That title, strangely, does mean something.
Post-Brexit, post-Trump, post-financial crisis, there’s a desire to respond to the perceived grievances of those who voted to give incumbent governments a kick. But in so far as these grievances are not genuine, responding to them in ways that harm everyone and don’t address the economy’s underlying problems sets us all up for a vortex of ever diminishing prosperity and more spiteful policies and politics.
So, for example, we had ‘quantitiative easing for the people’, framed to respond to quantitative easing that was just for bankers, and harmed old savers. This policy would dismantle monetary and fiscal credibility, likely harming those whose portfolios are unsophisticated.
Now the UK is embarked on Brexit, voted for by the older, less educated, less skilled. This will shrink the size of the economy in the long run and seems likely to pitch us into a protracted period of weak growth or recession to which we are ill-placed to respond. Both malaises, certainly the latter, will be disporportionately felt by those at the bottom of the pile whose Brexit vote got us here. The journey of concluding new trade arrangements will set off a new round of industrial reallocation, and choke off immigration. This will not benefit those who voted for Brexit, except in their imaginations. In fact the process of reallocation may well, if past such experiences are to be repeated, hit hardest those who are oldest, and have least time or aptitude to retrain, or are least able to relocate.
Taking perceived grievances at face value entails several risks.
The policy response shrinks the aggregate size of the pie, hurting all, and does not help the aggrieved constituency. In the next round, the wounded group takes aim at a new component of the status quo, dismantling our wealth creating machine even further.
Another risk is that responding legitimises unfounded prejudice: a slope much slippier than those involving a purely economic calculus. It is hard to write about this without descending myself into a level of vitriol which leaves me little different from the populists. But the point has been addressed by many others.
Yet another risk of the unfounded sop response to the perceived grievance is that it rewards dishonest political opportunism. That industry is a machine that searches for prejudicial diagnoses, manufactures them into political power and chaos, but producing, this blog contends, just more grievance to begin the process afresh, each time more vigorously than the last.
Is there a way out of this? I’ve no idea, but it’s incumbent on the believers to keep banging on the many drums of rational policy discourse. That our state capacity should focus on the real problems; improving its insurance functions for those subject to more of the adjustment costs posed by closed and open economies alike; redistributing to the young; relatedly, addressing the housing and planning problem [specific to the UK]; doubling down on the functions where there is a comparative advantage and need, like health and education, and not invading spheres where there is little [like industrial scale pharmaceutical research!]; that migration, whatever focus groups and opinion polls say, is almost entirely beneficial.
If only all that could be sloganised effectively enough to get enough people angry enough to vote.
longandvariable 
You say that brexit will shrink the economy in the long run. This doesn’t seem necessarily logical. What is your logic behind that statement.
The reduction in trade, which is almost certain to occur following Brexit, is very likely to reduce living standards.
Certain to.
Magical thinking. Trade isn’t a magic fairy which raises living standards.
What concerns me about much of the debate is not so much that one option is “give the racists what they want”, but that we are led to believe that the only alternative is to leave things pretty much as they are (for fear of “encouraging” the racists). That binary approach suits Trump, but it also suits a lot of people who are currently quite powerful.
We probably wouldn’t be in this mess if there was more rational discourse and policy in the past, and (as you say) rational policy could get us out of this. But I think this requires some humility. We need to tell people that we know they are angry and that we agree that they are *correct* to be angry. But that the anger is misdirected. Incompetent governments, not migration, is/was the problem.
So, Obama wasn’t helping anything when he said last night that America already is “great”. He’s doubling-down on the status quo, because he is partly responsible for it.
Who is going to take the lead on this? Who can stand up to Trump, while also pointing out that the current politicians have created this mess? This is a perfect opportunity for the EU Commission to stand up to the Heads Of Government. They are supposed to look after the greater good and avoid playing nationalistic games.
Juncker should stop hiding, and come out with a big political speech attacking the status quo. But he won’t, and no other big politician will (now that Bernie has been pushed off the ballot).
“We need to tell people that we know they are angry and that we agree that they are *correct* to be angry. But that the anger is misdirected. Incompetent governments, not migration, is/was the problem.”
Where’s the Labour Party when you need it?
“grievances are not genuine”…says who? given grievances are a personal view.. who are you/we to say that someone’s grievance isn’t genuine
They may feel genuinely aggrieved. But the object about which the grievance is felt may not itself exist. This would be an example of a grievance that isn’t genuine.
Great post.
“Who are you to say…” does not deserve a response. It goes to the person, not the argument.
Hell, it is actually an example of what Yates is talking about.
“If only all that could be sloganised effectively enough to get enough people angry enough to vote.”
This is the real paradox of politics. On the one hand discourse needs to be rational and account for the true complexities of a given issue if it is to be scientific and progressive. On the other hand, the only thing that really inspires and gets people engaged is the principle of mass communication: simplification and repetition. Slogans are much more fun.
1) There is no real argument that Brexit would shrink the economy, except perhaps briefly during the adjustment period. There is an ideological argument that Brexit would cause shrinkage, but no logical reason.
2) Perceived grievance is redundant. All grievances are perceived. They’re like pains or delights in that way. Trying to dismiss a grievance by calling it “perceived” is like trying to convince someone that they are not hungry rather than feeding them.
3) I think Margaret Thatcher put it nicely when she said that there was “no alternative”. For the large number of people who have been trapped in the stagnant or collapsing portions of the economy, there was no alternative means for them to get any political attention.
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As a foreigner I followed the result on Brexit night and was surprised at the polling pattern. I really expected to see a north-south divide, probably because that divide has been around since pre-Roman days so even people in benighted countries have heard of it. Instead, it was London versus just about everywhere else. I found that pattern rather telling. For a long while, the ruling class was about London and the south, and devil take the rest of the place. Now it seems that even the south has been forsaken. That cannot be a healthy strategy. One sees it in places like Nigeria, but one would hope that the UK was more politically advanced than Nigeria.
It’s very difficult to convince people of all these arguments when the primary source of political information for most people is a news media that doesn’t care how well people do, and is very narrow minded.
Many of these problems will become lesser, as more turn to social media for their news and information is shared more freely. Information by it’s very nature wants to be shared freely.
For the time being, it’s important to do as people wish, even if you know it’s not in the best interest, and just make use of the time to ensure that people are better educated in the future. This problem is never going to end whilever those at the top have a vested interest in making sure those at the bottom are not educated in economics and philosophy. Get these subjects into state schools from a young age.
Doing as the public request is a trust building exercise. If we come out of the EU and it all goes tits up, who’s fault is it? Our own. But we made that decision together and we’ll deal with it together. Telling people they are wrong and trying to override their decision, no matter how right you are, is anti-democratic. Democracy requires informed consent, which we’re not getting at the moment because that requires that people are properly informed. The way forward is NOT to deny democracy, but to DEMAND better information.
The way forward is to honour the referendum, come out of the EU, invest in infrastructure (as hard as possible) like the author has acknowledged, and start introducing economics and philosophy into state schools, if not as core subjects, then as secondary subjects with a view to making them core subjects. In the mean time, get to work on breaking up media monopolies to speed up the transition between traditional media and social media as a primary source of information. Social media allows the full marketisation of free information – good information will flourish, and bad information will die. People make better decisions as groups than they do as individuals.
Do all these things and we’ll be a world leader.
I’m not sure your crystal ball is any more reliable than that of the hard-core Brexiters. Of course if everything were to change for the better, things would get better. Does history bear out such an optimistic view?
Until the legal and constitutional arguments around the status of the June referendum have been put to rest, and until there’s a clear and credible plan from those charged with negotiating the UK exit from the EU, I will maintain my stubborn opposition to the whole idea.
And that, I submit, is at least as democratic as any other position.
“Dismantle monetary and fiscal credibility” — that phrase dismantles YOUR credibility.
We’ve know since Keynes that the government needs to credibly promise to print lots and lots of money when necessary, and it needs to credibly promise to distribute that money to the people. “Quantitative easing for the people” is the only thing which could possibly *restore* credibility to a discredited government, a government with no monetary credibility (known for crazy hard-money policies even in recessions) and no fiscal credibility (known for crazy hard-money policies even in recessions).