Anne Wren: Thatcher and Reagan sowed seeds of Brexit and Trump upheavals

The social divisions underpinning patterns of support for Brexit in Great Britain could not have been more clear. Support for remaining within the EU was strongest among those with college educations and higher incomes, and in the city of London; opposition was strongest among the less educated and less well-off, and in Britain's former industrial heartlands. Only in Scotland, where the issue of EU membership has obvious links with that of regional autonomy within the UK, were these patterns muted.

The parallels with support for Donald Trump in the US are strong. White voters without college educations are a far more important component of Trump's support base than the typical Republican party candidate. And support for Trump is also strong in regions where traditional economic sectors used to dominate, and unemployment rates are high.

These patterns reveal deep underlying social divisions that have almost nothing to do with immigration and everything to do with deindustrialisation and the decline of the traditional economy. And they have been decades in the making.

Since the early 1970s, employment in traditional sectors (manufacturing, mining, agriculture) has declined by about two-thirds in the UK. Formerly, these sectors provided stable and relatively well-paid employment for millions of British workers: currently less than 10 per cent of the working-age population actually find these types of jobs. This trend is not just a UK phenomenon. It is visible in all of the world’s most developed economies. It is attributable in some part to increased global economic competition; but also in large part to other aspects of economic development such as technological change, and changes in consumption patterns in the developed economies.

The transition away from reliance on traditional industrial sectors and towards services and ICT-intensive manufacturing greatly increases the inequalities in opportunity between those with college educations and those without. The spread of the new technologies and the expansion of high-end service markets has increased the demand for workers with a college degree, at the same time as deindustrialisation has reduced the demand for workers with mid-range skills. Without significant social investment, these changes can create sharp increases in inequality in wages, economic opportunities and life chances.

Disinvestment and deregulation

In the face of this major social upheaval, the UK and US took the lead under the Thatcher and Reagan governments in the 1980s in embarking on a strategy – not of investment – but of disinvestment and of radical deregulation. Deregulation has allowed the financial sectors in these countries to flourish and make an important contribution to economic growth (although in its most unfettered form it also facilitated the kinds of abuses that lead to the financial and economic crises of the last decade). It has also been associated, however, with the removal of protections on workers’ employment rights and incomes, with rapidly increasing inequality, and with higher levels of economic insecurity for less-skilled workers in particular.

At the same time, the increased privatisation of educational systems in both of these countries has moved access to higher education further out of the reach of children from less economically advantaged backgrounds. And disinvestment in public housing, in the national health system, in training and in other public services has further reduced the security of life chances of those groups that have seen their labour market opportunities decline.

The result is a sharply defined distinction between those who are winning and losing in the new economy. And that distinction defined the Brexit vote. The winners – the college-educated, those with high incomes, those working in areas like London where the new economy is flourishing – voted to Remain. The losers – those without college educations, with low incomes, in areas that have been decimated by deindustrialisation – voted to Leave.

Why they did so should not be a puzzle. We do not need to look back more than 80 years to understand that economic insecurity creates an environment ripe for political manipulation.

Racism and isolation

Throw in concerns over terrorism and national security; justified distrust of political elites over their complicity in, and response to, the financial crisis, and issues such as the expenses scandal in the UK; and a

Brussels

bureaucracy perceived as distant and undemocratic, and the task of selling racist and isolationist solutions to economic insecurity becomes even easier.

Equally at fault with Nigel Farage, Trump and others have been the parties of the left. Not only in the UK and the US, but also across Europe, left-wing parties have failed to act decisively to argue for a strategy of major social investment that is inclusive of those groups excluded from the benefits of economic change.

Even in Sweden, in the heartland of social democracy, the principal winners from the 2014 electoral revolt against years of centre-right cuts to welfare state spending were not the social democrats, but the far right anti-immigrant Sweden democrats.

Electoral upheavals are symptoms of the scale of the social challenge posed by major economic change. The challenge of responding to deindustrialisation and of implementing social investment to ensure the benefits of the new high-tech service economy are more widely shared is a major one. It has nothing to do with immigration. And it will not be solved by closing borders. It is faced by all of Europe. And it is faced by post-Brexit UK as much as pre-. Given its negative implications for economic growth across Europe, and negative political impact in fanning the flames of right-wing populism, Brexit has simply made the problem more difficult to address.

Anne Wren is adjunct assistant professor of political science at Trinity College Dublin