In a historic referendum held on June 23rd the United Kingdom (UK) voted to leave the European Union (EU) by a thin margin of 51.9% against 48.1%. Whether this decision will harm the British economy or will lead the EU to its disintegration, as some have predicted, is a matter of speculation for the time being. However, the referendum and the Pandora’s box it has opened are clear signs of a long-term process: the decline of Europe and the shift of economic and political power to the East.
In an editorial the Global Times, a mouthpiece of the Chinese Communist Party (CCP), argued that the UK referendum is likely to push the entire continent into chaos, which will only accelerate the shift of wealth and power from West to East. “East Asia has witnessed decades of high-speed growth and prosperity”, wrote the Global Times. “Europe stays where it was, becoming the world’s center of museums and tourist destinations … Europe is not able to resolve the problems it is facing”.
The anti-Brexit narrative of the CCP is partly the product of Beijing’s anti-democratic rhetoric. However, it cannot be dismissed as sheer propaganda, and its efficacy derives exactly from the fact that it is based on the real crisis of European statehood and economic models. Supporters of democracy may oppose an analysis of the ongoing power shift. But those who support democracy should be aware that the best way to advance their ideas is to create successful, stable, tolerant and wealthy societies. Rhetoric alone has never achieved anything; it is facts that matter.
Over the past few decades the United Kingdom, as many other countries in Europe, has been beset by severe economic issues whose origin dates back as far as the 1970s: stagnation or fall of median incomes, widening wealth gap, reduction of public services, underemployment or unemployment, and deindustrialisation. These phenomena – which we shall examine more closely in the next posts – put an end to the post-war economic boom during which the average citizen of Western Europe and the US saw his or her living standard rise.
According to the Pew Research Center, the average hourly wage in the US has been stagnating for almost three decades:
[A]fter adjusting for inflation, today’s average hourly wage has just about the same purchasing power as it did in 1979, following a long slide in the 1980s and early 1990s and bumpy, inconsistent growth since then. In fact, in real terms the average wage peaked more than 40 years ago: The $4.03-an-hour rate recorded in January 1973 has the same purchasing power as $22.41 would today.
The UK has experienced a similar trend. Between 1980 and the early 2000s real wage growth fell by almost 20%. This has not happened evenly. Some jobs have seen considerable income increase, while others have stagnated or fallen. According to a study by the Trade Unions Congress (TUC), wages of medical practitioners rose by 153% since the late 1970s, while bakers saw their wages fall by 1% in the same period. Judges, barristers and solicitors saw their wages grow by over 100%, whereas truck drivers, packers and bottlers experienced a 5% wage drop.
The 2008 financial crisis hit the job market hard. By 2014 incomes had fallen back to the level of the early 2000s. Income stagnation has been made even worse by inequality. Statistics show that in the UK “the poorest fifth of society have only 8% of the total income, whereas the top fifth have 40%”. Inequality is also demonstrated by the fact that, as The Guardian reported,”9% of households have no assets while 5% are worth in excess of £1.2m”.
The consequence of income stagnation or underemployment has been insecurity, which in turn has led to anger and resentment among a large section of the population. The crisis of the middle class has reduced popular consensus and the citizens’ identification with the state. However, academics, parties and politicians have been unable to address these issues. It is not surprising that many people feel abandoned by the authorities. It is against this backdrop that we must analyse the resurgence of nationalism and demagogy in Europe.
In the following posts we shall analyse some of the major factors that are contributing to the power shift from West to East and to the gradual decline of Europe:
1- Democracy, mob rule, dictatorship: The problem of freedom from ancient Greece to the present
2 – Nationalism, populism and the disintegration of European statehood
3 – Independence movements and the ‘Lincoln argument’ against national self-determination
4 – Demagogic parties take hold of Europe
5 – The myth of the free market
6 – How China’s Communist Party profits from Europe’s failures and what can be done to strengthen democracy