di Umair Haque
I have a soft spot for Brits. That should come as no surprise, considering I’ve lived in London much of my life. They’re a strange and special people. Kind and funny, wise and learned, that famous reserve hiding deep wellsprings of compassion and grace. I like them. It’s true they colonized half the world — but they gave us the vaccine, antibiotics, and industry, too. We’ll come back to that — because that’s what Brexit is really all about: empire’s ghost, the need to dominate and control, the inability to be a true equal in this world, the desperate dream of supremacy.
Brexit tells us these ugly and foolish sentiments still somehow rule this little island that I’ve come to love. My mistake, I suppose. Still, on balance, I don’t think you could haved hoped to be a better society than Britain. At least, until now. Because, my friends, when it comes to Brexit, the Brits have lost their goddamned minds.
You see, despite the fact that the majority of them would now cancel Brexit in a second referendum, nobody much seems to understand the urgency of scale of the problem at issue here. There’s just a sense of weary frustration. But if your country was going to run short of food and medicine in approximately two months — wouldn’t you want to, well, stop it? So why do both sides in British politics seem not to care?
Nobody in Britain is really explaining to Brits just how catastrophic is going to be. People sense something of it, still — how could you not — but the discussion itself is taboo. Britain’s leaders are wrapped up, mostly, in stupid, selfish, childish political games — columnists and intellectuals and pundits and politicians — all clamoring to to try to turn disaster to their own advantage. Good work, guys — what about, wait for it, averting disaster?
Even a soft Brexit will be devastating — a hard Brexit? LOL. You don’t want to know. Nobody is quite spelling this out — but they should be, in painstaking detail, with grim and brutal clarity. Let me illustrate, with three simple examples Brits should be talking about, but aren’t.
Let’s take food. About half of Britain’s food comes from the EU, directly or in roundabout way, (like from non-EU European countries, still negotiated for by the EU.) Half of its food. Being trucked in every day, on ferries, mostly. Now. Imagine even a soft Brexit. What happens? Now there’s paperwork and checks and so on. Even if they’re of a minimal kind — those trucks are going to get backed up. Now what happens? The food spoils. Remember, one of the great virtues of EU food regulations is much of it’s fresh. Spoiled food is no food. Now a nation has run short of food — even under a soft Brexit.
Now imagine that tariffs and duties and import costs come into play. Do you know what WTO tariffs on cheese alone are? 40–75%. Think about that for a second. Do you see instantaneously what a fiction a “WTO Brexit” is? You should. Why don’t you already know this?
Still, let’s be charitable, and say tariffs and transaction costs raise the cost of food by just say 10%. But that food isn’t just an output, it’s also an input. It’s used to make other food, it’s sold and resold, and so on. So the effects are additive. The person buying the food isn’t necessarily the retailer, but the wholesaler. So that 10% becomes 30%. The distributor needs to make a profit, too. That 30% becomes 50%. Wham! That ten percent has just made the price of food for the average person soar.
Now take medicine. It’s more or less exactly the same story — only worse. About half of Britain’s medicine comes from the EU. Half of its medicine. Like food, medicine is perishable. Like food, it must be transported with care. But now even the most minimal checks will disrupt the process — even under a soft Brexit. Wham! A nation goes short of medicine. How badly so? Well, consider for a moment that Britain imports all its insulin. What happens when even 20% of that insulin spoils? 30%? 50%? Where will it come from, exactly? Who will pay for it? Are you beginning to see the problem here?
Food and medicine are more or less the two basics of modern life. Without them, we’re back in the stone age — bashing each others’ heads in for bread. What happens when a society runs short of these basic things?
There are three economic effects, which always happen. Prices skyrocket. People hoard. And the black market soars. Usually, the government steps in to limit all three. But the interventions just make the fundamental problem worse — they don’t solve it. Yet the government can be said to be addressing it, so on the charade goes. The shortages grow, the prices rise and rise. As prices rise, people lose their jobs — because incomes don’t, and demand dries up.
All these things are forms of inflation. So now a society doesn’t just have a shortages problem. It has an inflation problem. How do we solve inflation? The central bank is forced to raise interest rates. But this is the precise moment in time when people cannot afford higher rates — they are already paying more for basics, and losing their jobs, too. Never mind — there’s no way to stop it. The bank hikes rates. Wham! Now you’re paying hundreds of pounds more a month to live in the same home. Can you afford your mortgage now? What do you think life will be like when the interest rate is five percent higher? Ten? You will be wiped out. It won’t take years. It will just take months.
It will happen with stunning, vicious, disbelieving speed. People become homeless. And jobless. And broke. And hungry. And sick. Is this sounding catastrophic enough to you yet? Do you think I’m kidding around? Can you pick any holes in the logic above? Go ahead and try. Don’t you think I would already know? This is the real deal, my friends, bona fide self-inflicted catastrophe, without parallel in modern history. That doesn’t mean, “oh, we have a few months when things are hard. Stiff upper lip! Keep calm and carry on!” It means a society runs short of the basics of life…for the foreseeable future…and those shortages have devastating second and third order effects, like stagflation, depression, and collapse.
Let’s talk about that one next. What happens as societies grow suddenly poorer? Again, something predictable. People, now having to focus on bitter self-preservation, do something paradoxical and foolish — they swing harder and harder to the right. Think Weimar Germany becoming Nazi Germany. Am I saying Britain’s going to go full fascist? Of course not. Don’t be ridiculous. I am saying that where the economic effect of even a soft Brexit will be economic catastrophe, the political effect of the economic effect will be a vicious circle, a feedback loop of ruin.
To undo sudden falls into poverty, a society needs to invest in itself — build hospitals, roads, schools, even just dig ditches. But a society of people focused on self-preservation doesn’t choose that often. It chooses to “tighten its belt” at the precise moment everyone should agree to just shower everyone else with money (it’s imaginary, remember?). In this, the economic effect of Brexit will be devastating, middle class implosion, working class immiseration — but the political effect will be even more lethal: it will produce a loop of austerity.
What happens when a society chooses austerity — apart from the fact that it gets even poorer, so it chooses more austerity, so it gets poorer, like America? What are the sociocultural consequences of austerity?
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