Last year I wrote a series of gloomy posts about Europe: Is this the Beginning of the End for the European Union? and The Deep Historical Roots of the European Crisis. Unfortunately, the European crisis has only deepened since then. Tomorrow the Brits vote for, or against the “Brexit”. Even if the Brits choose to stay in the European Union, there may be a “Frexit Referendum” next year, if Marine le Pen emerges as the front-runner in the 2017 French presidential elections. The Dutch may also run their own referendum.
Signs of dysfunction abound. Belgium did not have a national government for months. Lack of cooperation at the national level is partly to blame for the horrific Brussels terror attacks. Spain similarly can’t seem to be able to put together a national government. The likelihood that a future referendum on independence succeeds in Scotland or Catalonia remains high. Greece, which prompted my 2015 posts, is a bleeding wound.
Let’s think of the EU as an empire, of which we have many examples in history. Of course, it’s an empire of a somewhat new kind, because it was put together without conquest, the tool for building empires. Still the EU is not entirely new, because not all empires were conquest states. Think of the previous “European Union”, the sixteenth century’s Hapsburg Empire – it was also cobbled together by non-violent means: a series of dynastic unions.
And like what eventually happen to any empires, the EU has now entered the disintegrative phase. (For those of you not familiar with this terminology, see entries under “structural-demographic” in Popular Posts and Series).
Cliodynamics suggests that the causes of imperial collapse are manifold. In The Deep Historical Roots of the European Crisis I discuss one set of causes: the disappearance of an external threat (represented by the Soviet Union) and imperial overstretch resulting in gobbling up too much territory to the east and south.
But there are also internal causes. The structural-demographic theory points to two fundamental causes of imperial failure: popular immiseration and elite overproduction. I haven’t studied as thoroughly the situation in Germany as in the United States, but it definitely looks like Germany is following the American trajectory, although with a time lag.
Why focus on Germany? Because in many ways the European Union was a German empire. Or, at the very least, a collaboration between the German economic elites and the French political elites. Now this cooperation is unravelling, and the place to watch is, I think, Germany.
Everybody talks about how Germany managed to keep low unemployment and sustain economic growth, unlike the rest of Europe. The reforms under the Gerhard Schroeder government are credited for this “success.” But the success is a hollow one. Schroeder broke the social contract on which the modern Germany was founded: the cooperation between the Workers’ Unions and the corporate managers. As a result, we have the paradoxical situation in which the unemployment rate is low, while the proportion of Germans below the poverty line is growing rapidly.
It takes time, but as the capacity of the population to purchase goods declines, this will eventually undermine the potential for economic growth.(And yes, I know that Germany’s growth has been driven by exports, but there are limits to export-oriented growth.)
If the income inequality and the proportion below the poverty line are increasing even in the most economically sound European country, Germany, everywhere else the situation is much worse. I remember the media reporting on one Greek protester in Athens exclaiming, “It’s not right that children live worse than their parents!” But that’s the trend all over Europe. Yes, the European youth have smartphones and the Internet, and much more that the previous generation couldn’t even dream of. But they lack the economic security of the previous generation. Many of them can’t afford to live in their own homes.
The youth cohort in Europe, those in their 20s and 30s, are the highest educated in the history of humanity – and there are not enough jobs that would use their skills. History shows that the overproduction of youth with education credentials is a sure sign of political turbulence to come.
What does the poor in Germany and overeducated youths in Greece and Spain have to do with the Brexit? Just that the Brexit is only one of the indications that the European Union is failing. I may be wrong, but my guess is that the Brexit Referendum tomorrow will fail (more will vote to stay). But that will deal with the deep structural forces that are tearing the EU apart. The disintegrative phase has set in, and unless the structural-demographic trends are somehow reversed, the EU seems to be doomed.
“Schroeder broke the social contract on which the modern Germany was founded: the cooperation between the Workers’ Unions and the corporate managers.”
??? (1) You are referring to the Hartz agenda. The unions largely supported it — because the programme did not affect unionised workers. It affected the long-term unemployed. (2) Furthermore, Germany’s current position within the EU is precisely due to the continuing cooperation between unions and industry. Labour productivity has been allowed to grow faster than wage growth within the unionised sector precisely because the unions, the workers’ councils within corporations, and the managers agreed to it !! Since 1995 (before Hartz), inequality within the unionised sector has grown much more than within the non-unionised sector. Without any legislation, unions and industry agreed to decentralise, piecemeal, wage-bargaining from industry-level negotiation to within-firm negotiation. And the workers’ councils remain within the firms.
At the same time, the proportion of unionized Germans dropped and the percentage of working poor increased. So how do you explain it?
Globalization. The same force which pulled one billion impoverished people out of extreme poverty acted as a partial break on incomes and job demand of lower skilled workers in developed nations such as Germany and the US. See Stolper/Samuelson. Theory matches reality.
https://en.m.wikipedia.org/wiki/Stolper–Samuelson_theorem
Note that the theory also predicts higher returns to capital and skill, as these are even more scarce in the developing world. So we get more within-nation inequality, and higher global average productivity and median incomes. Unions are undermined in competing industries (as they flourish in monopolized areas of government),
Let me accentuate the argument I made below in terms you can relate to from your latest book. External competition (China) is forcing BETTER cooperation in the US and Germany by undermining privilege cartels. You are framing a source of privilege and defection as a source of cooperation. I take it you are familiar with the destructive role of guilds in history? Unions play a similar role in many cases. They are RENT SEEKING organizations, which promote the interests of incumbent skilled labor over the job seekers (the young) and consumers.
You are mis-classifying a source of defection as a source of cooperation.
I will add that I have nothing against voluntary unions. I have huge issues though with them using government coercion to restrict employment. I am also against employers using coercion.
Labor unions bad? They can go to excess, and their managements can sell out to business managements, but overall, they are good for improving rank-and-file workers’ standards of living. Our host, Peter Turchin, has researched US history, and he has found roughly a cycle and a half of national well-being. There was a peak during the early 19th cy., the Era of Good Feelings, a trough during the Gilded Age, another peak during the Eisenhower Era, as it might be called, and another trough coming up, if we have not already reached it. He has written about it in “The Double Helix of Inequality”, Aeon Magazine, and in other places.
During peaks, social unrest is low, wages are a relatively high fraction of GDP, not much of the population is foreign-born, wealth inequality is relatively low, and physical health tends to be good.
During troughs, social unrest is high, wages are a relatively low fraction of GDP, a sizable fraction of the population is foreign-born, wealth inequality is relatively high, and physical health tends to be bad.
Now the interesting thing about US labor unions is that they were strongest during the Eisenhower Era, and weak during the Gilded Age and around now. If labor unions are so debilitating, one would expect the opposite correlation.
“The youth cohort in Europe, those in their 20s and 30s, are the highest educated in the history of humanity”.
That’s probably true if to regard this generation in a comparative perspective, against the background of generations of their less educated ancestors. But at the same time it has been argued that neo-liberal reforms generated educational crisis that resulted in the emergence of a generation of less-educated unemployed young people, whose only way forward is through a confrontation with the institutions:
https://www.tni.org/en/article/france-from-republic-to-oligarchy
I agree with the disappearance of external threat as a cause in the breakdown in cooperation within the EU, but I must disagree with many of your other points.
First, unions in practical effect really are not a form of broad scale social cooperation. They often work (like guilds of the past) in great part as cooperative cartels — using state enforced compulsion to privilege existing incumbent workers of higher income and experience against non incumbent potential workers. They are thus a form of exploitation where the elite among workers use power and influence illegitimately to sustain privilege at the expense of younger, more disadvantaged workers. I am not in any way familiar with unions in Germany, so admittedly I may be projecting from my knowledge in the US, but from what I am reading here, Germany’s agreements with the unions seems to contradict your theory, not support it.
The net long term effect of unions is often to reduce productivity and innovation, reduce capital investment, reduce job growth, promote industry leaving for non-cartel freedom, and thus in effect starve off the very industries which they invade. I am aware that unions often arise at times of abnormal growth and prosperity, but longer term they help choke off the growth which comes — not from some sort of abstract bargaining power — but rather simple increases in marginal productivity. See the shift in industry growth and median prosperity from closed shop to right to work states over past forty years on the US.
In other words, I disagree the success was a “hollow one.” It could indeed explain why Germany is doing better at resisting the tide of decay of much of The EU, just as it partially explains the right to work states better performance on this side of Atlantic. I know this paradigm is foreign to you. But at least consider it.
Next, and more importantly, you speak of “immiseration” in the US. As I have previously pushed back, you keep repeating this to the point where you seem to have convinced yourself of its truth. In the recent Urban Institute’s report on US income and class, this decidedly not-right leaning institution discloses:
“This study showed that, from 1979 to 2014, mean real incomes per nondependent adult grew 53 percent… Between 1979 and 2014, the upper middle class more than doubled in size, from 12.9 to 29.4 percent (figure 2).7 While the share of the rich grew by 1.7 percentage points, there were sizable declines in each of the lower three groups, with the poor and near-poor falling from 24.3 to 19.8 percent, the lower middle class from 23.9 to 17.1 percent, and the middle class from 38.8 to 32.0 percent.”
I will be the first to admit that growth rates throughout the developed world slowed during the last two generations as incomes soared in the new developing nations during an unprecedented expansion of global cooperation (see Stolper/Samuelson for explanation), but the net effect is the greatest prosperity of global humanity by a long shot (which I thought was our goal).
In the US, the disappearance of the “middle class” is basically one where the “lower classes” are shifting into “higher classes”. How this can in any way be considered “immiseration” is beyond me (and the above study specifically undercounts various transfers and benefits, which gained importance through the era).
Another way of stating this, in terms familiar to a historian, is that we have seen greater increases in prosperity since 1979 in the US than the globe saw in the first 10,000 years of agriculture. And this was from a ten X higher base with faster growing populations. As a historian where exactly is the immiseration? I see the greatest step forward of all history. What do you see? The question isn’t rhetorical.
I will add that the above report does bemoan that the increases went disproportionately to the higher income groups. But this too discloses an inadequacy in the paradigm. In reality, income groups are determined annually with CONSTANTLY changing membership. Lower income groups represent life stages more than permanent classes. Doctors, MBAs and lawyers, for example, are often in lowest grouping as students, highest in middle age and then lower again in retirement.
In the US, only 13% of bottom quintile families have even a single full time worker in the year they are in the bottom — again, we are seeing income group as life stage more than permanent class, the lowest quintile basically representing the stages of unemployment, job change, retirement, and education.
Finally, you get to the highest educated youth of all time having fewer jobs. I agree this could be a problem, and again plead ignorance on conditions in Germany. In the US though, the higher educated are doing the best, not the worst. Indeed, the factors that lead to longer term (rather than short term) lower income is not graduating high school, not marrying before having kids, and of course committing felonies. High school graduates with enough tenacity to get (or create) and keep a job in the USA can earn more than 99% of all people to have ever walked this planet. Again, where is this immiseration?
Assuming kids are getting degrees in economically useful areas (as determined by fellow humans such as they are willing to pay for their services), then there is no reason within a market economy for their value to go to waste. Entrepreneurs have an incentive to discover uses of their skills and brain power. This assumes of course that sources of privilege within society don’t prevent such creativity (usually via overly onerous regulations in modern society).
Again, where I agree with you (and Mancur Olson and dozens of other historians of European enrichment) is that societies without strong external cooperation will naturally become sclerotic, over regulated, with cartels and incumbents seeking to eliminate competition and change, and elites seeking to exploit however they can be interfering with others freedom to compete and cooperate.
Sorry if this comes across as too argumentative
You keep ignoring data that is shown to you.
Look here:
https://www.census.gov/people/wealth/files/Wealth%20distribution%202000%20to%202011.pdf
By wealth, on average, every age group below 65 has less wealth in 2011 than in 2000.
Break it down by quintiles, and every quintile of every age group below 65 and below the top quintile (except the middle quintile of 45 to 54 year-olds) is less wealthy in 2011 compared to 2000. And yes, people move up and down, but based on that data, more people have moved down (at least relative to expectations) between 2000 and 2011 than up.
There’s the immiseration.
Richard,
Do you remember the recession of 2008? Look at the data on page 13 of your report. What we see is a dramatic INCREASE in net worth running up to 2005 and a sudden drop shortly after.
This is an article on long term trends in history and you are responding to me with a well known hit in wealth (asset prices) caused by a global recession?
Everyone is well aware of the short term effect of large recessions. This is not anything even closely related to long term “immiseration”.
Recessions happen in advanced economies. To claim the effects of a recession on the last five years as deeper explanation or rationalization for longer term trends is simply bad form.
Roger, it doesn’t have to be long-term. In the long run, the depression and financial fiasco of Weimar Germany was a short blip in time (and over the long-run, Germany’s economy has trended up for centuries now), but a few years of distress was enough to put the Nazis in power. And we know what happened next.
This post and the associated comments are bizarre. Although the topic is Europe, everyone is talking about everything other than the Euro-induced recession in Europe… Hello? Most of the Eurozone has been subject to fiscal austerity for 8 years now.
Peter Turchin: “the proportion of unionized Germans dropped and the percentage of working poor increased. So how do you explain it?”
Unionisation rates: as I mentioned earlier, unions and corporations switched from industry-wide bargaining to firm-level bargaining, i.e., unions sacrificed many of their members. This was not done by legislation. Someone mentioned globalisation and China, but maybe the bigger reason is Eastern Europe. German firms’ ability to move production to Eastern Europe probably reduced unions’ bargaining power.
Working poor — (1) the long-term unemployed are more likely to be employed now and receiving less benefit, this coincides with the onset of Hartz (2) but there is also this thing in Europe called a recession. In Germany, this takes the form of slower growth and stagnant wages but lower unemployment rate. In France and the Mediterranean, this takes the form of much larger unemployment rate as these countries undergo fiscal austerity. The low German unemployment rate comes at the expense of the high unemployment rate in France et al. — because Germany has been running massive trade surpluses for 8 years now.
“Do you remember the recession of 2008?”
Although there are many long-term trends that this blog does correctly highlight, I must say this blog also hypes up short-term trends which probably do not have any deep causes. For example, Donald Trump is obviously a recession/slow recovery phenomenon — just like Ross Perot was in 1992. The US labour force participation rate is still almost 4% below the 2007 peak.
The non-Europe comments are in great part a focus on the mistaken foundational beliefs behind Turchin’s post. He is proposing that Germany is following the US path to “immiseration” and a major component to this is the unfortunate breakdown of unions which he sees as an institution of beneficial widespread cooperation.
There is nothing remotely close to a long term trend toward immiseration in the US.
Unions are a rent-seeking source of defection (not cooperation) whose demise is greatly explained by external competition. They operate as a labor cartel. And cartels do not as a rule improve productivity, efficiency, investment, R&D or prosperity. To be clear, the basic theory is that external competition serves a beneficial role of for internal cooperation. We are seeing exactly this occur in the US and Germany. Yet because Turchin views unions as a source of cooperation rather than defection, he is getting everything backwards.
Meanwhile: The UK has voted to leave the EU, all the votes are in. It’s official.
Cameron steps down in October.
“… Brussels must now brace itself for similar referendums across the EU. The decision has been praised as a victory by nationalists and euroskeptics across Europe.
…the main fear now for many European capitals is that the result is likely to fire up eurosceptic populists across the bloc, triggering a domino effect of referendums in other countries and in turn threatening the core of the European project.
Arguably the most immediate risk is France, where right-wing leader Marine Le Pen has already dubbed herself “Madame Frexit.”
The National Front (FN) leader hailed the UK’s decision to leave the European Union on Friday and called for a similar referendum in France within hours of the Brexit vote being announced.
“Victory for Freedom! As I have been asking for years we must now have the same referendum in France and EU countries,” the National Front (FN) leader tweeted.
…. In the Netherlands, which, like France, is one of the EU’s six founding members, far-right Dutch MP Geert Wilders also praised the victory of the UK’s Brexiteers. The founder and leader of the Dutch Party for Freedom (PVV) vowed that if he becomes prime minister next year, “there will be a referendum in the Netherlands on leaving the European Union.”
“Let the Dutch people decide!” Wilders said.
….Despite having urged Britain to remain in the EU ahead of Thursday’s referendum, Hungary is also a likely candidate to loosen their ties with their European partners.
….Euroskeptism in Scandanavian countries is also likely to enjoy riding the Brexit wave. Much of the hostility towards Brussels has been fueled by the ongoing migration crisis.
… Amid the growing resistance to the high numbers of arriving refugees, the nationalist and anti-immigrant Sweden Democrat party has slowly become a more prominent figure on the Swedish political stage.
In neighboring Finland, the ultra-nationalist True Finn party has also seen a surge in popularity, winning almost 20 percent of the vote in the 2015 election.
The Danish People’s Party (DF) also called for popular vote on Friday. The anti-immigration party is not in the Danish government, although its provides necessary support to the center-right cabinet. The opposition Red-Green alliance also called for a vote.
http://www.dw.com/en/europes-right-wing-euroskeptics-laud-brexit-decision/a-19351836
Everybody votes for recessions and war.
Only when you leave them no other choice.
Immiseration as been advancing up the income ladder since the early 70s when NAIRU became the preferred regulatory tool of central banks, putting money supply and money cost issues ahead of full employment. This resulted in the systemic erosion of labor bargaining power (I share your skepticism of unions, but not of labor) which then resulted in a steady increase in the profit share of gross income.
That increased profit share was then used to supplement stagnant wages with credit which had the effect of tying up an ever growing share of labor income in interest and penalty payments. At the same time, public goods like health and education became steadily more expensive and less accessible putting further pressure on those benefitting from “liberalization” with lower or stagnant wages.
Electorates have repeatedly voted for change, but political systems have refused to provide them with real alternatives and the change vote has been systematically betrayed now for going on two generations.
If you knew enough people on the loosing side of this, you would understand how from their perspective violently disruptive change that promises a fundamentally new settlement for those who survive is more attractive than the stultification, decay and rot they are living with. They are already living in a pretty brutal state.
the correct phenomenon is not “euroskepticism” it’s EU-skepticism. that’s a big difference. people are voting against the EU as a polity (especially one of 500 million run by 28 unaccountable bureaucrats), not against cooperation with other European people.
so we can expect the UK to try to stay within the EEA (European Economic Area) which provides free movement of goods/people.
the “EU” the political union dates from the Lisbon Treaty (2007). this was the Constitution before they changed the name of the document to a Treaty to stop the number of referendums that were promised to the peoples of member states by their governments if ever there were a “Constitution.”
“EU-skepticism” (at who leads and shapes the European polity/polities) is fundamentally elite-level dynamic where as euroskepticism describes a popular xenophobic phenomenon that downplays elites and emphasises less-educated working classes.
Good luck with all that. Especially since immigration was a major factor inspiring “Leave”.
That’s controversial and I would disagree.
It’s not easy to say what caused the Leave vote but immigration would not be the top reason for the majority of the voters because immigration had nothing to do with the question being asked at the poll.
UKIP is the clearly identified strong anti-immigration party and at the General Election in 2015 it polled 12.6%.
In the referendum Leave got 51.9%. Huge difference there and certainly not all of the additional voters voted due to concerns about immigration.
Skeptical? I know why.
The official government-funded campaigns were very one-dimensional, one side all FUD (fear-uncertainty-doubt that wasn’t true) and the other side all anti-immigration rhetoric (that wasn’t relevant to the referendum – Norway has relatively high levels of immigration and is not in the EU).
Reading the media narrative you would assume that what the media is covering is the hot topic. But no, it was just covering the official campaigns in which established Westminister elites talked nonsense to each other without managing to inform the public about the nature of the European Union or how an exit from that political union might proceed.
This one-dimensionality between the campaigns was reflected back in the media coverage so by looking at the media you would not know that Leave voters had any other major concerns, or indeed possessed wholly different voting profile, to that of the anti-immigration voter.
I strongly recommend you read this as a taster of one other kind of Leave voter that was responsible for the total reaching as high as 51.9%. There are other kinds. It’s a diverse bunch.
http://eureferendum.com/blogview.aspx?blogno=86116
We’ll see who’s in charge and what policies are in place when the dust clears.
Did the English leavers also wish for Scotland to secede? Because that is essentially what they voted for.
And I won’t even touch North Ireland, where a hard-won peace is now needlessly put in to jeopardy.
The Leavers are a diverse bunch. It depends who you ask and the reasons will be different in all cases.
Some would love Scotland to exit the Union for the general reason it would be preferable for the Germans to pick up the tab instead.
Some would wish Scotland stay in the Union because they strongly believe in their British nationality (Royalists?), whatever that means, or because they believe Britain together would be stronger in the world, whatever that means.
Some would like Scotland to exit and for the Union to disintegrate completely, creating many independent regional states, like Wales, Cornwall, London.
There is a growing realisation among many that Westminister has too much power and politics at all levels in all locations need to be restructured. Scotland is a symptom of a wider problem and its needs could be met with wider political reforms. http://harrogateagenda.org.uk/
That said, 38% (or 1 million) of the Scottish electorate voted Leave in the EU Referendum. Would Scotland choose to vote for independence if they knew they would not be able to gain entry into the European Union afterwards because they did not meet the financial criteria for entry?
The unique political situation in Northern Ireland should not determine the decisions made by the rest of the union. However, the most likely exit scenario won’t see much change there (free movement of people, goods etc. retained in EEA), so I don’t understand why you think their peace is in jeopardy.
How rational are people?
Yes, the Leavers are diverse, but only one set of policies will win out, and it may not be the one you want.
There is no “one moment” when everything stops and there is a final winner, so personally I don’t think it is sensible to think in terms of “winning” except for short term contests that have a well-defined set of rules.
In those cases winning becomes fun, because it’s a game, in which all sides have agreed to participate, with the effects of the result known in advance. Otherwise “winning” tends to be at the cost to others and the lack of rules can make the results exploitative.
So effective management, cooperation between people, is always more important than one side winning out over the other.
It is unlikely there will be “one set of policies that will win out” in near future Brexit. There will be compromises between all sorts of policies. They may trend towards a certain type. It’s possible that they may trend one way, then swing wildly the other way, briefly, as various different factions gain power and then lose power.
This chart, which shows voting intentions, may interest you. From a polling agency.
“When casting your vote, what was the most important issue in your decision?”
http://a.disquscdn.com/uploads/mediaembed/images/3862/2071/original.jpg
Supports what I said that immigration was not top of the list for the Leavers, was most important for about 34% of 17.4 million with the legitimacy of the lawmakers being the primary concern.
That is elite conflict. Elites in Britain being shut out by elites in Brussels aided by Westminister elites with strong old public school tie connections (Eton, Oxford).
Boris Johnson, one of the main self-appointed leaders of the official Vote Leave campaign, went to Eton and Oxford, as did David Cameron, the British Prime Minister who was the leader of the Vote Remain campaign. Moreover, Johnson, Cameron and British Chancellor George Osborne were all members of the elitist Bullingdon club at Oxford University.
http://www.thedailybeast.com/articles/2016/01/09/breaking-the-bullingdon-club-omerta-secret-lives-of-the-men-who-run-britain.html
The official opposing factions of the campaign were essentially the same people. When you factor in educated people exist outside of the London bubble there is a lot of elite competition in the UK. Radical downscaling of government to county level might create enough status positions to head-off complete chaos. However, other solutions might present themselves.
Elite conflict, yes, but elite conflict where the young are thwarted and their future stunted even though they voted by a big majority to stay. Rather, those who will be dead in 20 years carried the day. The tragedy is that the consequences of their vote will far outlive them.
It is very speculative to suggest that the future of young people in 2016 Britain lay with an anti-democratic supranational organization that was an economic basket-case that could have collapsed in on itself at any time.
I’m not sure you properly understand what the benefits to the young people in the UK of being outside this political union were, which remember, was only in essense a political union with a limited number of high status positions for a few rich and well-connected people.
There will still be non-governmental organizations, governmental organizations, domestic governmental organizations, there is the possibility of more governmental positions within Britain with provincialization, or more intra-governmental status positions as Britain might negotiate a more democratic successor to the EU, initially based on relationships with those European countries (Iceland, Norway etc) not in the EU.
So what were the benefits to the youth of staying in the European Union that could be had outside (I take for granted you know the difference between the EU and EEA/EFTA)? I for one am baffled.
Nothing in international affairs stays static. You may hope for an ideal future, but that does not mean that your idea state of affairs will come in to being. Staying in the EEA is not a certainty now that the dam has been breached. Furthermore, it’s likely now that financial services firms & banks, at the least, will pull out of London/the UK. Probably some other businesses as well. If they want an English-speaking city, Dublin will be welcoming (Edinburgh as well when Scotland leaves). Research funding from the EU will also now dry up.
At no point in our exchange have I suggested an ‘ideal state’ or ‘ideal future’ so meanderings on “your ideal state of affairs” is completely misplaced. I’ve argued against this point when I said “cooperation between people, is always more important than one side winning out over the other.”
Research funding –
Will be replaced by increased researched funding from national bodies that, now they need to actually govern for themselves, will need expertise to help them.
The UK will participate in pan-European research from outside the bloc (on the increasingly shaky hypothesis it holds together) with funding going both ways.
Consider Norway has contributed to projects like Horizon2020, Erasmus+, the Consumer and the Copernicus research programmes from outside the EU.
The are specific arrangements that can be made between the UK and the EU and its various agencies that conduct research – cooperation does not have to end just because the UK is not within the EU.
The idea that research funds would dry up once UK leaves the EU was a combinationof limited imagination and scaremongering.
There will be winners and losers. So long as you’re not sitting in an EU-funded John Monnet Chair of European Integrationist Studies you shoud be okay.
Financial services
The EEA is the go-to first stop but only a temporary solution. At no point have I suggested the EEA as an ‘ideal future’. Why should it be?
In the short term, the Financial Services and Markets Act 2000 guarantees the right of firms to operate in any EEA state if it is already authorised by an EEA state “either by exercising the right of establishment (of a branch and/or agents) or providing cross-border services.” This suggests the risk of flight of financial services firms has been overstated, at least in the short term.
One good reason to leave the EEA in the longer term would be to lose the Alternative Investment Fund Managers Directive which it ties us to. This will make our financial services sector more attractive to non-EU firms.
Again, you win some you lose some. It is unlikely that Brexit will cause London commuters of the future to seek radical new directions for employment or employment in exotic places.
In terms of financial and accountancy regulations these are not generated by EU institutions, they are set by international bodies so nor there will not be any significant ‘red tape’ or confusion in law to deal with due to Brexit.
What I would say is that out of the EU there are more pathways that the the people of the UK can follow to benefit young Britains.
One good example is ending corporate tax avoidance scams. Within the EU the British government cannot demand a large financial services company (or any large corporation like Amazon or Starbucks) keep its profits from UK trading in the country to be taxed. The “free movement of capital” guaranteed by EU treatises means that they can shift it abroad – to cities like Dublin, or wherever else convenient for them.
That is no good for young people of Britain as lower tax receipts means less money spent on national services like education and research programmes etc. Corporate tax avoidance is a big issue among young people and were they better informed about the nature of European Union law they would know where to point the finger to solving it.
Leaving the EEA would enable Britain to assert capital controls and thereby deal better in the event of financial crises that can be extremely damaging to the financial services sector.
There are plenty of options and new possibilities for creative young people to explore outside of the European Union.
http://www.eureferendum.com/documents/flexcit.pdf
The European Union was an elitist club for elitists, who chose to solve the problem of war and peace in Europe in a way primarily to the benefit of themselves. We now have many great educated young people and competitor elites in Britain and Europe, much more compared to 100 years ago, as well as enabling communication technologies like the internet: new possibilities of governance exist to be explored.
We don’t know where that future is precisely going but demographic-structural changes mean it is not going backwards.
The EU is increasingly flailing about in and will soon to be extinguished by real world changes it cannot possibly adapt to. It’s an authoritarian relic of an era where deals could be done in smoke-filled rooms and imposed on the “masses” of less educated peasants. What made it effective then makes it irrelevant now; indeed, for the competitor elites, an obstacle. Brexit shows that the EU is an obstacle that can be overcome.