
How a Quest by Elites Is Driving ‘Brexit’ and Trump - Cadsby
http://www.nytimes.com/2016/07/03/upshot/how-a-quest-by-elites-is-driving-brexit-and-trump.html?rref=collection%2Fcolumn%2FEconomic%20View&action=click&contentCollection=The%20Upshot&module=Collection&region=Marginalia&src=me&version=column&pgtype=article
======
caconym_
I may be reading this too late at night, but the theory seems to be that our
benevolent, perfectly logical Ivy League-educated overlords regrettably have
to break a few eggs to make a delicious omelette of economic prosperity for
all, and those broken eggs are enough to make people throw up their hands and
vote for Trump/Brexit/whatever just for a chance to cling to the present, the
good old days, at the expense of that shining, golden future.

I have a feeling that people are _actually_ pissed off because they don't
think the established elite are generally benevolent, but rather that they act
in their own interests at the expense of the prosperity of the middle and
lower classes. Whether this is true is beyond the scope of this comment, but
any discussion of this seemingly relevant alternate theory is conspicuously
absent from the article.

~~~
CM30
Pretty much this. And that's the issue with globalisation; it's great for
those at the top, decent for those at the very bottom and often rather awful
for those in the middle.

The votes for Brexit, Trump, various far left and right wing parties, etc are
a way of saying "let's watch the elite's world and system collapse on itself".
They've seen how little any of this is doing for them as workers, and how
every system seems stacked in favour of the well off, and they just want to
see it all burn to the ground.

~~~
return0
> are a way of saying "let's watch the elite's world and system collapse on
> itself"

I don't think people want to replace the elites with void. Maybe that's the
case for nihilistic, fringe far-right or far-left parties. But when majorities
or near majorities are voting for Trump or Brexit, they want to replace the
elites with _something else_ `.

It's funny to watch the elites suddenly renouncing democracy because she
stopped serving their purposes (It was quite a relevation to watch reddit go
full-on military-dictatorship this past week, but hey reddit is not reality).

Democracy is a very adaptive concept and there is a saying that there are no
dead ends with it.

~~~
pjc50
Replacing the "elite" with an underspecified, possibly unachievable "something
else" is begging for a void.

Come on, we're software engineers; we know how crazy it is to turn off a
working system without having a viable plan for its replacement.

~~~
return0
> underspecified, possibly unachievable "something else"

I think it's pretty well outlined what is that "something else". The
implementation is not there (obviously), but the API exists, for example anti-
immigration, [edit]pro-protectionism etc. Most people dismiss it as non-
existent though, due to liberal reflexes.

~~~
pjc50
Being anti-immigration _is_ protectionism, though. Especially for the services
sector. The two things are in direct contradiction to one another. The
specific motivation for objecting to immigration (other than straight racism)
is "protecting jobs".

~~~
return0
yep. sorry typo

------
elgabogringo
I don't think the distinguishing characteristic of bankers is their desire for
economic efficiency. It's their desire for self-enrichment.

Maybe the author doesn't mean actual _bankers_ , but is instead referring to
central bankers, in which case I'd argue that the meager GDP growth achieved
from an unprecedented expansion of central banking assets has been anything
but efficient.

Regardless, the fact that the author can look back the past 10 years of
economic policy and find among all the mad and destructive monetary actions a
"quest for efficiency" just shows that the author is as out of touch as the
bankers.

What's happening is that the public at large is figuring this out (and this
part the author gets right) using the imperfect vehicles of Trump and Brexit
to try and stop it.

~~~
misja111
I don't think the average banker has a greater desire for self-enrichment than
say, the average lawyer or the average sales manager. And anyway, there's
nothing wrong with a certain amount of greediness in a capitalist system, this
is what drives innovation and efficiency. The problem with banking has been
that the system is broken. Unlike other companies, mismanaged banks cannot go
bankrupt because they drag the entire system with them.

~~~
pyrale
> And anyway, there's nothing wrong with a certain amount of greediness in a
> capitalist system, this is what drives innovation and efficiency.

I wonder how many years will pass before people realize this mantra is an
article of faith.

~~~
mseebach
We're currently at 240 years, so I wouldn't hold my breath.

> _It is not from the benevolence of the butcher, the brewer, or the baker
> that we expect our dinner, but from their regard to their own interest. We
> address ourselves, not to their humanity but to their self-love, and never
> talk to them of our own necessities but of their advantages._

[http://geolib.com/smith.adam/won1-02.html](http://geolib.com/smith.adam/won1-02.html)

~~~
icebraining
Greediness is not the same as simply regarding one's interest, though the line
is subjective.

~~~
mseebach
The greed that people talk about when they say that greed is good (by way of
Wall Street, the 1987 movie) is, though.

Also, a great many uses of the word in (lazy) criticism of markets and
capitalism is that too.

~~~
pyrale
> The greed that people talk about when they say that greed is good (by way of
> Wall Street, the 1987 movie) is, though.

Thing is, you can't reduce the pursuit of self interest to accumulating
wealth. Therefore, even if we accept the definition of greed as merely
pursuing wealth, we misunderstand Smith's quote and fail to acknowledge many
sources of creativity. By disproportionately rewarding greed and not other
work incentives, we build a society for the few that are driven by it, at the
expense of most, and ultimately, we cannot thrive.

------
keithpeter
Quote from OA

 _" Voters in large numbers have been rejecting much of the underlying logic
behind a dynamic globalized economy that on paper seems to make the world much
richer."_

In the UK, we don't actually _know_ why 17+ million chose to tick the leave
box.

My conversations with a handful of people who did vote leave suggest a range
of reasons from immigration, through to 'loss of control'. Macroeconomic
policy does not seem to figure prominently.

The government of Mrs May is further to the right of that of Mr Cameron. Her
published statement does mention a softer approach to social factors and a
desire to spread the rewards around more evenly...

[https://www.gov.uk/government/speeches/statement-from-the-
ne...](https://www.gov.uk/government/speeches/statement-from-the-new-prime-
minister-theresa-may)

...we shall see how that actually goes over the next few years in terms of
actual law (look out for 'red tape' discussions - your red tape may be my
employment rights) and policy (look out for some systematic way to replace the
EU grant system that has recycled tax income from London/South to North).

~~~
nugget
Do you think millenials being priced out of London as it became a global money
laundering hub had anything to do with it? That's what I hear from my friends
there.

~~~
s_kilk
Unlikely. If you look at the age breakdown of the vote, millenials and other
assorted youngsters voted overwhelmingly for "Remain", while the older cohort
voted for "Leave".

~~~
dingaling
> If you look at the age breakdown of the vote

That's not the breakdown of the vote but of _exit polls_ and other opt-in
polling such as YouGov surveys. Both of which are biased towards those (1)
likely to contribute and (2) not concerned about sharing how they voted.

The actual demographic composition of the vote is unknown, it _could_ be
determined ( all UK ballot papers are linked to their voter ) but that would
be unprecedented and probably bad for democracy.

~~~
majewsky
> (2) not concerned about sharing how they voted

Are exit polls not anonymized in the UK? At the last federal election in
Germany, I was asked to contribute in an exit poll, and they had their own
voting booth and urn set up for that purpose next to the actual voting room.

The ballot was mostly identical, except for additional checkboxes for age
group and gender, which they wanted to break down in their analyses. So still
reasonably anonymized.

~~~
dingaling
The exit poll for the EU referendum at my local voting station was conducted
by a man with a tablet computer! I didn't stop to investigate the process,
unfortunately.

~~~
CM30
Haven't ever seen an exit poll round here. No one was trying to gage who voted
for what near any of these polling stations.

Guess it's more common in some areas than others.

------
objectivistbrit
I'm pro-economic liberty and voted for Brexit. Every analysis like this has
tunnel vision: yes, the free trade opened up by the EU brought prosperity to
an entire continent. Had we been voting for the 1970s era EEC, I'd have gladly
voted Remain.

But in 40 years the EEC has evolved into the EU, with a constitution, a
parliament, a president, a national anthem, a flag, supreme law-making powers
and a currency.

 _Maybe_ the Merckel anti-integration faction will remain dominant and they'll
stop there. Given the Juncker faction pushes further integration as the
solution to every crisis, and given the EU is in constant crisis, the next 10
years should be interesting.

The EU is a world-historical experiment in social democracy - free markets +
state regulation + the welfare state. The consensus is that this system
represents the current pinnacle of political evolution. (Both 'progressive'
Scandinavia and 'capitalist' America implement variants of it). An alternative
perspective is that it's simply a compromise system which emerged after WWII
and is already showing severe cracks.

Maybe the EU will create prosperity by such actions as forcing Google to break
up, throwing state money at impoverished regions, etc. Maybe the populations
of France, Spain, Italy et al will accept that they can't fund welfare states
by borrowing in perpetuity and stop voting in radical left-wing governments.
Maybe they'll find an alternative solution to the ever growing debt-burden,
over Piketty's proposal for seizing 15% of all bank accounts.
[https://en.m.wikipedia.org/wiki/Proposed_long-
term_solutions...](https://en.m.wikipedia.org/wiki/Proposed_long-
term_solutions_for_the_Eurozone_crisis)

I have no idea. I would like to see pro-EU articles which actually address
these issues, and not simply assume that the only reason to be against the EU
is that you're an ignorant racist, deluded by propaganda and lies.

~~~
AnonymousPlanet
> The EU is a world-historical experiment in social democracy - free markets +
> state regulation + the welfare state. The consensus is that this system
> represents the current pinnacle of political evolution.

Where does the EU provide the means for a welfare state? Do jobless people get
money from the EU? Any country can handle its own version of welfare state.
There is no mandate from the EU.

The perception is usually actually the other way round: many people think the
EU caters too much to the multinationals and bends over backwards to let the
"turbo capitalists" have their way with the little people. At least that is
what I hear from pretty much everyone I know in the south of Europe, the left
in France and Germany, and UKIP supporters in the UK (think of the TTIP
discussions). So which is it now? A socialist welfare state or bureaucrats
pleasing bankers and corporations?

~~~
gambiting
It's the "quantum immigrant" problem - where simultaneously immigrants steal
all jobs and at the same time sit at home and claim all the benefits.

------
ZenoArrow
> "Voters in large numbers have been rejecting much of the underlying logic
> behind a dynamic globalized economy that on paper seems to make the world
> much richer."

That's a very different narrative than the one I recognise. From what I've
seen the main effects of globalisation have been twofold:

1\. Lowering prices by getting the working classes of all countries to compete
with each other.

2\. Giving multinational companies greater leeway in tax avoidance.

The narrative that either benefits us all is somewhat misleading. Furthermore,
with increased automation we'll see an even more rapid concentration of wealth
in the hands of the few.

On a semi-related note, if you have the time to watch it (it's roughly 2 hours
long, but it stays interesting throughout IMO), I can recommend this video,
it's a conversation between Yanis Varoufakis and Noam Chomsky, it helped me
develop a further understanding of the problems in the EU, and the issues that
come from unelected bodies taking over our democracies:

[https://m.youtube.com/watch?v=2WG-uEND74E](https://m.youtube.com/watch?v=2WG-
uEND74E)

~~~
yAnonymous
Exactly. The average citizen doesn't see much of the benefits of
globalization. It mostly helps governments and companies.

~~~
rospaya
Tell that to my cheap phone made in China running an OS made by developers
from around the world. My Turkish t-shirt, the Spanish tomatoes I ate this
morning or the server I'm remotely setting up on the other side of the planet,
so my company can sell their services there.

~~~
pjc50
You benefit as a _consumer_ , but you may lose as a worker.

We end up in this strange environment where manufactured goods are very cheap
compared to housing and professional non-importable services like health and
education.

------
wrong_variable
The person does not seem to draw to anything actionable, and his conclusion is
vague.

I am not sure what he even means by 'optimizing for efficiency'

If your business depends on the happiness of your employees then optimizing
for their happiness increases your bottom line.

If your business will be shut down if you commit fraud then optimizing for
transparency is in your interest.

Is this person blaming economists for something that they do not have much
control over - and that is thinking about individual lives. Its mathematically
not possible for economists to worry about each person.

The reason why people are angry is that employment is closely linked to your
ability to feed yourself and be a consumer of the global economy.

So when politicians talk about employment - what they mean is a person's
ability to survive.

~~~
cmarschner
For economists, efficiency is simply that goods should be created where the
surroundings are best suited for it - first described by David Ricardo in the
19th century. E.g. Cotton should be planted where there is the most fertile
soil etc. This works best in a globalized economy where production can move
around freely and where there are no trade restrictions. As a result,
productivity is higher, meaning that goods are cheaper (if there is
competition), meaning that - provided the result is used for consumption -
that everybody is better off. This doesn't take into account that a) labor
doesn't move freely, meaning the change process creates winners and losers,
and uncertainty (locals are in constant danger that their job is reallocated
to some other place), b) it gives an incentive to move production to places
with lowest priced-in externalities (labor market frictions like unions,
environmental damage).

~~~
rahimnathwani
"Cotton should be planted where there is the most fertile soil etc."

Nitpick: this statement is about _absolute_ advantage, whereas Ricardo
emphasised _comparative_ advantage:
[https://en.wikipedia.org/wiki/Comparative_advantage#Ricardo....](https://en.wikipedia.org/wiki/Comparative_advantage#Ricardo.27s_example)

Imagine that you're better than me at everything (both programming and
needlework). You can program three times as fast, and sew twice as fast as I
can. Does that mean you should do all your own programming and sewing? No.

However small my contribution, I can save you _some_ time by doing some sewing
for you. In that saved time, you can do more programming than I could have
achieved in the time I spent sewing. So in sum we're better off. So, there are
potential gains from trade.

~~~
reddytowns
Yes, but at a certain threshold that is no longer true due to logistics. For
instance, I could try to sell back all the plastic bags I got at the grocery
store, and even if I folded them flat, made sure they were clean and ready to
reuse, no matter the price, the grocery store owner would with all likelihood
refuse to buy them from me.

Because, regardless of how much money would be saved from buying my bags over
the ones fresh from the factory, it wouldn't be able to cover the logistical
cost to the company's workflow.

~~~
rahimnathwani
My simplified example was designed to demonstrate the difference between
absolute advantage and comparative advantage, and show that there are gains
from trade, even when one party has absolute advantage for all output goods.

There is no doubt that transactions costs and other friction make some
potential exchanges uneconomical. So, what you say is true. But it doesn't
help or hinder my explanation, and is irrelevant to the point I was trying to
make.

------
dools
The issue he's talking about here is financialisation of the economy. It's an
economy that's efficient at delivering large profits for an increasingly
concentrated number of businesses and people.

Jobless recoveries, debt deflation, etc.

The answer of course is a reversal of the trend of neoliberalism over the past
40 years, to re-regulate banking and finance, increase government spending and
return to full employment as a policy priority.

This is all achievable through understanding Modern Monetary Theory. If anyone
is interested in finding out more check out this Facebook group[1].

If anyone in Australia is interested I'm also starting a political party based
on these principles.[2]

[1]
[https://www.facebook.com/groups/introductiontommt/](https://www.facebook.com/groups/introductiontommt/)

[2]
[http://www.australianemploymentparty.org/](http://www.australianemploymentparty.org/)

------
avivo
An interpretation:

\- Many people want to be able to have agency in what their future is like.

\- A quest for economic and technological growth makes the future unknowable,
and makes predictions about what skills (and capital) will provide a
livelihood to support your family as tricky as predictions about how much a
startups equity will be worth. Many (most?) people can't effectively make
these predictions and they suffer pretty badly.

------
panic
_Perhaps the pursuit of ever higher gross domestic product misses a
fundamental understanding of what makes most people tick. Against that
backdrop, support for Mr. Trump and for the British withdrawal known as Brexit
are just imperfect vehicles through which someone can yell, “Stop.”_

Did the author communicate at all with Trump supporters and leave voters, or
is this just speculation? The support given in the article seems pretty weak:
an unrelated abstract experiment about efficiency versus equality and a
reference to another newspaper article about a BMW worker.

------
tmaly
I think this idea that Trump is anti-establishment is a play right out of the
Game of Cards show.

Look at Obama, he had the Hope and Change rhetoric going, they even gave him a
Nobel Peace Prize.

What did he actually accomplish? Medical costs are 5x what they were in some
cases. The middle east is still in disarray. Police and protesters are
clashing.

They talk a big game before getting elected, but the reality is that they have
very little power once they are elected.

They would be better off reading Economics in One Lesson by Henry Hazlitt then
working off improving minor things.

~~~
ZeroGravitas
Even trying to fix your three examples is fairly impressive for a US
politician. Particularly as his opposite numbers (Trump included) run on a
platform of intentionally making these things worse.

------
summarite
People voted _for change_ (Brexit?) in order to keep things unchanging?

Not sure the theory fully checks out, but it seems very clear indeed that the
policy narrative that's all about economics is not something normal people can
feel connected to. It's just that it's easy (?) to measure and thus has taken
over the debate. But if I'm a German or Dutch worried that TTIP will bring
America's 'chlorine-soaked chicken' on my plate you can tell me as much about
job gains as you want and i won't hear it - statistics and numbers don't feel
real. Policy has to find the reconnect with reality, that means probably to
purge the lawyer and economist thinking that pretty much dominates all
ministries and government.

------
jkot
Is there some source that elites want "hyper-efficient global economy"? From
what I see, there is a push towards bigger government spending and higher
taxes. A lot of that actually decreases efficiency, to the point it suffocates
some industries.

~~~
collyw
The American health care system seems to be way less efficient than the state
run systems in Europe.

------
_yosefk
Rent control and protectionism are different, and immigration for instance, a
hot subject in today's politics, is another thing altogether.

Supporting rent control doesn't make you stupid/uninformed, but the only other
option is evil.

Protectionism is a complex topic in a world with currency manipulation, labor
laws variability and geopolitical conflicts; it's only simple (and
evil/stupid) in a world without these things.

And immigration is not just about economics, it's about who you want to live
next door and vote. Here, people can disagree regardless of economic views.

------
perfunctory
> favored equality over efficiency

I think this is the wrong trade off. More equality does not necessarily mean
less efficiency.

------
codingmyway
It might have something to do with the fact that the weaker the economy gets
the more the rich get rich and people know it. Whether they recognize that it
through inflating of the stock market, bonds and real estate with cheap credit
or not.

Central bankers can't seem to get it into their thick heads that their 'wealth
effect' is a 'poverty effect' for those who didn't get the chance to own those
assets before they pumped them up out of reach.

The fact that the central banks of Japan and Switzerland own most of the
companies that we are employed by and pay money to thanks to their ability to
create money out of nothing should make people angry.

------
didibus
I recall a study that showed that above average income workers supported Trump
at a higher percentage. If that's true, it seems to contradict the whole
premise of this article. They should have asked those same Yale grads if they
were voting Trump or not.

~~~
ZeroGravitas
You're probably thinking of this:

[http://fivethirtyeight.com/features/the-mythology-of-
trumps-...](http://fivethirtyeight.com/features/the-mythology-of-trumps-
working-class-support/)

One thing that confounds it is that Hispanic and African-American voters avoid
Trump due to his appeals to white supremacy, and they are poorer than average.
So if you only count "real Americans" then there may still be some truth in
it.

------
yummyfajitas
I'm a little amazed at the tone of this article.

People rent a home, and then exploit the democratic process in a beggar-thy-
potential-neighbors strategy. They use things like rent control and other
anti-migrant policies (e.g. anti-Google bus policies in SF, anti-Hijab laws in
France) to enrich themselves at the expense of others.

Because her wealthy uncles lost their job, and had a small drop in their
standard of living, "Andrea" wants to screw over a bunch of desperately poor
people a world away.

Unlike "Andrea", our elites behave far better. Populists try to protect their
favored ethnic groups - witness Shiv Sena trying to pass laws preventing non-
Marathis from driving taxis, or "tech bros" entering SF. In contrast, I've
never heard a white banker complaining about allowing a Marathi to be the CEO
of Citi. Elite institutions - think of banking or tech - tend to be truly
global enterprises, open to anyone who can demonstrate the requisite ability.

Somehow the author doesn't draw the obvious conclusion: that our elites are
honest, moral and principled individuals, while our masses are selfish, tribal
and greedy people out to beggar their neighbors. For good policy making the
conclusion is that we should try and increase the power of the elite.

~~~
reddytowns
"Tech bros" don't like their jobs outsourced to India. That's comparable to
your examples, yet they are mostly upper class.

In addition, people are concerned about things that effect _themselves_. The
elites don't care about the neighborhoods they don't live in, or the jobs they
don't have to compete for.

But they do care about profit, and about getting richer. In all of the
examples you gave, that motivation would work just as well as being
"principled" as to explaining their allegiance to the opposite side of the
issues as to that of the lower class.

If the world ends up 99.99% of us are either starving or doing jobs such as
building a carbon fiber toilet for some rich guy's yacht, simply because the
elite "own" everything, the world would be a worse off place, wouldn't you
agree?

And, IMO, that's what will occur if we strip away all laws meant to protect
the little guy.

~~~
yummyfajitas
I've never actually met a tech bro who objected except on HN. Everyone I've
met has been fine with economic competition from people unlike them. But I
could be wrong - do you have evidence that tech is even remotely as
protectionist as the trump/Bernie voting masses?

The local elites don't need to compete for CEO jobs with Satya Nadella or
Sunder Pichai? That's news to me.

~~~
rtcensored
The people you are talking about are either your coworkers or those you've met
in a workplace related environment, correct? Management wants to do the best
things as quickly and cheaply as possible, and anyone who speaks out about it
publicly or to their coworkers would be doing harm to their career.

The same is true in any industry. On the factory floor, workers who complain
loudly about immigrants working side by side them at the workplace will get
them fired.

The same people who you _think_ are all for globalization of the workforce,
may also be part of the "trump/Bernie voting masses" behind closed doors.

As for the CEO jobs, there isn't a large group of voters that identify with
candidates. I mean, this is getting kind of silly. Do I really need to explain
why someone competing for a CEO job with an immigrant can't look to the
political process to help them?

And anyway, even if I'm wrong and tech workers are for the race to the bottom,
you are quibbling about minor things while ignoring my main point. Do you
really think there is morality in denying the lower class a voice to help
change the situation they are in? Are the laws shat out by our ancestors so
great we cannot change them, even though the result turned out not to be so
good? Is it like a board game, in that if you lose, it's unfair to complain
because you should have been able to deduce what would happen from the
beginning?

What, exactly, do you mean when you refer to the elite as "honest, moral and
principled individuals" in your parent post?

~~~
yummyfajitas
By honest, moral and principled, I mean they don't try to exploit politics to
screw over their neighbors. They just compete economically. Kind of like the
article claims, and mg experience agrees with.

Some people also didn't want to get into a race to the bottom with negros. I
think it's perfectly moral to deny lower class whites the right to change
their situation by harming the competition.

