Liberalism’s Last Stand — Brexit

When the Soviet Union fell in 1991 Marxism was dealt a near fatal blow. The crown jewel of communism was no more and descended into the worst kind of lawlessness.

Francis Fukiyama famously declared the End of History and the U.S. went on a ‘to the victors go the spoils’ looting of 1990’s Russia that boggles the imagination.

Marxists were left floundering. They were convinced the end of capitalism would occur and communism would win. Their identity was shattered on the shores of collectivism’s inherent inconsistencies.

It’s lack of basic understanding of why man acts and what he hopes to achieve when he acts that dooms all forms of collectivism to eventual failure.

The cries went up among the committed Marxists to then blame the U.S.S.R. that it wasn’t real communism. And their argument shifted to European Democratic Socialism as the superior implementation.

For the past twenty-eight years we’ve been inundated with this by leftists who refuse to give up on the dream. It’s still just warmed-over Marxism but whatever.

The End Of OPM

Now with the European Union facing a populist uprising across the continent they have reached the turning point with Brexit. And the conundrum is enormous.

Brexit is the single most important political event of this century. It’s one of the few things that is bigger than Trump. So, paying close attention to it is important.
That’s why it has so divided people. It represents an existential threat to the inevitability of modern liberalism. The European Union is the symbol of that inevitability.

Because once that inevitability is breached the European Union will begin to unravel before our eyes.

Donald Trump, for his part, understands this. He is pressing the EU on the issue of tariffs and NATO spending.

He wants to break down the artificial financial support the EU receives to fund its ‘superior democratic socialism’ that U.S. liberals of the Bernie Sanders persuasion believe in.

Famously, former British Prime Minister Margaret Thatcher said, “The problem with socialism is that eventually you run out of other people’s money.”

That’s why Brexit has to be destroyed. Because if it happens and Britain thrives as a result, it will deal a fatal blow to Marxism.

This is why they fear Brexit so much. The EU will fail.

We got a microcosm of that on Thursday when Theresa May left a No-Deal option on the table. The EU Council turned a one-hour rubber stamp session into a five hour grudge match. which resulted in the EU caving at the last moment, offering an unconditional two-week extension to Article 50.

And the EU caved. Finally.

Tax Cows Unite

That’s why the Brits have to be made into voiceless tax-cows milked until they are depleted. That’s what socialism is, a giant tax vacuum which destroys capital and innovation.

And that is where the EU is today. They have run out of the British people’s willingness to fund their dreams of creating a better version of the U.S.S.R.

So is Italy. So is Poland, the Giles Jaunes in France, Hungary, Austria, Spain, the Czech Republic, and even Germany itself.

In the U.S., Trump refuses to pay for Europe’s externalities like defense, education and medical care. He’s attacking the fundamental argument made for socialism today.

It’s a cornerstone of his re-election strategy.

The Marxism of places like Norway, Denmark and the post WWII Great Britain were heavily subsidized not just by the U.S. via NATO and the Marshall Plan but also the massive oil and gas deposits they had relative to the size of the populations they were supporting.

But with the North Sea and Groningen fields drying up so is the revenue. And it’s placing immense strains on the promises of these democratic socialist governments.

Trump understands this. It’s why he’s activated the U.S.’s energy production the way he has. And he’s saying quite clearly to Europe, “No more will we fund your wealth transfers by paying import tariffs to protect inefficient industries and subsidize Germany’s car industry.”

I’ve given Trump a lot of grief in the past two years over tariffs because the economics are clear. Tariffs hurt domestic consumers at the expense of politically-connected domestic producers.

But I have always understood his reasoning for attacking the EU the way he has. I agree with the sentiment just not the implementation.

The End of Empires

Back to Brexit. If the EU wins its fight with the U.K. over this treaty it will be a short-term reprieve for Marxism. They will win a six to nine month grace period.

So, as I said recently on Strategic Culture:

Merkel and Juncker are trying to hold onto their manufactured leverage over the Brits to, in turn, hold onto a Union that is in the process of failing. May and her cabinet are trying to hold onto a relationship with the EU while the UK itself is now in danger of failing.
The Scots are pushing for independence to stay in the EU. Wales is beginning to consider it. Northern Ireland doesn’t like being anyone’s Trojan Horse.
They have thoroughly underestimated the will of the people and it will cost them what little cache they have left with voters. Remember, confidence lost in the institutions of government begets a loss of confidence in the money and their ability to manage it.

Because the global economy is rolling over. The data is everywhere.

The biggest proof is the central banks capitulating. Normalcy will not return to sovereign debt pricing.

The U.S. Yield Curve is a nightmare of convexity that is screaming, “Recession! Dead Ahead!”

Everyone fiddles while their empires burn, including the central banks.

The U.S. yield curve is inverted between 3 months and 10 years. The markets are braced for a severe dollar liquidity crunch. To me it means they know Brexit is irrelevant at this point.

Brexit isn’t the problem. It is the symptom of the far larger one that you can’t steal your way to infinite prosperity.

And that’s why it is inevitable.


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40 thoughts on “Liberalism’s Last Stand — Brexit

  1. I don’t know if you would have picked this up but Farrage had a constitutional law expert on his LBC show yesterday (Sunday). He asked him about the legal status of the extension. The position apparently is that all precedent requires that the extension should have been qualified by the need for a statutory instrument to be passed by both houses of parliament before it could be effective. This was not done – it was unqualified – although the statutory instrument is being prepared now for consideration this week. If it passes no big deal. If it does not pass, however, we have yet another layer to the crisis, with many arguing that the extension is not legally enforceable and Friday remaining a hard exit date.

  2. For a long time I’ve wondered if all of these machinations were nothing more than theatrics to keep the fuzzy headed distracted so “no deal” can slide home intact. Perhaps MP May is more clever than she appears from across the ocean? Playing stupid does seems to work for President Trump…

    • I’ve operated with that principle at times and played it out and it fits with the way she’s acted. And at other times I’m convinced that she’s the EU’s biggest shill.

      Either the most clever or incompetent person in 21st century politics.

  3. I think you meant North SEA rather than the North “Slope” oil field, i.e., the reference is meant to be to the UK rather than Alaska?

    Your recurring point that so much of the “success” of the European “democratic socialism” (the “Third Way,” as they use to call it back in day) has derived from the oil fields and various subsidies from the United States are well taken, IMHO.

    It has long been obvious that the Euro-sclerotic nations would run down their stocks of OPM and hydrocarbons and the ability to keep issuing claims on the future … eventually. But as wiser people than me note, just because something is inevitable does not mean it is imminent. Seems like the inevitable is more imminent than it used to be.

    • I did and thank you… edited. And you are also right that inevitable and timing are difficult to judge. I think we are close to the cliff given where we are in the generational and economic cycles.

    • Tom, I know that you have oscillated between: Is May duplicitous or is she smart? As someone who grew up in the UK, I have no doubt that she sold her soul a long time ago and is duplicitous. You simply cannot rise to that level in the Tory any other way. Having said that, the question still remains to what end? There is the conventional theory of globalism/socialism/Soros etc. which would suggest that she is trying to engineer a reversal of Brexit. However, there is an alternative theory that her number one goal is to preserve the special status of the City of London, whose independent status as a City State has been increasingly under threat by EU regulation. A lot of (dirty) money is channeled through the City, largely without supervision because of it’s special status. At this time I am 60:40 in favor of theory two but this week should provide the answer.

      • Does this mean that she is pushing towards a No-Deal to protect CoL or vice versa? It’s a good theory.

      • Maybe burried somewhere in the small print of her preferred (semi – Brexit) deal is a provision that the COL is exempt from regulation? If So, that would explain why she is pushing it. If not, then the theory would suggest a hard exit.

      • That’s what I thought. And in the end allowing Merkel to write a deal that Parliament couldn’t pass was the best way to get where we are now and secure a no-deal.

        I tend to think no one is that devious and rather that they play their cards as each hand is dealt.

        But, it seems an interesting theory.

  4. the elephant in the room visa vie the european union is more than brexit ….it is ….. draghi….. in his infinite incompetence has utterly destroyed the european sovereign bond market….think.. italy, greece, et al and done incalculable damage to the rest of the bloc.

    he is unable now or in the future to normalize bond yields without detonating individual government budgets and in certain member cases demonstrating a NO BID for their debt outside his own purchase.

    the euro union is doa…. it’s only a matter of time and now much less than most suppose.

    once that happens the us dollar will soar and in so doing destroy our export market which will begin the process of our demise with our own brand of american socialism and subsidization.

    the 2020’s promise to be exciting if you like financial chaos, drama with all the social upheaval historically know to accompany such times.

    • Is it incompetence or a well thought out plan? He’s addicted the EU member states to the ECB heroin. When he removes it they die and EU integration is completed. IE, all of the previously sovereign nations are now reduced to non-sovereign states as in the United States.

      • where politicians and other so called elite leaders are concerned never assume machiavellian machinations when simple garden variety stupidity will also satisfy the question.

        it is only through constant media snow jobs to the contrary are our elites and leaders viewed as anything other than the mediocre dumb bells most of them….in fact…..are!

  5. I disagree with you on this one Tom. I think you have a biased view of the definition of Socialism. See https://www.youtube.com/watch?v=DRCISn1KfKQ&feature=youtu.be

    Finland & the Nordic counties are viewed as better places to live than America, despite being over run by hordes of regiments thanks to the US.. China’s GDP has dropped from >10% to “only” 6%. We should be so lucky.

    Having been a conservative most of my life I now see that American Capitalism has changed sch that ALL the profit goes to the owners. This has hollowed out the middle class and done little for upgrading the infrastructure of the country. The resulting income inequality has always led to revolutions in the past.

    I don’t like either the EU or capitalism in its present form. Factoring in AI & automation reducing jobs by 40%. LENR (Low Energy Nuclear Reactions aka cold fusion) that is now commercial and will probably replace most fossil fuel over the next two decades, some form of Socialism will be required. Thanks to “Citizens United” the implementation is unlikely to work.

    At least it would be better than the other alternative of war. America’s invasion of Iraq was every bit as bad as the Nazi invasion of Poland. John Bolton and the other war war hawks are stupid enough to get us into WW 111.

    • I’m a libertarian and a free market, Austrian economist. We don’t practice capitalism in any form today so you’re right not to like what you see.

      Just because Norway is seen to be better doesn’t mean that it IS better.

      Socialism is not required. In fact, if, as you say, LENR is commercially successful and replaces fossil fuels, that will only empower individuals and the forces of decentralization rather than those of centralization.

      It is that fight which is what the current political upheaval is all about. And the process of hollowing out that middle class is not a product of capitalism, it is a product of central control and issuance over money which has corrupted the entire pricing structure, disempowering consumers through inflation and rolling wealth up to the class that prints the money and gets to use it first.

      That is absolutely a form of socialism — centralized control over the means of production.

      Now I do have a very broad definition of socialism because I don’t like to sugar coat things or lie to people. All forms of collectivism are anathema to a free society, but I understand that they will crop up. I’m not stupid.

      But, once you accept that they are going to happen, the results of those exceptions are very predictable. Freeing us from capital intensive energy extraction and humans printing monetary units would be the thing which frees more people than ever at every level.

      We live in a weird moment where we are approaching the end of an economic, political and solar macro cycle. The rules will change on the other side of this.

      But, the fight of the individual vs. the collective will still be there.

      • The only kind of capitalisms that exist in today’s world are well elucidated in this article:
        groups.yahoo.com/neo/groups/political_reading_room/conversations/messages/1210

      • Tom, Thank you for tour reply.
        You wrote: “Just because Norway is seen to be better doesn’t mean that it IS better. ”
        Well they don’t have tens of thousands living and dedicating on the sidewalks.
        They don’t spend anything like as much on the military or health. They don’t invade other countries or go in for regime changes.

        I agree LENR will decentralize things.

        TL. “And the process of hollowing out that middle class is not a product of capitalism, it is a product of central control and issuance over money”
        I think it would take some central control to stop manufacturing being exported to countries with lowest labor cost. Which is what killed the middle class.

        “Now I do have a very broad definition ”
        Please look at the amended link on Socialism.

        As a Libertarian, how do you suppose the coming 49% unemployed will eat and find shelter>.
        Keep in mind, in a democracy, 515 CAN VOTE TO TAKE MONEY FROM THE 49%

  6. You’re with Trump then you’re against Trump, you’re with Trump then against him again. Now you’re with him. You’re all over the place. What do you stand on? Capitalism, Communism, Socialism are all just Isms. They are all related. As for me and my house we will serve The Most High. No shifting shadows in him.

    • Jim. I’m not with or against any one person. Trump is a tool. When he does good I’ll praise him. When he does something stupid I’ll lambaste him. It’s not about the person it’s about the policy and the path.

    • Which of the 200+ denominations run said house on Earth?
      They all have complete Kabuti theatres full of shifting shadows.

  7. Mr luongo you are wrong very wrong.The EU is a neo-liberal global capitalist project.Being American,you simple mindedly label this “leftist”, a catch all label which is inappropriate.I repeat globalism is a Capitalist project,as predicted by Oswald Spengler a century ago.(you should try reading him,although your limited attention span might be a handicap) Spengler predicts a final battle between blood & money,eg; the bankers/global financers versus the rest of humanity(at least those with a strong ethnic/nationalist identity) To label hyper capitalists as leftists is absurd.They use people & organisations on the left just as they do so on the right.If you applied more nuanced & informed thinking your writing would improve in accuracy.

    • Why do you equate the ultimate form of collectivism, a transnational bureaucratic, unelected superstate with capitalism?

      Capitalism is the voluntary (Most important word here) exchange of goods and services while Socialism (and Marxism as an adjunct) is the central control over the means of production.

      Broadly this is about Individualism v. Collectivism. Spengler, if he’s using these terms this way, is doing you the disservice of trying to re-label Capitalism in Marxist terms to undermine your faith in anything remotely individualistic.

      That Spengler is forecasting this outcome, which I agree with, in these terms shows a stunning lack of understanding of the core issues.

      I don’t care about looking nuanced about these isms because they always break down to the basic dichotomy…. the individual versus the state. In fact, I am purposefully dispensing with nuance to make my point more forcefully and dispel the fog created by muddled thinking.

      While I appreciate the feedback, I think your thinking on these matters would improve immensely if you in turn read Mises, Rothbard and Hoppe to understand why my lack of nuance on this subject is not only a strategic and tactical decision for persuasion purposes but also the correct interpretation of the conflict.

      • Oh dear, simplistic tunnel vision from a von hayek /mises acolyte.Capital if unregulated by law eventually concentrates in a few hands,creating cartels which dominate & subvert,destroying freedom ,like metastasising tumours.You really should read Spengler he was not a communist but a realist. “The final battle between blood & money” draws ever closer.

      • Lol. The only in the context of ruinous wealth redistribution via taxation and the overreach of a central govt. Watch and learn over the next five years as the major states all collapse under their own weight.

        Marx was wrong and this period of history will prove that conclusively

  8. You really are a cretin.You make no attempt at reasoned argument,simply spouting your von hayek kindergarten dialectic which is overly simplistic. We live in a world where 500 people have 50% of the total wealth.If that’s “leftist” or communist you must be delusional.

    • Del, don’t take this the wrong way but I don’t care about your feelings. I’ve been doing this for a long long time and am not going to recreate the wheel for you.

      Calling me a ‘cretin’ after two replies? Whose the one who is not engaging here? Certainly not me. Be well and you will remember this conversation after the EU implodes.

  9. One can make the case that the Marshall Plan was put in place to benefit U.S. corporations. I recently read that the majority of the money stayed in the U.S. So… it was all about socialism for U.S. corporations. Of course, since 2008 this socialism for the wealthy has grown exponentially.

    • Look, you can’t change the definition of things. It’s Orwellian. Socialism is, by definition, centralized control of the means of production. Those that coined the term defined it that way. I won’t argue definitions of words.

      I will be happy to argue real-world implementations of collectivist ideas vs. individualist.

      But, at a philosophical or definitional level, no. Full Stop.

    • I’m five minutes into his real definition of economic activity and I can write two books about his erroneous assumptions about how production happens… glossing over everything that is important to rehash the wholly discredited Labour Theory of Value. By attacking “Embodied Labour” as property he does violence to the concept of what came before and how and why we turned nature into that chair in the first fucking place. It’s not enlightened, it’s envy.

      Seriously. Read Human Action by Mises. Read Socialism in the Economic Commonwealth. I’ll lend you my copy but it’s free from mises.org.

      Then come back to me and tell me you see the inevitability of socialism.

      No offense, but it is truly disgusting to see this crap lauded without a basic understanding of how and why Man Acts.

  10. Trump could expedite the inevitable by handing NATO over to the Europeans and turning off its American monetary tap, until it can be decommissioned permanently. We need to get out of the business of international warmongering in the interest of empire building before an accidental WW3 can begin.

  11. Tom, thank you for your reply. You need to view the whole lecture to really understand what Woflf is saying.
    The fact remains Marx didn’t write about central control by the government, he was interested in the micro economics.

    You, like mos of is, were taught that Socialism is government control of production and government lamming. This doesn’t work and is propaganda from capitalist economists.

    What Wolff is saying actually works. As described in the Q&A at the end, there is a worker Co-op in Spain that employs 100,000 people . it is the 7th largest corporation in Spain with its own bank. That is the current Socialism.

    I would love to read Socialism in the Economic Commonwealth but due to macula degeneration I can no longer read the text in a book.

    Adrian Ashfield

    • Adrian,

      I’m all for any form of anarchic, i.e. voluntary, arrangement of peoples. I would not, however, call that socialism. It’s not. It’s anarchy.

      Co-ops that function to coordinate production efficiently are ones that respect the inviolate property rights of the individuals that make it up and allow for them to leave when they want.

      Do the workers of this Co-op in Spain have ownership in the co-op? Can they take their earnings outside the co-op? Answer those questions and then decide on your terms.

      If so, then that is not socialism… this is anarcho-capitalism. In fact, this is the only kind of capitalism that makes any functional sense.

      The key is opting out of any system. If you can, then I’m not against any version of that. I’m not against people being communists. I’m against exporting that communism via a gun.

      I know that Marx was talking about exactly the same things that the anarcho-capitalists are…the end of the state. The difference is the approach to the organization.

      The divide is between voluntarism vs. coercion. liberty vs. socialism.

      All Wolff is doing is co-opting true anarchism and calling it socialism. The path to a free society is through the respecting of the individual. That is what builds communities. The idea that there is no property, however, is ludicrous.

  12. Tom,
    I am not persuaded Rothbard’s anarcho-capitalism is a better description, but no matter.

    Don’t get me wrong. There are lots of problems with Socialism. I also think the government should do some things such as health care and help people who are really in need. A percentage that I expect will increase.

    Private companies should still exist, in competition with Co-ops. Any organization needs a leader to get things done and deal with free-loaders. I wonder how well electing a manager would work.

    Co-op workers are free to leave and presumably have received their share of the company as the profits were divided as they went along. I like the idea that the wage range should be no more than 8 times that of the lowest. Not paying a CEO $5,000 per hour etc.

    I don’t pretend to be an expert on Co-ops. Dr. Wolff gives a link to a site that spells out how they should be organized and there are many years of experience to draw on.

    The problem with those things that should be run by the government is that they are not good at it and corrupted by the elites. Possibly workers experienced in making their own decisions would have more sense than the present electorate.

  13. I don’t know about the rest of you, but I have not seen one single detailed analysis of the Brexit deal.
    It’s all smoke and mirrors.

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