The Real Trump/Brexit Shock is That Nothing has Changed

What is even more surprising than the shattering changes to the political system from the election of Donald Trump and Britain’s vote to leave the European Union is that nothing seems to have changed in the way that the major economies are managed.

Trump’s victory was seen as being the result of an expression of anger among households that felt they had been left behind by the cocktail of globalisation and liberal market economics, endorsed by both the main parties and which they blamed for job losses and falling incomes.

Over on this side the pond, the support for Brexit was seen as a cry for help from communities that have seen their traditional industries wither and be replaced by service sector jobs that their children were unprepared for and which – in their view - probably from went to European migrants.

Indeed, a report last week from the Social Mobility Commission showed that of the 65 places with the lowest chances of the next generation moving up the social ladder in terms of jobs and housing, all but six had voted to leave the EU.

A year after Trump’s victory and 17 months after the Brexit vote, it might finally be dawning on their supporters that none of the things they were promised have come to pass.

It should have become painfully clear in Washington last week when the Senate voted through a tax bill that will benefit corporations and wealthy individuals. If the bill reaches the statute book it will cut corporation tax to 20% from 35% and offer temporary tax cuts to individual tax rates. There probably will be a boost to the economy but it will come via Reagan-esque trickle-down theory rather than the direct help Trump voters had hoped for.

it is Brexit itself that has prevented the government from taking any meaningful action

In the UK, last month’s Budget showed that it was business as usual when it came to economic management. The Government is still set on cutting corporation tax while accepting that real wages – the growth in earnings after the effect of inflation – will fall every year for two decades.

On Sunday, the chairman of the Social Mobility Commission, Alan Milburn, effectively resigned after 10 years, saying that he would not apply for a new term. His three fellow commissioners, including former Tory minister Gillian Shepherd, have joined him.

Milburn said he had lost hope that the current government would make any progress in the battle to create what he called a fairer Britain.

He is right to defend himself against accusations of playing party politics. Although he served as Cabinet minister under Tony Blair, he chaired the commission under both former Tory PM David Cameron and Theresa May. He said he had decided to leave after realising that he had seen “little if any signs” that May would echo his call to deliver justice on the steps of 10 Downing Street when she became prime minister. “I do not doubt [her] personal belief in social justice, but I see little evidence of that being translated into meaningful action,” he told the Andrew Marr Show.

Most significantly, he said that the government simply did not have the “bandwidth” because all its energies were devoted to the gargantuan and prolonged negotiations with Brussels over its departure from the EU.

It is a cruel irony that not only have the political, social and cultural inequalities that were the fuel for the anti-EU anger not improved since the vote, it is Brexit itself that has prevented the government from taking any meaningful action.

For both Trump and May, and her pro-Brexit allies in the Cabinet, it is the old story of looking at what they do rather than what they say. Even their supporters must now realise they are getting a lot of the latter and little of the former.

 

 

More about the author

About the author

Phil has run Clarity Economics, a London-based consultancy, since 2007 and, before that, was Economics Correspondent at The Independent.

Phil won feature writer of the year Work Foundation Work World media awards in 2009, and was commended by the Royal Statistical Society in 2007.

He is the author of Brilliant Economics and The Great Economists.

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