National Pride

The UK Vote and the American Election

Economists have it wrong.  Humans are not "economic man" we learned about in Econ 101: rational maximizers of self interest.   

We are the humans we learned about in Antro 101: religious culture-bound people with quirky sometimes self defeating customs.

Samuel Huntington's book, The Clash of Civilizations and the Remaking of World Order was controversial when written, and discouraging.   His former student, Francis Fukuyama had written a book The End of History and the Last Man which argued that with the end of the Cold War humans would get down to the simple business of creating and sharing wealth and prosperity, being too busy as consumers trading with one another to fight over stupid things.  Since we were simply trading partners there would be nothing really to fight about.

Huntington said that the end of the cold war would mean we would fight about the stuff that was really important to us.  Not food nor shelter nor business.   We would fight over language and religion and culture.   It was a grim future, Islam against Christianity, Roman Catholic against Orthodox, Chinese against Japanese.  It was a reprise of every ugly disgusting war of the previous centuries. 

The "west" is blue; Islam is dark green

No wonder people hated the book.   It turns out he was right.

British voters just chose nationalism and sovereignty over economic integration.   They resented the bureaucracy of economic integration and they disliked the free movement of labor which manifests itself as too many dark skinned foreigners migrating into their country.  They wanted to re-assert national boundaries and reaffirm boundaries.   They chose nation-hood (Huntington's elements of civilization (commonality of race, ethnicity, language, customs, food, religion) instead of the economic integration and presumed greater prosperity.

Britons, in the face of near-universal assurance by learned authority figures that a vote to exit the European Union would mean less prosperity voted to re-affirm nationalism and self-determination instead.

Anthropology beats Economics.

Trump congratulated the voters:  they took their country back.    Will the vote serve to empower similar impulses in the US, the people who voted for Trump in the primaries and some of the people who voted for Sanders?   The vote certainly shows that Trump has located a movement greater than simply himself personally.  It isn't just Trump-the-celebrity.  Trump represents a desire to assert nationalism over globalism, America First not America the cooperator.    Progressives may hate it but Trump is on to something that motivates voters.

Trump looked confident and self-assured in his press conference in Scotland, but the mainstream media interpretation of it turned his self confidence into Trump-cluelessness and vanity.   He was apparently ignorant that Scottish voters overwhelmingly wanted to remain in the EU and he was in Scotland, and Thursday's vote may mean the dismemberment of the 300 year old United Kingdom since it will inflame Scottish independence pressures.   It would be as if a Brit came to Charleston, South Carolina in 1860 and congratulated Americans for voting to elect Abraham Lincoln the president.     

This will not translate down to the regular voter but foreign policy elites of both political parties will see this as further evidence of Trump's dangerous ignorance, and some will speak out.  Although, importantly, this may not matter since voters are intentionally rejecting the opinion of educated authoritative elites.   The Scotland press conference is an unusually crisp example of the difference between how differently an event can be read by two groups--elites observing an ill informed narcissist bragging about his luxurious properties in the face of economic suicide,  while the general public sees a strong, self confident man calm and steady amid a gaggle of alarmed reporters.

There was immediate economic damage in America, although it may not be enough to matter.  Trump serenely said that, yes, there might be some short term worry but that in the long run this was good for Britain and the world.  Here in America, stock market investors lost 3% of their money overnight in US stocks, and global funds lost some 8%.   Banks stocks did even worse.  We will see if this is a one day event or something much bigger.  British exit may trigger a European recession which will hurt everyone, including American exporters.   If this is the harbinger of many more days of economic chaos, and if more damage happens and it can be attributed to Brexit and Trump, then this will help de-legitimize nationalistic acting out by voters.  I would expect Wall Street leaders publicly to condemn Brexit, to express reservations about Trump, and to endorse Hillary.   But, again, Wall Street endorsements may hurt Hillary more than help her.

Worse, the British exit could trigger an American recession and reverse the story of the Obama recovery after the Republican economic failure of 2007-08.   Voters will consider economic slowdown a failure of Obama/Clinton, not a failure of Trump-beloved nationalism triggering job killing chaos.    I currently see help wanted signs all over my home town of Medford.  School bus drivers are at busy intersections holding up signs urging people to apply for jobs.   It is harder in this labor market environment to think "immigrants are taking all the jobs."   But the job situation could change and an economic slowdown is more likely to hurt Hillary than Trump since immigrants are a more visible cause of unemployment than are recessions triggered across an ocean.   Trump is the one saying things in America are terrible now.  A recession proves his point.

The economic news of the next few days will help determine whose narrative is the more powerful.   Will the Trump-supported vote for nationalism trigger huge financial loss in America?   If so, Hillary will say it shows that Trump is a risky, undisciplined choice.  Vote for Trump and you destroy your retirement savings.

If the markets rebound and things go back to the status quo ante then it will document that the world can have both economic and cultural nationalism AND steady markets and a strong economy.    Trump supporters should wish for a speedy rebound in markets.

Hillary supporters should wish that their 401k accounts take a big hit and they can blame it on Trump.  Unless, of course, the 401k hit precedes a recession, in which case Hillary is hurt.   

The ideal for Hillary would be for investors to be hit hard, quickly, sending a message that Trump is bad for business, but for the Main Street job market to stay strong so the Obama-recovery story stays intact.    The ideal for Trump is a worldwide recession with everyone pointing fingers but that ultimately voters blame on the people in power generally, and Obama-Hillary in particular.