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Understanding "Brexit"

The referendum on whether Britain should remain in the European Union delivered a political and economic shocker: 52 percent of voters favored leaving the EU; 48 percent favored staying. The polls, the pundits, and the betting parlours all predicted no "Brexit." The vote would be close, but Britain would remain.
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The British today have an identity problem - but this is nothing new.

The referendum on whether Britain should remain in the European Union delivered a political and economic shocker: 52 percent of voters favored leaving the EU; 48 percent favored staying. The polls, the pundits, and the betting parlours all predicted no "Brexit." The vote would be close, but Britain would remain.

Oops. The pound sterling dropped to its lowest level in 30 years, and now there appears to be some misgiving about the outcome, as many "protest voters" who voted "leave" to send a signal to establishment elites have now surfaced to claim that they really didn't mean it after all. They didn't think their "leave" vote would actually result in, well, leaving.

Since the 1970s, Britain has never been "all in" when it came to the EU. Prime Minister Margaret Thatcher favored closer integration of Britain with Europe in many important areas but drew the line (wisely, it now appears) when it came to currency union. But now Britain is "all out," and it is unclear whether this will be an economically wise decision in the long term.

From 1973 to 1975, I lived in Britain as a graduate student. Those years saw the country at an economic and political low point: stagflation, a bitter miner's strike, feckless Conservative and Labour Party leadership, and unrest in Northern Ireland. Mrs. Thatcher changed all of that and championed reforms that created today's thriving London and its presence as a global banking and financial center.
The problem, however, seems to be in the rest of the country, where the glitter, glamor, and wealth of London has not played out so well, even though overall UK unemployment is now at a low 5.1 percent.

In my student days, I sensed that Britain was keenly aware of its role as a former global empire and was still searching for an appropriate, comfortable place in the world. Would it be a leader or a follower?

I will never forget one exchange over breakfast one day in my college. A college employee was arguing -- seriously -- that Britain should become the 51st American state, while another opined memorably that "the problem with you Yanks is that you're all overfed, oversexed, and over here!" I remained silent through this debate.

Notwithstanding the humor, this exchange illustrated the ongoing British identity issue: go it alone or join something larger than the United Kingdom (somebody else's empire?). More than 40 years later, the same debate is being replayed, but this time within the context of concerns about globalization (and the failure to share its gains evenly), immigration, stagnant middle class incomes, urban versus rural attitudes (with 1 percenters flocking to the large cities), a mistrust and rejection of elites (especially Brussels bureaucrats, perceived as out-of-touch), and the continuing rise of populist sentiments.

Every couple of weeks, the London "Financial Times" issues a glossy, full-color magazine called "How to spend it." A recent issue featured a "Boating Edition" with entrepreneur Richard Branson on the cover. There was a full-page ad for "The worlds (sic) most desirable, exclusive & luxurious charter yacht." One boat was available for £45,000 per week, or you could rent an estate on Moskito Island in the British Virgin Islands for $47,300 per night. There was also a white gold watch that cost £202,900. F. Scott Fitzgerald famously wrote that "the rich are different...." My guess is that many more of the "Leave" voters - to paraphrase William Wordsworth -- are more focused on getting rather than on spending.

As many observers have noted, these concerns are also playing out in other western democracies. Populist parties in France, Germany, the Netherlands, and Spain are taking cues from the British "Leave" vote. In the United States, this election season has included the rise of populists on the right (Donald Trump) and on the left (Bernie Sanders). Each man, in his different way, has made appeals to disaffected Americans who are not part of the top one percent of income earners.

The appeal of Trump and Sanders to their very different supporters lies in the fact that they are not scripted and claim to care about some of the things that animated "Leave" voters. Their supporters just don't seem to worry whether their economic policies make any sense or are affordable given today's serious budget constraints. Trump and Sanders each have their own band of middle class populist supporters.

The fascinating new documentary "Weiner" features the campaign travails of disgraced former New York Congressman Anthony Weiner who campaigned to be Mayor of New York City in 2013. (Go and see this film!) How believable was his claim that he would work to keep New York the great middle class city that it is? Middle class - when the average Manhattan apartment sells for $1.87 million as of this time last year, with one or more apartments topping the $100 million range?

How believable is Hillary Clinton as a champion of the American middle class when she wears a $12,495 Armani jackets to a campaign event on inequality and pocketed $250,000 per speech to Wall Street firms for about one hour of work. Today, median household income in the United States remains about $52,000.

The late Columbia University historian, Richard Hofstadter, published a famous book in 1962 called Anti-Intellectualism in American Life. In the introduction, Hofstadter cited John Dewey for his observation that "[e]very thinker puts some portion of an apparently stable world in peril, and no one can wholly predict what will emerge in its place." Today, it's not just elites who are doing the thinking. Elites are no longer trusted; that is the fundamental message about change and new directions coming from the "Brexit" vote. Direct democracy is returning to favor when average citizens perceive a massive disconnect between the promises and the performance of the people they have trusted for the last 40 years.

Charles Kolb served as Deputy Assistant to the President for Domestic Policy from 1990-1992 in the George H.W. Bush White House. He was president of the French-American Foundation - United States from 2012-2014 and president of the Committee for Economic Development from 1997-2012.