Brexit and the Ghosts of the Past

In the mid-1980s, Great Britain seemed to be a lot more confident about its potential and future.  At least that’s what was reflected in the policies adopted by its Prime Minister, Margaret Thatcher.  With her faith in market-based economics, she privatized big state companies, like BP, and then, with her “Big Bang” deregulation of capital markets and the financial services industry, she showed that Britain was ready to compete on a global scale.  Indeed, London became an early beneficiary by quickly becoming a world-class financial center, ready to rival New York’s Wall Street.

The fact that traditional, centuries-old, investment banks, were taken over by American and continental European financial institutions did not seem to raise particular anxiety.  After all, as a result of London’s internationalization, multitudes of professionals in law, finance, accounting, and other ancillary fields added to London’s economic vitality and heft as a cosmopolitan financial heavyweight.  London’s growth was also evident in its fast-changing skyline as new glittering buildings were added to house international firms.  Similarly, the Great Britain of the 1990s had no problem of welcoming the excess labor force of less developed European Union countries after the adoption of the Maastricht Treaty that opened up the labor market in the EU.  Great Britain and London, in particular, became the destination for talented and ambitious young professionals from all over Europe.

But then, a decade into the 21^st century Great Britain started to lose its nerve.  On one hand, the financial crisis of 2008 was pushing more displaced Spaniards, Portuguese, Greeks and other Europeans to seek work in England.  On the other, a more disturbing development to many British people was the influx of Middle East refugees into Europe as a result of the wars in that region.  The passport-free crossing of the channel by non-European, mostly Muslim, migrants became the bete noire of fringe right-wing groups before it metastasized in more politically correct language to mainstream segments of the population.  Around the same time, the EU rules made in Brussels also started to leave a bad taste in the mouths of British politicians that should know better as to how a multi-national union was supposed to work in order to keep its cohesion.  In short, politicians and people of influence, many of whom had come out of the elite schools that until a century ago had graduated those who ruled over Pax Britannica, all of a sadden turned against internationalization.

There is a historical irony in this closing of the British horizons in the minds of the British, especially its elite.  Throughout the colonial times, the British were active in subjugating other people, rearranging their lives, destroying traditional social and political structures, and introducing new customs and cultural norms.  But the moment these former colonial masters realized that they themselves ran a real or fantastical risk of having their lives been impacted by foreigners, be it the rule-makers of Brussels or European workers or Asian and African migrants, they dug the moat around fortress Britannica by approving the Brexit.  The up-to-that time internationalization of their frontier was now the threat.

Lest I am unfair to the British people, let me add that the same irony applies to Western Europe as well as to America.  Western Europe, starting with the Crusades and continuing with the colonization or outright conquest of new lands played an immense role in upsetting the lives of people from the Americas to Far East Asia.  Western Europeans spread their religion, customs, culture, political institutions and so much more, besides spreading deadly diseases.  Whether the spread of European influence and hegemony were beneficial or not is besides the point.  The lives of so many people were changed by European colonizers and settlers most often against the will of the local population.  Now people from these same lands are coming to Europe, not as armed invaders, but as desperate migrants attracted to Europe’s success and peace.  All of a sudden being exposed to other cultural influences, to this reverse direction of globalization and multiculturalism, annoys to say the least, or even worse, raises nasty nationalist sentiments that feed the ranks and the clamor of right-wing parties across Europe.

We see the same historical irony in contemporary America.  Sometimes by military and other times by political means, we have interfered in the domestic affairs of foreign people, most frequently those of Central and South America.  Just like earlier generations of Europeans, Americans believed their engagement in the affairs of others were for the purpose of setting up a better world order.  But there is no denying that our interference impacted other peoples’ lives when many of them would rather be left alone to sort out their mess.  Central to America’s message as it engaged in global affairs was convincing others about the benefits of economic opportunity and the right of people to free and safe living.  Many of these people realizing that neither was possible in their countries kept coming knocking on our borders eager to pursue the goals we preached to them.  But now we want to raise walls to keep them out.  Having been responsible for changing the lives of others, we are now afraid of any change they may mean for us.

Being honest with our historical past means we recognize that we are often those who set in motion the forces that now bedevil us.  Those who see foreign people as a menace to their lives, from a political, cultural, or religious standpoint, ought to realize that that was the threat we posed to them in the name of global and cultural expansion.  Grasping our historical interaction with other people should inform every European and American citizen that showing tolerance to those whom we brought into our own world of global order is the least we can do to save our honesty.

Author: George Papaioannou

Distinguished Professor Emeritus (Finance), Hofstra University, USA. Author of Underwriting and the New Issues Market. Former Vice Dean, Zarb School of Business, Hofstra University. Board Director, Jovia Financial Federal Credit Union. View all posts by George Papaioannou