Trump rides to victory on a tide of popular anger
Many facile comparisons have been made between Brexit and the election of Donald Trump today.
They have an important element in common. But the commentators have missed it.
It is said that both represent a backlash against globalisation. Others say it is a revolt of the uneducated, the marginalised, the people who have been left behind. Others emphasise the reaction against excessive immigration: “We want our country back”.
Many blame “experts”. The overwhelming majority of US economists sided with Clinton. The majority of the governors of the Federal Reserve and the entire policy-making establishment in Washington are Democrats.
Nearly 400 economists including several Nobel Prize winners wrote an open letter denouncing Trump.
Have the experts done so startlingly well as to deserve the public trust, the status, the cushy jobs, the limousines and honours that go with it? Has the economy done well under their expert stewardship?
This is where we get nearer to the nub of the issue.
What drove Brexit and Trump is a revolt against the legacy of the financial crisis:
1. The failure to manage the crisis competently and to get out of it in a reasonable span of time.
2. The unfairness of the distribution of the burdens, of the losses.
3. The fact that those at the top, those who held responsible positions as heads of great financial institutions, men who, in the view of the public showed astonishing irresponsibility and poor judgement, have “got away with it”.
The reforms that were made were just enough to prevent collapse but postponed fundamental reform, leaving the underlying monetary fabric weaker.
Most people., without prejudice against the City or Wall Street in normal times, saw that the behaviour of some – nay, of many – bankers was in ordinary language criminal.
Yet they got away with their loot.
The entire economy tanked – both in the US and UK.
We will not recover fully for a generation. Both in the UK and US, the growth model was seen to be failing to be delivering its promise for the mass of the people.
Yet no truly radical reforms have been implemented. There has been no Roosevelt New Deal (whether or not that actually helped or hindered the US recovery in the 1930s is another question – beside the point in this analysis). In the 1930s governments both in the UK and US took more radical action on housing and housing debt.
This time round, deals were struck with the banks. There was much posturing. Paul Volcker – about the only financial figure with any credibility left – was called in to help – and to decorate Obama’s platform
But for the rest the public saw only an alliance of economists and bankers cosying up to power.
So nothing really changed, as millions were thrown out of their homes and/ or their jobs
All that governments could think of was – give them more of the same: more debt, more printing money, ever more complex regulation. But the big banks are still too big to fail. They still can threaten and frighten the people and governments with their power. They still have a pipeline to the pockets of the people.
In the UK, the only man who ever really scared the cCity – former Financial Services Authority boss Martin Wheatley – was sacked by Chancellor George Osborne. For being too tough. The bankers had twisted the arms of the politicians.
The people took their chance
Will Brexit lead to reforms? Will Trump smash the banking cartel?
Very doubtful. The people will probably be betrayed again, both in the UK and the US.
But at least the people took their chance within democratic proceedures to protest, to make their voice heard.
And the protest is by no means confined to the poorly educated, the forgotten people, those left behind.
What we see is a wave of indignant rage across all classes that, like a tsunami, sweeps away everything in its path.
I do not think the people of Britain were voting to close our borders. They were not voting to stop immigration. They were not voting to turn back the clock on globalisation.
The people are not nuts
They were not voting to throw out the mixed state-market or capitalist system.
They were not voting against austerity.
They were not even voting to “take back control’. They know that in the modern world sovereignty has to be shared. They are not nuts.
They voted against gross unfairness
They were voting against unfairness. They were signalling their disgust at the disgraceful behaviour of governments and the financial elite, behaviour that any 10-year old should be ashamed of. Against the power of money and greed.
They were voting against cronyism, the revolving doors between the banks, central banks and governments, in short, against a corrupt political system.
And they were voting against technocrats who had promised financial stability and delivered one crisis after another.
Governments had not learnt the lessons of The Money Trap.
As everybody except economists and central bankers can see, we are still in the money trap.
That is what Trump’s victory has in commom with Brexit.
They are both parts of the geo-political fallout of the crisis and of its mismanagement. They will not be the last.