I’m sitting here watching the BBC site as the results of the Brexit referendum pour in. It’s not looking good for the EU right now, and that has to give us all pause. The EU is absolutely essential, in some form, but the bureaucratic mess that has resulted isn’t necessarily helping anyone. The UK never went all in, keeping the Pound, so their view has always been a bit askance.
For far too many, it comes down to an interesting revelation. Did Germany actually “win” after all? Signs point to yes, they did. But how? What does this mean to other industrialized nations? Is there something we should all learn? Is Britain right for possibly wanting to go it alone?
One of the interesting features of Germany has always been that heavy industry has had an incredible amount of control. They were largely self-funding, not relying heavily on the banking system – which was never as developed and centralized as it was in older empires like Britain or France. This feature is one of the main reasons why heavy industry was one of the few things to survive the series of apocalyptic calamities that comprised the first half of the twentieth century for Germany.
The other interesting point, away from Europe, is that Japan had an even more primitive banking system as they industrialized, and heavy industry was almost completely self-funding through their rise, fall, and incredible rejuvenation. This is why huge Japanese conglomerates make nearly everything – Yamaha, for example, makes musical instruments, engines, motorcycles, audio equipment, and music box movements.
Curiously, the development of a strong central bank in Japan almost perfectly matches their long downfall since about 1990.
The two great technocratic nations both relied on industry finding itself, which is to say created systems where engineering minds were allowed to run free. This contrasts with the UK, which always had an imperial mind that produced a balance between finance and industry. The same model worked well in the United States, aside from some terrible corruption, thriving all the more as worker’s rights started to dominate politics with the rise of the Labor movement. Our balance of different forces served us well.
The US largely became post-industrial as the rise of credit took over our economy, starting just before 1980. The old balance fell apart as both Labor and Industry fell on hard times. The same thing happened in the UK as the empire fell apart of its own weight and their balance tilted heavily towards finance and banking. It’s now pretty much what they do.
The referendum results from London show how distinct it’s become from the rest of England – heavily in favor of remaining, while England wants to leave. Scotland, with its own balance still favoring industry and labor, wants to remain as well. Strange times we live in.
Through it all it’s hard to not think about the balance of power between the UK and Germany. Forget France – they are a spent force that isn’t driving anything right now. The EU without the UK is indeed Germany. They now have a strong central bank and with Deutsche Bank reaching around the world, something well beyond the industrial base that has defined their nation since it came into existence in 1871. Chancellor Merkel is the de facto leader of Europe, even though it genuinely appears she does not want the title.
It’s not as though Germany isn’t doing something very right. Previously, Barataria discussed whether a modern society really has enough paying work to go around for everyone, given that the measure of income inequality, the Gini Index, tracks almost perfectly with the percent of adults employed – as shown in this graph:
The dots are all different nations – the developed world plus the BRICS. There is one outlier at the bottom, one nation with a lot of people working and much lower income inequality than other nations would expect. That outlier is Germany. What are they doing differently? What is going so terribly right there?
There is a lot more to potential Brexit than simple fear or jealousy with Germany, of course. But as the two great powers left in Europe the relationship between them is of paramount importance all around the world. That Brexit is even close has to give us all pause. It does seem to imply that Germany, or at least German industry, did indeed “win” after all. There is something in their model that appears to work.
Meanwhile, the UK has spent a generation digesting just what it means to be post-imperial as much as post-industrial. Today it’s taking a turn one way or the other, and it appears right now that Brexit may indeed happen. I’ll keep watching the results, and when there is something solid we can talk about it. In the meantime, there is definitely a lot to talk about.
In a world moving closer together, can Britain really go it alone? Or is the problem in the structure of the EU rather than forced marriage that it has come to be?
And what is the right balance for a nation today between industry, labor, and all the other bits and pieces that make up this collection of values we call an “economy”?
Addendum: It’s Brexit. All bets are off while we sort this out. Everything is on the table, from Irish Unity to Scottish Independence to a genuine global financial collapse. If the US can get through this election properly we’ll be the island of stability in a crazy world, but even that is up for grabs right now. Goodnight, everyone.