Before Brexit: how the gap between capital and country split Britain in two
My grandfather came from St Helens, a boom town of the first globalization. It sits on a South Lancashire coal field in north-west England, and in Britain’s industrial revolution the first steam-powered railway transported its coal to fuel the growth of nearby Liverpool and Manchester. In the 20th century, the town became a great exporter and a world leader in glass-making. But today, St Helens produces little: the mines are long-closed, and most glass-making jobs were lost after a foreign buy-out. Last year, this town, which had thrived on exporting to continental Europe, voted overwhelmingly for Brexit.
I live in London, a city that has soared in the latest wave of globalization. Its most famous skyscraper was built by an Italian, its best football team is owned by a Russian, and its most popular foods are Asian. The city voted to remain in the European Union, and was shocked that places such as St Helens did not follow suit.
London’s openness to the world has enabled once inconceivable levels of prosperity. More people use its airports than any other city, and it leads the world in industries from finance to fashion. It is unrealistic that the United Kingdom – a medium-size market with a service-based economy and few natural resources – can hope to prosper in the glorious isolation of an imagined past.
This does not mean that the status quo works. Britain is a deeply unequal country. Inner London has the highest per capita GDP of any region of the OECD, but the area around St Helens is poorer than Slovenia. Despite London’s reliance on banking, the city did not experience a drop in pay after the 2007-08 financial crash . Wages are not expected to recover in the rest of the country until 2023 .
Globalization is the easy scapegoat for rising inequality. Sceptics blame it for issues including reductions in workers’ rights and tax evasion, but protectionism is not the only answer to these problems. Trade deals which simply lower barriers can lead to a race to the bottom. This does not need to be an argument against trade, but for a new model of agreements that also raise labour and environmental standards. Likewise, it is true that globalization has allowed companies to evade taxes, which depletes resources for public services. But the best way of tackling the excesses of trans-national corporations is through more international cooperation, not less.
In fact, critics of globalization are letting national governments off too lightly. Greater openness to the world created great wealth, but governments failed to ensure that it was widely shared, mistaking gross domestic product for the defining measure of a nation’s progress. National government can and must ensure that there is a good standard of living in both London and St Helens.
This requires domestic policies to ensure that growth is shared across the whole country. British and American demands to “make our countries great again” resonated because of the perception of decline. Citizens need to have reasons to be confident about the future. First, governments of developed economies must prepare their people for turbulent times by transforming education and skills provision. Helping existing workers retrain for jobs which do not currently exist deserves as much thought as educating the next generation. (In fact, technological change is a bigger challenge to employment than globalization.) Second, governments should be prepared to protect people from the worst ruptures, and support communities in transition. Third, more must be done to redistribute the wealth created by globalization.
However, economics is not the only way people experience their lives. The thornier challenge posed by globalization is rapid cultural upheaval. The process has introduced a range of paradoxes, including greater ethnic diversity and a more homogeneous global culture. These changes, undoubtedly a result of globalization, have occurred against the backdrop of increasing economic inequality, largely the fault of inaction from national governments. But some people have mistaken correlation for causation, and nostalgia for a time of well-paying jobs and strong community risks becoming nostalgia for a time of whiteness.
Supporters of global cooperation should realize that only a small minority of voters think of themselves as “world citizens”. Rather, they identify as members of families, communities and countries, usually in that order. It would therefore be a recipe for defeat for those who believe in cooperation to allow themselves to be caricatured as “globalists”, in conflict with “nationalists”. Instead, they must show that international engagement is the patriotic course, rooted in the national interest.
This requires more than a shift in rhetoric. Britain has seen a decline in many of the institutions that once tied together working-class communities, such as trade unions and churches. To address this, there must be a concerted effort to strengthen the bodies that can unite communities, and to make politics more responsive to them by devolving power wherever possible (including on immigration).
Globalization has brought great wealth but its benefits have been uneven, and many have found the pace of change unsettling. As the world becomes ever more connected and technologically advanced, people must feel supported, rather than being left to sink or swim.
There is a lesson in Britain’s experience for other advanced economies that are turning against globalization. Brexit would not have happened had the country had been more united. The decision will cause profound damage to both ex-industrial towns and the capital city. We must hope that Britons will now recognize their common interest in bridging the gap between St Helens and London.
Ben Lyons is a World Economic Forum Global Shaper with the London Hub. His article is this month's winner in the Global Shaper essay contest, on the theme of inclusive growth.
SOURCE: World Economic Forum