Sunday, June 26, 2016
The Brexit Breakdown and What It Means for the UK and the US
I'll be honest, prior to last Wednesday if someone had mentioned Brexit to me, I'd have thought they were talking about a new sandwich from Subway. I probably would've asked, What the fuck's a Brexit?
That's the problem with living across the pond, as they call it. It isolates you from the rest of the planet. By Thursday, I was reading up on it and still didn't think it was all that much of a big deal. No way in hell the Brits leave the EU, I said to myself. This is a non-issue meant to distract us from what's really important, like who Hillary will tap as he running mate and the ramifications of Trump firing his campaign manager. Indeed, the early exit polling on Thursday showed the Remain vote in the early lead. The Dow soared 200 points as markets reacted favorably to what most thought was a done deal.
Then Friday morning arrived and the shit hit the fan. The UK, by a 52-48 margin, voted to exit the European Union. The same Dow, that only 24 hours earlier had climbed 200 points, plummeted by more than 600; 400 in just the opening minutes. The Pound fell to a level not seen since 1985, and the British economy lost $172 billion overnight. Markets all over the globe were in a panic as investors were selling everything but the kitchen sink. If your 401k was heavily invested in stocks, you took one helluva hit. On the other hand, if you were holding US treasuries, it was a pretty good day for you.
So what happened? And more importantly what does this mean for the UK and the US? To answer the first question, it's important to face an important fact. This vote and the movement that spawned it did not spring up overnight. It has been slowly building up steam throughout much of Europe for about the last decade. We've only started to take notice of it here in America since last fall when both the Donald Trump and Bernie Sanders campaigns began tapping a vein of discontent within the American electorate. That populist wave delivered Trump the Republican nomination and damn near delivered Sanders the Democratic one.
And make no mistake about it: what's happening in this country is eerily similar to what's going on in Europe. Anybody who doesn't see the parallel is blind. Those who voted to leave the EU cited the following reasons: fear of immigrants taking their jobs away, fear of losing their country, resentment over wage stagnation, fear of trade and globalization, loss of sovereignty.
Sound familiar? It should. With the exception of the sovereignty argument, every one of the above could just as easily come out of the mouth of a Trump supporter, perhaps even a Bernie supporter, sans the immigrant fear. Trump's Mexican-border wall and call to halt all Muslim immigration, as well as Sanders's railing against NAFTA and income inequality is the sort of populism that has come to define American politics these days, and regardless of what happens in November, it will have far-reaching implications in this country for years to come.
We still don't know how this will fully play out in the UK. Already there are calls - 3 million of them - for a second referendum, as more and more Britons begin to have buyer's remorse over their vote. Apparently it didn't dawn on them that severing ties with a market as large as the EU could have such negative consequences. No doubt predictions of a permeant loss of 2 percent of their GDP is scaring the bejesus out of the blokes. And now word is coming that Scotland, which recently voted to stay in the UK, might seek another referendum to exit it and stay in the EU. If Scotland leaves and, with it, Northern Ireland, you can kiss the United Kingdom goodbye. Merry old England will be a very small place, not only geographically, but geopolitically, as well. That's what happens when you leap before you look.
But what about the United States? I'm guessing that the fallout in Great Britain will have some impact here. There's nothing like watching your 401k lose 10 to 20 percent of its value to leave a bad taste in your mouth. But if I'm Hillary Clinton and the DNC, I wouldn't sit back and rest on my laurels. If anything, I would take this opportunity to go into reset mode. They need to take this movement seriously. It's virulent, irrational and defiant. And it runs counter to everything we know about political movements, which means it's very hard to predict, and thus very hard to poll accurately.
I suspect that's what happened in the UK. Only 24 hours before the Brexit vote, polls show Remain leading 52-48. The result was Leave 52-48. That's a 4 point deviation. That sort of error simply doesn't happen in modern politics, which should tell you that there's something profoundly wrong with how pollsters are getting their sampling data. It's also quite possible that many people are hesitant to reveal controversial views to pollsters for fear of how they'll sound.
If that is the case, and I think it is, Hillary's 6 point national lead could be as little as 2. And, even worse, her narrow lead in most swing states could well be a narrow Trump lead. I mentioned in an earlier piece that Trump was capable of pulling off a narrow electoral win this November. The election results in Britain confirm that this is a very real possibility. If the pollsters here are off by as much as the UK pollsters, Donald Trump could well be the next president of the United States.
Think about that for a moment. Since clinching the GOP nomination in May, Trump has had the worst six weeks of any presidential nominee ever. He has no campaign staff to speak of, he has approximately $1.3 million cash on hand, compared with Clinton's $42 million, and he's within the margin of error in some states. That Clinton isn't ahead by double digits should be a real concern for her supporters and the DNC.
Of course it's still way too early to panic. Four years ago, President Obama was only half a point ahead of Republican nominee Mitt Romney in June, yet won handily in November. But that was then, this is now. The political headwinds are blowing in the opposite direction in 2016. Out is in and in is out.
So what should Clinton and the Democrats do to deal with this movement? Well for starters, they need to realize that the usual rational arguments are not going to work. They certainly didn't work in Britain. There was a plethora of evidence suggesting that leaving the EU would lead to the very things we are now witnessing. That didn't stop a majority of voters from voting to exit anyway.
Similarly in America, Trump's critics pointing out his numerous outlandish and racist statements have not disqualified him, as they most assuredly would've with any other politician; rather, they seem to have increased his popularity among his supporters. He not only easily won his party's nomination, he is, as I alluded to above, very much alive in this presidential race.
You can't reason with the unreasonable. So how do you win? By extolling the virtues of what it is you stand for. To badly paraphrase Wayne LaPierre, the only way to defeat a bad idea is with a good idea. The mistake that David Cameron and the Remain group made was to attempt to frighten Britishers into not voting to exit. The reason it didn't work was because Cameron never spelled out what the virtues of remaining were. Saying something bad will happen if you vote "X" doesn't explain why you should vote "Y".
When President Obama visited Britain back in April in an attempt to persuade them to remain in the EU, he basically said that if Britain left, they would be at the "back of the line" for trade deals. Here's a hint: if you're trying to make a persuasive argument to your audience, it's helpful not to insult them. Obama's comments became fodder for the Brexit supporters and, no doubt, played a role in the eventual outcome.
If I'm Hillary, I take heed of what happened in the UK and do just the opposite. I'd acknowledge the pain that people in this country are going through. Don't be condescending or dismissive; instead make an effort to connect with them. I know empathy is not her strong suit, nor for that matter is it Obama's, but she must try nonetheless. Whatever else you might say about Bernie Sanders: he was able to connect emotionally with his supporters in a way Hillary still hasn't learned to master.
With that in mind, her best course of action is to take away the one argument Trump has: that he knows how to fix the mess we're in. She needs to expose him as the snake oil salesman he is, without insulting his supporters or those that are on the fence. This will be tricky, but it can be done. To a large extent, Trump is already doing a good job of exposing himself. At times it seems as though he doesn't even want to win the presidency.
By laying out a clear vision for the country and by behaving the way a commander in chief should, Clinton can differentiate herself from Trump in the eyes of millions of voters. Of all the strengths Obama possess, none have proven more invaluable than his ability to be the adult in the room. It was that poise, I believe, that helped put him over the top in 2012, and it could do the same for Clinton in 2016. Above all else, voters want their presidential candidates to look presidential.
While it's true there are differences between the Brexit vote and this year's presidential vote, it still comes down to making the case for your side. The Clinton camp has two big advantages here: One, it knows what the Remain group did wrong and, therefore, it can avoid making the same mistakes; and two, unlike the vote in the UK, the 2016 election will not be about a single issue. The character of the candidates will likely be the deciding factor.
There can be little doubt that many voters in the UK are expressing regret over their vote. Hillary Clinton's job over the next four months will be to ensure that the American electorate doesn't have similar misgivings this November.