, in the current and historical context, the ‘political project’ is always subservient to the ‘economic project’.
Mr. Collinson is correct in the sense that corporations are now global entities. With the trade deals that have been signed in the last thirty years, corporations have gained more power than Governments and borders are all but irrelevant. So, despite the economic Armageddon that was predicted by some before the vote, and though the markets reacted violently in the first few days, three months later the FTSE100 is within earshot its record closing of 6959, which occurred in December, 2015.
So, as Mr. Collinson predicted, business as usual… except for the millions of Britons who are under the financial gun, and many of whom voted to Leave the European Union. Business as usual does them no good at all. Surely, the vote, and its aftermath, reveals the relative irrelevance of the stock market as a useful indicator of the economic reality on the ground, where the people are, as opposed to up in the sky, where the FTSE100 resides.
So, why have the people rebelled in such an apparently surprising way against the interests of the majority of the political and economic leadership? Economically, at least, the answer is obvious – too obvious it seems to be acknowledged. The reality is that the current system is wantonly skewed in favour of the wealthy and powerful. The average citizen knows they are being neglected, and they have had enough.
One month after the Vote, a survey of British CEOs suggested, “there wasn’t an increase in business costs, which some are fearing as the plunge in the pound since the vote will make fuel, raw materials and imports more expensive. Those rises were offset in part by subdued wage inflation.” (ie) weaker profits offset by workers receiving less real wages. Of course: “The cost of living is rising faster in the UK than anywhere in Europe, with soaring food and energy bills blamed”.
Britain joined the European Union in 1973, right at the time when the top 1% ‘suffered’ their lowest share of the British National Income; in other words, when the economy was more equitable. Note that for both the United States and Britain, their current levels of Income Inequality are close to the same levels as just before the Great Depression of 1929. This is why, perhaps, we are witnessing the current global economic upheaval that culminated in the recent financial meltdown, and which we have not recovered from, despite assurances from our financial leaders, and the emergence of the Occupy Movement a few years back. Enter: Brexit, not because being out of Europe will necessarily mean less inequality and more opportunity for people but because the status quo is leaving the masses behind.
This chart further reveals Income Inequality within the richest Western Nations.
In the Western World, 4 out of the worst 6 countries, including the United States, Canada and Australia, can be categorized as “Anglo Nations”. What if the current inequality in Britain has little to do with being in the EU and more to do with the British/Anglo approach?
The social impact of income inequality, as measured by health and social problems, are currently as follows:
Not surprisingly, the two countries in the first graph with the largest income inequality, the US and UK, both have notably higher rates of Health and Social Problems than France or Sweden. Amazingly, even Greece, with its disastrous recent history, has better health outcomes than the UK. So, while stock market performance is relevant to the affluent, the masses are seeing that no matter what they do, they keep falling behind – with the concomitant stress and health issues that ensue.
Compare these two maps, the one on the left detailing Regional Income, the other the Brexit vote:
With a few exceptions, it’s easy to see that, on the whole, Britons voted along income, or lack thereof, lines. So, again, contrary to Mr. Collinson’s protestations, the economy is most certainly a factor in the Brexit outcome.
Some might point to the fact that the economy on the whole – GDP, etc. – has expanded since Britain joined the EU, but this position presupposes that perpetual ‘growth’ is necessarily a good and desired outcome, especially when it goes disproportionally to a tiny group of people. Increasingly, people are beginning to realize the hollowness of this hyper-capitalist system in which all other considerations, such as community, camaraderie and peace, are crushed under the mighty thumb of the primacy of a Rational Economy.
If, in real terms, the growth in GDP since joining the EU was distributed a little more evenly, even discussions of Brexit would likely not happen, let alone a vote. Conversely, Brexit might not have even had a chance to happen, at least at this point, if it hadn’t been for one thing; there are those who stand to make a great deal of money from it.
Politics today, in most jurisdictions, but especially in the ‘peaceful’ Anglo countries, is a constant and relatively benign redistribution of wealth between two or more sets of elites. As Mr. Collinson alluded to, depending on which Party attains power, Conservative or Labour, Democrat or Republican, the economic deck becomes slightly stacked in favour of their corporate backers – backers who incidentally often play both sides, at times simultaneously. As we can see from the next graph, the rise in income inequality does not discriminate between political parties:
Where economics are concerned, the general irrelevance of political affiliation can readily be seen in the Brexit vote as the likes of David Cameron, Jeremy Corbyn, John Major, Nick Clegg and Tony Blair were all in bed together in the ‘Remain’ camp.
And lest anyone think this is a partisan piece that focuses on the shortcomings of the current Conservative Leadership, many of the following arguments can be made against the previous Labour leadership, which did nothing to stem the tide of inequality. As Equity Trust has noted:
“Wealth in Great Britain is even more unequally divided than income. The richest 10% of households hold 45% of all wealth. The poorest 50%, by contrast, own just 8.7%.” The Independent noted the same phenomena: “The majority of the UK population (66 per cent) hold no positive financial assets at all – with the combined £9 Trillion held privately in the UK spread between the remaining 34 per cent.”
And then there is the laughable Taxation system whereby the struggling citizenry is milked to the maximum while corporations and the wealthy manage to contribute little or nothing, as noted by the Daily Mail:
“The outrageous reality that the corporate sector provides him (Osborne) with a pitiful amount of revenue – just £43 billion a year… Too many of the tax dodges indulged in by multinationals are achieved by sleight of hand using subsidiaries in low-tax areas to offset the money they earn in countries where they might have to contribute more.”
“has paid just £8.6m in taxes on a reported £3bn in UK sales since 1998, when it launched its first UK coffee shop, despite having opened 735 outlets… A year after filing a £26m loss in the UK, Starbucks’ chief executive, Howard Schultz, told investors the business here was so successful he planned to apply the lessons to the company’s biggest market in the US.”
Only in a topsy-turvy economic system can a CEO be so chuffed with their company’s ‘losses’. This entertaining and informative video spells out how corporations legally, but morally reprehensibly, avoid contributing to the well-being of the nation:
There are regular calls to close the loopholes that these companies so easily, and quite legally, exploit; but government, beholden as it is to corporate power, predictably does nothing. Some hugely profitable companies manage to pay nothing at all. Do we need any studies to know that if corporations were paying their fair share of taxes, we would not have the constant deficits, which, when injury turns into insult, results in austerity?
In the meantime, those who wield the levers of power keep hoping that somehow the people will not notice; that they will keep taking it on the chin and soldiering on.
Enter David Cameron and his cohort. In one of Britain’s historically greatest political miscalculations, Mr. Cameron, confidently assuming that the voters would choose to Remain, triggered the vote in order to mollify the right wing of his party and to maintain power. The cynical nature of this political masturbation was staggering, not least because it was so transparent. Well, to the chagrin of those who would put short-term political gain ahead of the long-term health of the nation, millions of Britons took notice. When the citizens, shockingly, were actually given a say, they said ‘enough’. The people were allowed to twist in the wind and that wind transformed into a hurricane.
There has been much finger-pointing since the Vote. Who is at fault for this apparent disaster? That this is even a legitimate question reveals the unawareness that many in the Remain camp have of how millions of Britons are living. The Leave camp have been labelled as ignorant and backward. They have been ridiculed and parodied for their foolishness – and, in some cases, their racism. Xenophobia is certainly a factor (more on this later), but what underpinned this Vote was economics. Brexit would have failed miserably had there been more collective economic justice; actually, it probably would not have even come up.
Based on the many abovementioned charts and statistics, the concerns and frustrations of those in the Leave camp are well warranted, even if they don’t speak the Queen’s English. Yes, Britain is now isolated, which is simply a reflection of just how so many of the people are feeling. Have some Brexiters shot themselves in the foot? Maybe, but they had already been shot in the foot seven times. Might this lead to further instability, financially and socially? Maybe. If so, the scale of the disruption will be commensurate with what the irresponsible and self-serving leadership have foisted on the people.
Yet, the real question here is how on earth did the country’s leadership even allow itself to take such a massive risk, let alone fail? Where does this personal (Cameron) and institutional (Government) lack of judgment and sense come from? How could Mr. Cameron have been so reckless with his country?
This leads us to another question: How is Brexit NOT about the economy, or, maybe more accurately, about much more than the economy?
The British People endured months of a contentious, hyperbolic and sometimes vitriolic Brexit campaign that served to stir mass fear and confusion, which continues unabated post-vote. As the average citizen was bamboozled by the din of debate, a myriad of people were pitted against each other, taking polarized positions as if their very souls depended on it. The voters were distracted and stirred up by issues such as immigration (manipulated by the Far Right) and travel and employment restrictions (appealing more to the privileged) – important issues to be sure but trumped by a more foundational and influential force.
Some disenfranchised, low-income citizens (the largest contingent of Brexiters) were manipulated into believing that immigration and the influx of refugees due to EU membership was the cause of their economic desperation and security fears. In fact, the real issue was rampant inequality as a by-product of a normalized and unconscious system of betrayal.
Bard Azima is a Writer, Photographer, Filmmaker, Empathy Miner and Boarding School Survivor.
You can read more of his work at: www.empathyrising.com.
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Here are the other sections of this article:
Brexit: An Invitation to Dig Deeper – Part 3 – Reflections on David Cameron and Boris Johnson: Boarding School, Systemic Betrayal and the Subjugation of the Feminine as Outgrowths of The Age of Reason
Brexit: An Invitation to Dig Deeper – Part 7 – Reflections on Donald Trump, Ridicule as a National Pastime, The Sheer Scale of Humanity’s Endless Trauma, The Continuation of Global British Influence and the Troubling Legacy of Winston Churchill