27 October 2016
Beyond its immediate impact on global markets, Brexit ushers in a new era in which everything is unpredictable. Photo: Internet
Beyond its immediate impact on global markets, Brexit ushers in a new era in which everything is unpredictable. Photo: Internet

Brexit signals the dawn of populism

It seems the entire world was caught off guard by Britain’s decision to leave the European Union.

Stocks markets worldwide plunged, with our Hang Seng Index at one point dropping 1,206 points the day after the outcome of the referendum in the United Kingdom was announced.

However, Brexit has far more profound and far-reaching implications for Europe and the entire world than wiping trillions of dollars off world markets.

A new world order is taking shape in which populism will replace meritocracy as the major driving force behind social changes.

In the run-up to the referendum, many people believed that Britain would be able to ride it out like it did in the Scottish referendum two years ago.

Political pundits, analysts and investors around the world were optimistic that British people were by and large in favor of remaining in the EU.

They thought so because people tend to believe what they want to believe.

Also, Britain staying in the EU is in the best interest of world markets, big businesses and big institutional investors.

And so these powerful vested interests had to promote an optimistic sentiment in the market so as to swing public opinion their way.

Besides, the illusion prevailing in the international community that everything had been taken care of and would be fine and predictable under the leadership of mainstream liberal political elites also contributed a lot to such ill-founded optimism about the Brexit referendum.

In fact, the rise of meritocracy after the end of World War II and the rapid economic recovery of the West gave rise to a blind faith in the leadership of mainstream liberal elites among the general public in the developed world.

The fall of the Soviet Union and the prevalence of the West simply reinforced such blind faith.

What most people have overlooked is that public opinion has undergone gradual but drastic changes as we entered the 21st century.

Among all the issues, the 2008 financial tsunami, which had seriously eroded public confidence, turned out to be the last nail in the coffin of these mainstream elites, and completely dispelled the myth of meritocracy.

The subsequent massive bailout of big banks with public money by western governments because they were “too big to fail” simply dealt a further blow to mainstream liberal elites.

Once hailed as the guardian of public interest and economic wizard that could guarantee long-term prosperity, meritocracy has fallen from grace in the public eye.

The explosion of the myth of meritocracy that dominated the western political scene for over half a century eventually led to the rapid rise of populism in western society.

The result of the Brexit referendum marks the end of “the era of the predictable” and signals the beginning of a new era in which everything is unpredictable.

The good old days of the mainstream political establishment have long been gone.

Whether in the UK, the US or Hong Kong, populism is toppling the political status quo and splitting the traditional political forces.

In the UK, the Brexit referendum has split the Tories; in the US, Donald Trump has split the GOP; and in Hong Kong, the rise of nativism or even separatism has split the pan-democrats.

It is crystal clear that the rise of populism has already become a global phenomenon, which transcends borders, age groups and races.

Unless the mainstream elites can address their grievances and drastically reform the existing socio-economic system, chances are they will become increasingly sidelined in politics in the days ahead.

This article appeared in the Hong Kong Economic Journal on June 29.

Translation by Alan Lee

[Chinese version 中文版]

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