Brexit and the Clash Between Globalism and Small Business
Although the British vote to exit the European Union was fairly close, it must be viewed as an event that reflects major undercurrents sweeping through Western nations.
Two very powerful factors weighed against Brexit. First, people are very averse to change. They would rather stick with the misery they know than misery they don’t know. Second, pundits and leaders kept telling the British citizenry that it would be a dire mistake to exit the EU.
Nonetheless, they rejected those arguments and fears, and said goodbye to the EU.
Small businesses in the U.S. need to be carefully watching how this plays out in Great Britain. If I can paint a big picture for a moment, I think the Brexit, the rise of Donald Trump, and the success of Bernie Sanders are all part of the same social phenomenon: The average citizen no longer believes that their leaders have their best interests at heart.
There are a number of derogatory names and phrases associated with this, such as:
- Globalism,
- Corporate greed,
- Power elite,
- Too big to fail,
- Political class, and others.
While we can tinker with statistics to make them demonstrate pretty much anything we want to “prove,” it’s a fact that the middle class is feeling squeezed in every Western nation. The middle-class squeeze has been going on for decades while the world’s political class has been agreeing to global trade agreements and creating the European Union.
The EU and these trade agreements are always billed as deals that will lift up the citizenry. I think the average citizen would say that the outcomes have been exactly the opposite; the more our political and corporate leaders have “globalized” economic and political power, the less well off the people have ended up. Global pacts and treaties are always “good” for national politicians and international corporate leaders because every deal gives them more power, but does small business benefit?
I have to point out that in the U.S., business starts began going down at about the same time globalism started going up. Coincidence? We now have more business closures each year than we do business starts. Further, small business has always been the average citizen’s ticket to a comfortable middle-class life style. As business starts slip away, do we have any right to be surprised that the middle class is feeling squeezed?
This also impacts the minimum wage debate. Who pays minimum wage? Honestly, most small businesses pay above the minimum wage. When you see a minimum wage protest, the folks holding the signs are always standing in front of one of the global fast food chains. I believe much of the angst about the minimum wage would dissolve if small business starts were at levels like they used to be. But without those new businesses opening in your community, less-skilled workers are forced to apply at one of the corporate-global-minimum-wage-paying outlets.
So let’s turn our attention back to Brexit and its impact on small business. Although we won’t know this answer for some time, the critical question is: Will Brexit invigorate British small business?
If it does, we need to completely reevaluate the way we look at trade deals.