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Brexit is almost as big a disaster as a terror attack

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Bindu Dalmia
Bindu DalmiaJul 04, 2016 | 17:31

Brexit is almost as big a disaster as a terror attack

Xenophobia is a state of paranoia, I feel, when humans revert to primitive insecurities like troglodytes, who fear scarcity of food, resources.

The world we live in post 2008 financial meltdown and the US-inflicted mortgage crisis, from which no country ever recovered, has pushed nations to an inflection point and led to the closing down of their borders - a departure from the times that thrived on a free flow of ideas, finance, technology and travel.

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As a consequence, de-growth, decline, disintegration and de-globalisation define the economic zeitgeist of nations in 2016.

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Let's know for a fact that the big American Dream was killed by the nation itself in 2008, which had shattered the dreams of the rest of the world. And now, in the absence of recovery, central banks are contemplating resorting to printing more money; QE4, as economies get addicted to quantitative easing - following this, the depreciation of currencies and the decline of purchasing power will continue, as Marc Faber, investor and the futurist of gloom and doom, predicts.

The point here is that both the UK and the US are First World countries that were proponents of free trade across borders and who enjoyed decades of growth from it.

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Donald Trump. (Reuters) 

And the US now cries "rape" as Trump did on job losses, promising to re-negotiate previous trade pacts. "They've taken our jobs, they've stolen our wealth..." he said, speaking of immigrants. Peddling fear more than he sells hope, presumptive President Trump strikes a chord with 46 million Americans with incomes below the poverty line; his populist rancour appeals to 65 per cent of voters who want curbs on imported goods, because gains from economic recovery have been inequitous and accrued to only the wealthy.

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Trump may be politically illiberal and sound like the motormouth fringe of India, but gauging from popular sentiment after Brexit and the political windfall his campaign gains from it, he emerges as a cutting-edge alternative to his relatively elitist opponent Hillary, resonating with the working classes who stare at poverty rates which are at a 20-year-high in the US.

Secondly, across Europe, the US or India, extreme nationalism and xenophobia is also fuelled as a consequence of productive immigrants perceived and braced with the same scepticism as Muslim refugees, who historically never integrated culturally with the country they domiciled in.

Scarcity

Islamaphobia has seen a 326 per cent rise in 2015, making it difficult at the point of entry to differentiate a "good Muslim", one who is liberal and productive, from one who has arrived in a new country to kill, spread venom and sabotage peace.

In a world of plenty, people are generous and don't mind sharing the boom times; but in a world of scarcity and shrinking resources, people and nations are inclined towards self-preservation in a fight-or-flight syndrome.

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The "leave" vote does not signify the irrational exuberance of voters for independence from the EU as much as it points to a rational paranoia about immigration and consequent job losses for its citizens.

The poor and middle classes in most countries, First World or Emerging World economies, are responding to hyper nationalist demagogurey of leaders for closing down borders because the vox populi favours protectionism, having seen no major gains accrue to the "one per cent over the 99 per cent".

Luddites

During the Great Depression of 1930, the predictable recourse was towards protectionism by raising import barriers, hoping to encourage exports.

But shutting imports has a damaging and retaliatory effect from interdependent trading partners, as the entire chain of trade then halts because of locked-in economies.

How fair is a unilateral call for protectionism by the West, just as India is beginning to open up as also other emerging nations who are equally dependent on trade for recovery?

In that, Brexit is a historic and geopolitical event, no less significant in magnitude than 9/11 or 2008. It sets in motion a second round of disintegration of a comity of nations after World War II, the Soviet Union being the first.

In such a world of compounding scarcity and inequity, let me throw in an alarmist eventuality that is going to be the black swan of all events possibly a decade from now: robots replacing humans, a faceless enemy of all working classes.

What sounds sci-fi of today, as did water-scarcity and climate change years back when futurists predicted it, this disruption will sound the death-knell for labour, shaving off jobs.

The Bank of England believes machines might replace 80 million American and 15 million British jobs over the next 10-20 years, as CNN Money reports, or 50 per cent of the workforce in each of the two countries.

Luddites will then rise in a bigger revolt as a reaction to the fifth wave of change.

(This first appeared on July 2 in Mail Today.)

Last updated: July 04, 2016 | 17:31
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