Sunday, July 10, 2016

Brexit - why the media must be regulated

The British Brexit referendum outcome was an enormous shock to the rest of the world, and the people of New Zealand in particular. Nobody outside Britain could understand why a people who had a comparatively cushy economic position inside a vast trading bloc would leap out into the cold world beyond its borders simply because there were immigration problems.

Because Britain's migration situation is not that bad. She has a population of 64.8 million. Of this 8.4 million were not born in the UK. Of these 5 million were born beyond the EU, including the former Commonwealth. The other 3 million were born in the EU. So 1:8 were born outside the UK. The NZ figure is 1:4. Britain accepted 14.5k asylum seekers in 2014 (latest figures) or 2.2 for every 1000 residents. Conservative politicians said Britain was being 'soft' on immigration. NZ is often criticised for only taking 750 per year or 1.6 per 1000 residents. NZ is now raising the intake to 1,000 which is the same as Britain's 14.5k on a per capita basis. On the face of it the UKs immigration situation was a perfectly reasonable part of EU membership. The problem really was voters had no idea what that was worth.

From outside the EU it was much easier to see. When Britain effectively abandoned its last vestages of Empire (the Commonwealth) to join the EEC in 1972 the impact on that Commonwealth was serious.In New Zealand half our trade had been based around the imperial model of selling commodities to Britain which sold processed goods back to the commonwealth. We sold meat, dairy and wool, apples and pears. The British owned the meat processing plants, the wool scours and merchant fleets. In 1960 New Zealand was on the pigs back. It was said the Kiwi Prime Minister knew the names of all the unemployed people in the country. Then Britain announced it was joining the EEC.

When Britain retreated into Festung Europa in 1973 and started raising the tariff drawbridge a lot of countries were forced to adapt. Australia, Malaysia, South Africa also faced problems but like Canada, India and Hong Kong they had close, rich neighbours and scale on their side. New Zealand was one of the smallest and it was the most vulnerable. New Zealand's initial response was a kind of collective political self deception. We kept up production subsisidies for farmers we could not afford, we tried to invest in energy assuming a continuation of OPEC prices and a global oil shortage, we simply buried our heads in the sand and tried to pretend nothing had changed. By 1984 the level of government control in the economy to maintain this self deception had reached outrageous levels. It couldn't last, and it didn't.

Remarkably it was a leftist Labour government (ushered in by a rich property developer who split the conservative vote) which enacted a right wing reform agenda (very like the rich property developers' agenda). The pain was vicious. Subsidies were stripped from farmers. Tariffs ripped away from manufacturing. Companies died left right and centre. It was even worse when the October 1986 crash smashed the overheated and over-leveraged property market. Unemployment peaked at 10% in 1992. Many Kiwis left for Australia, or the UK. Among my friends only about half of those who left ever came back.

New Zealand is one of the least protected, least distorted economies in the world. Australia has huge protections in place for its farmers (mostly against New Zealand), the US, far from being the home of a market economy subsidises farming, and uses its military as a defacto industrial policy. Where in 1960 Britain was 53% of our exports and 43% of our imports today it is less than 3% of either. Indeed New Zealand is so diversified that "other" is one of our largest categories both in terms of our exports and in terms of where they go.

New Zealand's experience of being outside Europe gave us enormous experience at negotiating entry into large protected markets. Despite being outside Europe we have fifty years experience in gaining entry to it. We are very good at it. Unlike Australia we don't bluster, unlike the US we can't strong arm, we are small and relatively insignificant so we don't annoy people. We just patiently work with trade partners to find a useful political solution for all concerned.

Britain will now find itself outside Europe and in a far worse position. First it has kicked Europe where it hurts: European unity, and the architects of European quasi federalism are mad as hell. They can't allow Britain to get away with that or there will be no EU. The British speak of 'negotiating an exit', but they can't. Under European law a Member has two years to leave and Members cannot negotiate trade on their own with the EU. If they did there wouldn't be an EU trade bloc to negotiate with. So Britain will be left with basic WTO access to all their nearest neighbours.

Almost certainly if the article 50 jump is made Scotland will cede. The EU will be happy to welcome Scottish dissenters, and Irish ones too if it comes to that. Major British companies would doubtless relocate their headquarters in Edinburgh and slow start moving critical operations north. I suspect a lot of companies will find excuses to relocate within the two year time frame.

While England has always cosied up to the US the Americans have bigger fish to fry. They have the TPPA initiative (started by New Zealand) in the Pacific including Northern Asian nations like Japan, China and Korea to ratify. That is far more important to the USA than Britain. Then there is the European equivalent, the TPPI. This is the US's other major initiative. If England has hopped off the EU bus then its not included. The Americans have two major fronts and England simply isn't big enough.

What does that leave England? Of the white countries, weirdly enough Russia and the other members of the eastern bloc struggling outside the EU. If England was worried about an influx of Romanian gypsies it has now made itself less attractive than Romania. It's on par with Moldova and Byeloruss, and Russia. Even the Ukraine will be treated better by the EU.

England will also discover what Africa has had to deal with all these years. The natural trading partner for African nations is Europe, but because of French colonialism Africa suffers at the hands of the EUs Common Agricultural Policy. Africa should be rich. The only reason African nation's aren't is the collective racist policies of trade barriers by Europe.

But the most likely allies England will find are in South America and India. Watch for a diplomatic exit from the Malvinas/ Falklands islands in order to curry favour with Argentina. England will probably also make overtures to India and we are likely to see a kind of imperial reverse take over as India asserts more influence over England than vice versa. The Brexit voters may find the upshot is more Indians and Pakistanis running their nation than ever before.

What if the Brexit can be stopped? Many hopes are pinned to this ranging from legal challenges to the original referendum to petitions for a second referendum. It is probable, though that it will come down to a general election. The Conservative Party will go to the people seeking a Brexit mandate. The hope of remainers is that Jeremy Corbyn will be replaced and that the Labour Party will win the election with a mandate to remain. Realistically this, however is unlikely. First most of those who voted to leave are working class or living outside the cities that are doing OK. They feel threatened by European migration. Corbyn knows that to dedicate labour to remain will split the party and lose all the support he personally gained from the disenfranchised who rose up against the Party intelligentsia to elect him leader. Second the wealthy who knew what was good for them traditionally vote Conservative and don't want Brexit. They will be reluctant to vote Labour. In short the political machinery has short circuited and Brexit may be the only possible outcome.

But what, if anything, does this sorry mess teach the rest of the world?

What it should scream from the rooftops is that media ownership still matters. The Brexit campaign was not waged by Farage, Johnson and Grove (who like paid assassins have now all vanished from the political scene) but by the Daily Mail and the Sun. They were the ones exaggerating immigration issues and driving xenophobia. Why? Because under a British peerage system their influence was dominant. Under a EU federalist system it was diluted. The phone hacking scandal revealed only too clearly the unhealthy relationship between media barons and politicians and it is not over. The so called fourth estate of public discourse has become a fiefdom run by a few for their advantage. The same players are at work in the US with Rupert Murdoch endorsing Donald Trump's candidacy for US President.

The fact is media is not just a market for advertising. It is a means to shape attitudes, change public discourse and influence the political agenda. The fact that 17 million Britons were convinced to vote against their own best interests by a campaign of misinformation, ommission and outright deception largely led by unaccountable media owners should be proof enough that control of the means of public discourse is too dangerous to simply leave in the hands of market regulators.

For democracy to work the public must know what is going on. They need unbiased information and they need a full context. Organisations like Polifact and Snopes are important but they are not a sufficient counter to campaigns of misinformation and propaganda. While the state is itself a source of misinformation and political manipulation perversely state funded radio has often proved - in Britain and the US, and indeed New Zealand, to be the least politically influenced by external actors of all media.

As digital media diversifies there is a role for the state to both operate and regulate the media domain. This doesn't mean censorship but it does mean balance, and limits to control. Without this any nation runs the risk of following the example of a bread and circus plebescite which counters the best interest of the people themselves.

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