As fund managers it is our job to prepare for everything but Friday’s events were a shock to me. Whilst preparing for the possibility that Britain would vote to leave the European Union, my gut feel was that it wouldn’t happen. A lot of people would threaten to leave, sure. They’ll tell a pollster they have had enough of technocrats ruining their lives, but faced with the economic uncertainty of departure I thought they would stick with the status quo on polling day.
I also love everything about the world the Brits voted against.
London is one of my favourite cities. A melting pot of culture, language, food and nightlife unrivalled in the world. It’s a place that makes me feel extremely fortunate about the generation I have grown up in and the opportunities that have been available to me, and slightly jealous of what the British had that I didn’t. Imagine being able to freely study and work in Paris, Madrid or Berlin?
It is hard for me to imagine why a country’s people would want to shut themselves off from that.
The reason I can’t fathom it, though, is because I am one of the lucky ones. For a small percentage of the global population, well-educated and with the right skill set, the first decades off this century have provided wonderful careers and unprecedented opportunity. For many, perhaps the majority based on Friday’s voting, they feel completely left behind and isolated by the changes taking place.
In a Bloomberg interview the week before the Brexit poll, US President Barack Obama presciently summed up these concerns:
And this is another area where sometimes I find myself arguing with my friends in the business community. The issue is not resentment or class warfare or that somehow we want to level everybody down rather than lift everybody up. The issue is that, if in fact automation and globalization do have a tendency to create vast wealth and opportunity for a very small, highly skilled set of people and have a tendency to create a larger and larger group of folks who feel redundant in the economy, and if you don’t pay attention to that, then people will rightly resist. They will understandably say, “I am not getting a good deal here.”
Leaving the European Union is not going to fix their problems, of course. It seems highly likely that leaving the EU will hit the economy in the short-term and meaningfully reduce long-term growth in the UK. That will mean higher unemployment and lower wages. It is a protest vote, pure and simple.
And unless we pay more than lip service to the unequal distribution of benefits, unless those of us enjoying the fruits of the modern economy are prepared to find ways to share more of it with everyone else, we are going to see a lot more rebellions. That won’t be a good outcome for anyone.
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