26
Jun
16

Brexit – Implications for the USA

There is nothing like a good story to breakup writer’s bloc. Brexit was a surprise story that has lots of parallels between United States and England. England voted to leave the European Union because of the following reasons: they were unhappy with its present economic malaise; there was a  feeling that government was not listening to them; and there was fear of more immigrants coming into the country.

One of the sad points of the story, however, is the misinformation which got the vote passed.. It is true that all nations in Europe and the U.S. have been suffering through less than vibrant economic growth. The incorrect assumption is that immigration is the cause of loss of good paying jobs. Which is totally wrong. For example, in the United States, many Americans blame immigrants, especially from Mexico, of taking away many good paying jobs. But the loss of good paying jobs has, mainly, been in manufacturing and its associated jobs, which has nothing to do with immigration. Most of the jobs that immigrants take are very poor paying jobs (often less than the federal minimum wage). And a large percentage of these jobs are in agriculture (and believe me, they are almost no Americans willing to take those jobs – I have seen it in the 2009 recession). Certainly, there are small exceptions, for example, in Southern California, there are immigrants that make clothing, but the pay scale is close to minimum wage. Other than that, immigrant workers are not in the manufacturing area, except for the foreigners which come through working visas (which is altogether different problem that needs to be handled).

The real reason for the economic malaise is globalization and free trade. Put simply: tons of cheap stuff is being made by slave labor, sent without import tax (into US and Europe), underselling home made products. This phenomenon causes the loss of good-paying home-made manufacturing and associated jobs. US businesses pile on to the problem by eliminating American jobs and opening up plants in China, Vietnam, Mexico and India (offshoring). The impact hits hardest on the small towns and small businesses.

There is definitely a correlation between England’s Brexit Vote and the upcoming United States Presidential election. The electorate in the US is, also, quite angry (although for different reasons). The Left is angry due to economic inequality. This is basically The Occupy Wall Street movement which has a mistrust of the Big Banks and large corporations who have passed laws against the will of the people (like the Free Trade agreements such as NAFTA and the WTO and the on-going Trans-Pacific Partnership (TPP) agreement being negotiated). The Occupy movement is tired of the Republican policy of trickledown economics that have sent all the profits going to the top 1% of the population and destroying the jobs and depressing the wages of the middle class. The Right is angry, because it is just angry. This is the Tea Party. It is part nativism – fear of immigrants and people of color and part just angry in general which seems to be all directed at the 44th President of the United States and all government. They do not seem to have a plan for improvement but are against things in general. That is why year after year, the Republicans elect people to obstruct government from working.

Implication for the 2016 U.S. Presidential election.

Anger about the current situation is good, especially if you know the circumstances that are causing it and voting intelligently to reverse it. I can not say the Brexit vote was voted on intelligently – it seemed to be more of a protest vote. As many Pro-Brexit voters said afterwards, “I just voted to protest, I didn’t think it would pass.”  Well, it did pass and now their future is uncertain. Whether the decision for Britain to exit the European Union is good or bad, remains to be seen. If the British government just concentrates on immigration, then most asssuredly the British economic situation will  not improve because it is not the problem for the economic malaise in the first place and it would result most likely will cause a moderate to severe recession.

A lot of people who vote for change for the sake of change, never entertain the possibility that things could get worse. Take, for instance, recent U.S. history. In 2000, the American people were not satisfied with its best economic growth in decades with its rapid decline of the US federal deficit, so the US decided for a change. George W. Bush was elected. Instantly, he put the US into a two year recession and then 5 years later, the greatest depression since the Stock Market crash of 1929. Now, we are looking at replacing a President that has been behind 7 years of continuous economic growth, granted it is not robust, but it never will be – not until the Republican policies of trickle down and unrestricted Free Trade are eliminated.

The Candidates

The Presidential candidate for the Republican Party is Donald Trump who is pure Tea Party. He is a born-millionaire who has never talked to a middle class or poor person in over 50 years. The only issue that separates him from classic Tea Party is “Free Trade”. He says he is all for Free Trade but wants to change the treaties we already have, but without any specifics. Personally, he continues to outsource all of his clothing to China and does not talk about bringing these jobs back to the USA. Also, in a May rally in California, besides the chants for “Build the Wall” one of supporters said “Down with Free Trade and no to the TPP”. The supporter started the chant “No TPP”. Trump joined the chant saying “No PPP”. The fact that Trump who is against certain Free Trade agreements does not even know what the TPP is shows that he is truly clueless. He is definitely not serious about Free Trade or offshoring of US jobs. Nor does he talk about breaking up the big banks, he wants to repeal regulations placed on Wall Street which caused the Great Recession in the first place, and his tax plan gives more tax  breaks and decreased taxes for other millionaires like himself. He is the exact opposite of the Occupy Wall Street movement. His continuance of trickledown economics, his ideas of letting big corporations running things unabated and the continued off-shoring of US jobs is a giant disaster ten times worse than the election of George W. Bush, who was a horrible President.

The other candidate from the Democratic party is Hilary Clinton. She has stated she is for more regulation on Wall Street and the Big Banks. She has said that she is against the Trans-Pacific Partnership (TPP). ALthough, previously she said she was for it. Clinton is also in favor of raising the federal minimum age (Trump is against this). The knock on her is that her competition, Bernie Sanders, who is much more left, had vowed to break up the Big Banks and has been consistently against all Free Trade agreements for years. Sander’s message has resonated with the extreme left. Clinton’s more moderate views have left some Democratic voters without the fiery passion that Sanders brings.

The Outcome of the Presidential Election

The outcome of the United States will be determined by many things. The nativism movement – dislike of anybody that is otherwise white and of Western Europe- is popular in about 30% of the US population. This 30% will vote for Trump no matter what other policies he supports. The fear of immigrants is a large issue that touches a broader section of the USA. If Trump can convince Americans that immigrants are the problem, similar to Hitler convincing Nazi Germany that Jews were the problem, then Trump will win.

Mexico is not the problem, there is no net immigration from Mexico for years, they are not coming over the border to take good-paying American jobs. The bigger problem is American companies eliminating American manufacturing jobs, moving these jobs to Mexico. The work visa are actually a bigger problem to good paying jobs and this needs to be fixed.

Free Trade is a double edge sword. Free Trade is great for countries that have the same values, but it puts American jobs at risk in dealing with more impoverished countries with different values.

Financially, the United States is financially strong, it is resistant to recessions of many other countries. However, the middle class has diminished and the new profits need to be shared. Getting rid of trickledown policies would help this. Changing Free Trade policies with impoverished countries including China and investing in more American manufacturing would remedy this. If we don’t do this, eventually we will have no choice but to destroy the whole political process. But I do not think we are at that point – not for another 15-20 years.

Go figure that the American public thinks that Trump would be better for US economic situation. Yeah, if you want to file Chapter 11.

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9 Responses to “Brexit – Implications for the USA”


  1. June 26, 2016 at 4:46 pm

    Hello from a depressed England.
    Try having a population density of 660 people per square mile, then compare it to the USA which has 85 people per square mile.
    Then, figure if you’re the nation that has 660 people per square mile and has accepted a further half a million people every year for the last decade and more to come.
    If you couldn’t get your child into your local school, you’d probably be upset. If there was a five day wait to get into your doctors office and you were really sick, you may get upset about that. If there were too many people on the bus, or your route to work was constantly jammed by traffic, which got you in late and a reprimand, that might be a little problem for you.
    Blaming immigrants is not really the issue. It was unlimited immigration with no criminal checks on an island too small and unprepared to receive those immigrants.
    Though a percentage voted because of this, the majority of Brexiteers voted Out because they watch London billionaires (who have forced real Londoners out of their homes and on to streets) squander money while none of it trickles down to the people of England and Wales. While we are heavily taxed to pay the EU, my City watched our factories close while the EU pays for them to be rebuilt in Turkey as they do not have a minimum wage. We are not allowed to fish from our shores, but have another country fish it for us charging twice as much for their own country. Farmers are payed meagre grants not to farm and watch their crops rot while their local supermarkets owned by foreigners are filled with vegetables from other countries. We are heading for a recession now, but it is not just about the economy either. This just might be the biggest step towards anti-globalisation this Century.

    • June 27, 2016 at 5:47 am

      Dear Southamptonoldlady,
      Thank you for the feedback. I do realize that my article is a simplification of all of the reasons for the decision to exit the European Union. You did reinforce my argument about immigration and the problem of:globalization, Free Trade, offshoring and the powerful people that control this. But, for you enumerated many issues about the inefficiencies and frustrations of every day life. Your inability to get into to see your doctor often mirrors the problem Americans have getting into their doctors and they have private insurance. People in the U.S. rarely ride buses and traffic is the way of life. And our government also pays farmers not to grow things and we keep importing fruits and vegetables from other countries as well which undersell our home-grown produce. Whether you are in the EU or not, those frustrations would not solve themselves. I agree that we need to take a step back away from globalization. -Jack A

  2. July 1, 2016 at 8:47 am

    I have just read your article about what to do with all your used clothing with great interest. What a fascinating post. Here in the UK we do not have enough land for this sort of filling. There is public conscience as needs must. Nearly all clothing is donated to charity shops here (a bit like your thift stores). Nearly everyone shops from stores as well as from department stores. Anything that cannot be sold on the shop floor is sold at next to nothing by the kilo to rag merchants. Rag merchants sort out the clothing. Piles of useful clothing are donated to areas where there are emergency disasters or to impoverished areas throughout the world, leather goods and fur are sent for further recycling, others are cut up further to make stuffing for furniture, building materials, such as insulation or industrial burning bricks – a cheap source of power. It seems to me that there are missed opportunities to make a living here.

    • July 2, 2016 at 4:40 am

      The United States, in many states, have more than enough land to have landfills. The biggest problem the US has is its reliance on big volume discounters. These huge warehouse stores buy products by the tons brought in by gigantic shipping freighters. When they don’t sell, they trickle down to other discounters who then eventually dump it all. There are opportunities in this excess, but at this point nobody had taken advantage of this condition. Jack A

  3. July 2, 2016 at 1:46 pm

    I used to think that Americans were the uninformed dolts. Then I listened to interviews of Englishmen about why they voted for Brexit, and they sounded just as stupid as Americans. This time, the accent did not make them sound more intelligent. ;(
    If Brexit can happen so can Donny Boy. People are angry and fearful and that leads to poor decisions.
    WTO? I’d say WTF.

    • July 2, 2016 at 9:19 pm

      You are exactly right. The English are supposed to be smarter, I think overall in many subjects they are. Compare that to the US, I mean 27% of Americans think that Obama was not born in the United States. Jack A


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