from Mauldin Economics
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The United Kingdom’s vote to leave the European Union didn’t surprise George Friedman. The geopolitics expert says other EU members might do the same if they could (read more in our free special report on Brexit implications). Nations are tired of Brussels bureaucrats pushing them around.
Speaking in a Mauldin Economics video, Friedman said after successfully forcing unwanted policies on countries like Poland, Romania, and Italy, the EU thought the British would roll over, too. UK voters proved otherwise.
Western elites, the kind who go to prominent universities and run the EU, know little of the working class. The many London-dwelling “Remain” voters, shocked at the result, said they knew no one on the “Leave” side.
That is exactly the problem, says Friedman, founder of Austin-based Geopolitical Futures.
Throughout Europe, EU support correlates highly with education level. Elites hold the “uneducated” lower classes in contempt. They can’t comprehend why the ignorant masses might resist elite ideals.
Donald Trump’s popularity in the US has similar roots. He appeals to the country’s lower half. Having been economically disadvantaged and culturally marginalized for so long, working-class voters rally around someone they think will represent their interests.
The media, because it is largely composed of elites, doesn’t grasp this dynamic and has failed to report it. That’s why they were so surprised the Brexit referendum passed.
To Europe’s masses, elite leaders care mostly about other elites. They protect banks and bank shareholders but ignore the massive unemployment in Mediterranean countries.
Worse, some elites actually blame jobless workers for their own condition. They mete out punishment with harsh austerity measures like bank “bail-in” policies. This began with the 2013 Cyprus bank crisis when bank depositors, lacking any kind of FDIC deposit protection, had to take large haircuts.
Friedman says the contrast could not be clearer, at least outside of Brussels. People know that EU authorities will always protect European bankers from their own mistakes, while punishing EU workers for problems others created.
That the masses eventually tired of this treatment should surprise no one. Brexit is simply the latest step in an inevitable process.
Friedman thinks Brexit will have little impact on the global economy. The EU did not create the trading patterns between the UK and everyone else. London is the continent’s financial capital because bank clients want it to be, not because the EU decreed it would be so.
Germany, France, and Italy have always traded with the UK and always will… no matter what barriers Brussels might try to create. Casting the UK out of the free trade zone would hurt Europe more than it hurts the UK.
The UK holds a huge trump card in this game. Its biggest trading partner is the United States, not the rest of Europe. That relationship is secure. Thus, Friedman thinks economic life will continue largely interrupted.
This will change only if the EU chooses to hurt itself.