the UK is holding an important election on June 8th So today we're bringing you some bonus audio on that topic it was recorded at an event several weeks ago and features Tyler and Steve Davies of The london-based Institute of economic Affairs they talk about how the general election could shape the terms of brexit how much further the EU and even the UK
might Splinter the prospects for the European left wing and the populism underneath it all now keep in mind this was recorded shortly after Theresa May called for the snap election and as as usual right now A lot has happened since then nonetheless we hope you enjoy the prognosticating and we'll be back next week with Jill [Music] [Applause] [Music] leapor conversations with Tyler is
produced by the mercada center at George Mason University Bridging the Gap between academic ideas and real world problems learn more at marcus.org and for more conversations including videos transcripts and upcoming dates visit conversations withth tyler.com [Music] okay Steve you're the one with the British accent your country has called a snap election June 8th Why did Teresa
may do it and how is it going to change the terms of brexit what's your take well um the simple answer of course for any as for any politician is she's called it because she thinks she's going to win uh and improve her position in Parliament and that's almost certainly going to be the case uh somebody very unkindly observed recently Abraham Lincoln's prospects when he picked up
those theater tickets were better than the labor parties right now so uh but but uh more seriously there are there are two other reasons for her doing this one of them is that she wants a mandate for the kind of brexit she wants to pursue uh and the big argument now I think in Britain is not should we leave the EU or not I think the British public broadly thinks yes we've decided to do
this let's get on with it now including most of the people who voted remain uh but the big argument now is what kind of brexit should there be uh should there be one which uh involves Britain remaining in What's called the European economic area which would mean access to the uh regulatory regime of the single Market but also accepting a whole lot of
European regulations obviously uh and also free movement of Labor or should the uh UK go for a much more independent role uh not apply for membership of the EA and that seems to be the one that the government wants to go for and so she's she wants a mandate for that strategy and that's what the other parties are going to argue against the other thing is she wants to stamp her own authority
on the conservative party and I think what this election will do uh is complete a kind of transformation of the conservative party away from what it has been for quite a long time actually I think there's going to be a a significant generational change in the British conservative party and and it's going to become much more of a traditional conservative party than it
has been for quite a long time what struck me about the announcement which to many people including in her own cabinet seem to have been a surprise is that the pound went up 2.7% right after the announcement and that's quite a significant currency movement now is this the right way to think about that that she had her own backbenchers who were deep Euros Skeptics and now they're
actually cut out of the equation they don't have a veto anymore so she can on one hand give a more Centrist way of leaving the European Union but on the other hand due to your fixed term parliaments act when the next election has to be that doesn't have to be right after March uh 2019 so she can again do the kind of brexit she wants without the next election being a referendum on that
because that's now more put off so no one thought she would do this but I see the pound going up I think of those those two factors I actually think she's much smarter than all the people who thought this wouldn't happen and do you agree with that I I agree completely with that yes she's postponed the otherwise it would have been very very awkward they would have been having an
election a year after the brexit negotiations were concluded and that could have been very very difficult now there's going to be a big gap uh she will have time to uh sort out any problems that arise from the actual way in which we leave the EU uh and also a lot of people like the prospect of there being a decisive uh and conclusive result in the election which there's
clearly going to be uh I would say uh and so yes I think it is probably a very smart move on her part so how hard will the hard brexit be so Teresa may has said she's not going to take in migrants from the EU as a matter of law some may be taken in on a discretionary basis she's making that a campaign pledge so that would seem to rule out an arrangement like that of Switzerland or
Norway an EA like arrangement that seems to mean hard brexit since the European union doesn't seem to be giving in uh what rights will the London financial sector have to sell product on the continent what will rates of tariff be will it be default WTO rates or what what will it look like say 5 years from now that is very tricky because uh in terms there's three different issues
there one of them is that the government is uh deciding to go for I think a much a very a hard brexit I agree with that mainly I think for the very reason that they want to impose controls on immigration from uh the EU uh and they can't do that if they're part of the European economic area because the European countries quite reasonably I think say look there's a whole package
deal here and free movement of Labor is part of the package deal you can't pick and choose what you get uh so they've decided I think very incorrectly that they for political reasons they don't want to do that and therefore they're not going to be part of the EA now the question then is well are they going to be able to get a trade deal with the EU
of the kind of Swiss type before the deadline for the of 2019 when the 2-year uh ticking clock finally hits midnight my own view is probably not actually because uh any deal has to be agreed by the 27 remaining members and getting all 27 of them to agree to it is very very difficult uh now this is a case of British strategy uh coming back to bite
them if you will because it was British strategy to expand the EU so enormously in the aftermath of the collapse of the Soviet Union and as Sir Humphrey explained very lucidly to Jim hacker in a very famous episode of uh yes prime minister the reason for this was to actually make it so that nothing could get done and that was indeed the reason uh as he told uh as he told Jim hacker
the goal of British foreign policy for a th years had been to bring about a disunited Europe uh which is completely true uh and so the problem is therefore I think we're not going to have a deal at the end of the two years so I think we are probably going to need either to revert to uh WTO rules or I think more likely we will have an interim agreement put in place that's where the hard
argument will be about what that inter agreement is now as to the city of London there's a lot of talk at the moment the city of London is going to lose its so-called passporting rights which means that it can conduct business in euros last year before the referendum uh the city of London did just under a trillion euros worth of bit Euro denominated business uh it's a lot of
business so if they were to lose that uh that would be an enormous blow to them uh the C European Central Bank would dearly like to yank that privilege because it didn't want them to have it in the first place but they have nowhere to put it but they've know where to put it the problem for the Europeans however is that you can't build up a major Financial Center like the city of London
in somewhere like Frankfurt or Paris overnight uh it it's a much more drawn out process so I think in the medium term at any rate the city of London probably will be given passporting privileges but uh in the more medium term a lot of business will shift to the uh to the continent to Frankfurt primarily but also Paris but that you're talking about a 15year kind of time
Horizon for that rather than an Abrupt cliffedge transition I think and now if you don't consider me too rude I'd like to ask if your country is falling apart so in Scotland you Nicholas sturgeon is asking for some would say demanding a second referendum You could argue that ever since Devolution the attention of the Scots is focused on their own
politics in a way that makes them feel much more separate from England and that won't change and of course they feel that their votes were disregarded in the decision for brexit brexit is now quite hard uh s SMP the independence party has done very well in the most recent elections it's at least we're not sure how well they'll do this time around but is Great Britain going to Splinter
because Scotland will leave and you might say oh that would be insane what currency would they use how would they bail out their banking system the price of oil is down but given that the United Kingdom voted to leave the European Union which many people advised against seems we can't dismiss the possibility that having said a one then says b so is Scotland going to leave yes or no uh I
think I actually think no no actually I would like to say yes but I think no um you want them to go oh I definitely do tell us why my attitude and the attitude actually the majority of English is that it would be pretty good to get rid of the bloody Scots um the if there was a referendum on Scottish independence purely in England there would be a clear
majority in favor without well that's all that's a diminishing asset anyway actually that the production rate from the north SE is declining dramatically um I think Nicholas sergeon has a perfect right to call another referendum uh because she did say that if there was a major change in circumstances they would call another one and quite clearly there's been a
major change in circumstances and as you rightly say Scotland's view on brexit is radically different from that of uh England and Wales um now the whether or not she will get a vote in favor of uh leaving the UK is more open to question because the problem there is that leaving the UK If the UK is still in the EU uh is not quite as frightening as the prospect of leaving the UK If the UK is
outside the EU because a that requires the uh the EU if the goal of it is to stay in the EU to give Scotland membership and Spain in particular is probably going to veto Scotland becoming a member of the E uh EU because they do not want to give encouragement to separatist movements for obvious reasons uh but also uh the the other the other problem is that that would mean a hard
border between England and Scotland and that's a lot more scary uh than uh the prospect of being two separate countries but with still no no hard border at all and the Scots as a nation are actually very small sea conservative so I think that actually if push comes to shove they will very narrow vote to remain in the union actually personally I wish
they would vote to leave uh and quite apart from all joking aside I think there a very good reason for that which is well two good reasons one is that my general view is that small to mediumsized countries countries up to about 7 million people empirically do better have better governance uh better Economic Policy than large countries because public Choice problems are less
severe in small countries uh and the other thing is that Scotland has very very severe social problems basically basically greater Glasgow and they're not going to address those problems in a mature way as long as they can blame them all on the English uh at the moment all the problems of Glasgow are pushed onto the English taxpayer uh whereas if it was the Edinburgh taxpayer who was
having to pick up the tab that would really concentrate some Minds very sharply uh and if any of you know anything about the Rivalry between Glasgow and Edinburgh uh well you know you'd realize that that would something would be done to sort out Glasgow pretty quickly if that was the case uh and so I think Scotland actually would have to sort its own problems out uh in a way
that it's not going to do if it can blame everything on the the hated English so I would actually wish that they would vote to leave but I fear that they will narrowly decide to stay with us now on the other hand Ireland uh which I know the Shetland Islands first there's a growing separatist movement in the Shetland Islands oh yes well now 400 people in support are you hoping for
them to leave Scotland no I would actually yes I would actually yes I would uh sh the shats would have a wonderful future is a kind of Nordic Little Island they they that's where the oil is actually the' 40s and the other two major fields are both in Shetland Waters uh and Shetland actually historically not a part of Scotland part of Norway uh came to Scotland just a few
hundred years ago so so my my people the Irish now there's no border whatsoever between Northern Ireland and Republic of Ireland when you drive from one to the other the CH sign changes from kilometers to miles you get a different cell phone signal but so many people from Ireland proper now have summer homes in the North or they're connected in some way there are actually homes
built that straddle the Border you go from one room of the house to another and you go from one country to another there's been peace since the Belfast agreement is it now not truly inconceivable to reinstitute a hard border between the two irelands and what will be done because of this fact will we not end up with the Border being between Belfast and Heth Airport rather
than a Long dagle County between the two irelands tell us I think what will happen is that the Irish government and the British government will agree that the Irish government will do the British government's Dirty Work and have all the Border controls and checks in places like Waterford Cork and Dublin rather than which is what happened before 1971 uh rather than uh
what you suggest because nobody I think in their right mind wants to have a hard border between Northern Ireland and the Republic It's a complete joke anyway I mean uh if you the kind of things you talk about are not new uh even when the troubles were going on and all the block houses and the fences were around it was still very hard to tell where the Border
was in plac like for Manor and South armar so nobody really wants that I actually think though there is a while I think Scotland will stay in the uh UK I think there is quite a realistic chance that Northern Ireland will vote to join the Republic uh or join the Republic under some kind of condominium codominium scheme I think that's actually quite quite possible because uh
for one thing the demographics are changing uh the next ensus is probably going to show a Catholic majority in Northern Ireland which doesn't necessarily mean a majority for Union in the Republic but it's a major shift and also uh increasingly the younger generation of the Protestant population in Northern Ireland are not as attached to the historic olar identity as the the
older generation are and I actually think that there's quite likely uh that there will be um a significant move if not fully towards the United island in the direction of United is as a result of brexit I think that's one of the which also I think would be a good thing in many ways and I think that's another one of the consequences will follow from it and why is it there's a movement it
has different names some people call it populism I'm not sure that's the right word because it's not always that popular but in England we've had it in parts of the United States you don't really have it much at all in Ireland you don't have it much at all in Spain uh it's growing in France especially with young people we'll see how strong it is
it was strong in the Netherlands but it failed though because the more Centrist parties moved sharply to the right uh two interrelated questions why have leftwing parties in so many countries become so weak so labor in England is just a joke right it's not even a joke it's one reason why terresa may can call another election uh Social Democratic parties across the continent are looking
extremely weak pretty consistently but in some but not all other countries there these Rising populist or alt-right movements I mean what's your take on the broader developments that are driving this new and actually pretty startling configuration of loyalties how do you see that well the the thing is this is the predominant Trend uh the thing you
describe as a predominant Trend throughout most of Europe and I think many other parts of the world but some parts are immune too we want to explain the cross-sectional variation the immune bits are places like Spain Portugal Ireland uh Japan is it a Catholic thing the major I don't think it is cuz Italy's got popular M France has got it it's pretty strong in parts of Germany
as well I think there are two things going on there uh one well first let me say a lot of people say this is due to economic factors it's due to a feeling of disaffection by the losers from globalization I don't think that is actually true and you may disagree with me on this I'll come back to you on that in a moment I think this is about the politics of identity I think what is
happening in many countries is that a lot of people feel that their identity is threatened by globalizing ation by the social cultural technological changes Mass migration a whole range of other things that have taken place in the last 20 to 30 years these are people who basically want the world to stay roughly the same uh they feel threatened by radical dramatic change they feel
that their identity is under assault and what they are coming to support is a kind of very unpleasant politics which combines as in the case of Marin Le Pen for example uh very left of center econom eics she's well to the left of most socialist parties and economics with anti-globalism uh cultural traditionalism and authoritarianism uh and uh anti-immigration policies uh and this is
a politics which is on the rise in most parts of Europe now the other question you asked is what's happened with the social Democrats well the big story in the Dutch election actually which did not get covered was the complete collapse of the Dutch labor party one of the great historic parties of Dutch politics it collapsed from 24% of the vote to just under 6% of the vote and
why are these parties so weak and labor in England for a very simple reason because basically they are trying to appeal to two radically different and increasingly hostile blocks of Voters on the one hand traditional typically older white workingclass voters who are economically left-wing but culturally very traditionalist and very conservative and on the other hand a
more Metropolitan younger very green very environmentally conscious very PC you might say culturally leftist group uh who basically have the same kind of left of center economics as the first group but in every other respect are simply on a totally different agenda and it's almost impossible to appeal to both of those two groups at once and Social Democratic
parties in most parts of Europe are losing their traditional workingclass base to the new populist politics that's what's happening now if I if I may i' like to S put a question to you now and uh uh what what I was saying is I mean uh first of all how do you how do you see recent events in the United States as fitting into this kind of broad scenario do you think that the kind of
account I've given of popularism in Europe uh is a good way of understanding or explaining what happened in the election last November or other Trends in American politics in the last few years I think it's much more cultural and less economic than people think if you look even at a state such as West Virginia I just wrote a column about West Virginia we all talk about how poor
it is but per capita income in West Virginia it's about 3/4 of the US national average if you take into account the fact that it's cheaper to live there it's actually not that far from the national average are there are obvious problems with opioids low labor force participation but that actually means the other people in West Virginia actually have to be awfully productive
that per capita income in West Virginia in real terms is about equal to that of France or Japan now those are poorer countries than the United States but if you're theory is all about the extreme Poverty of West Virginia and the state is falling apart when in fact it's been growing a bit it's gained 50,000 residents over the last 15 years not a lot but it's not being massively
depopulated and your theory is they're all opting for Trump or populism or alt right because they're so poor it doesn't make sense I think there's increased sword of this country by education and what is sometimes called a coastal Elites phenomenon though you find it in Ann Arbor and Austin Texas and some places that aren't the coasts and uh I think part of it is because of the
internet there is a split of sympathy so say parents that rather they might have once said I don't want my daughter to marry an ex some ethnic or racial group and now it's I don't want my daughter to marry a republican is a much stronger sentiment and parts of the country are realizing they should rebel against that I don't feel they're doing so in an especially
effective way but that's what I think is happening here uh there is slow wage growth and that creates grievances where expectations are not met and that feeds into the cultural problems but I think also uh in Europe it's very often a more cultural thing so Spain has relatively recent fascism so they're somewhat in culated because there's been a lot of
immigration to Spain Ireland didn't have fascism but it had the issue obviously a lot of violence so the idea that some kind of alt-right view comes along that so flirts with the idea of being violent on Twitter it's not going to be a big seller in Ireland and I think it's really history being recreated in different places and different ways yeah I I I T to agree very much with that
actually and what I what I then ask uh ask you further is well you say that um and I agree with you as I say that the economics is not what's really driving this it's more a cultural phenomenon but on the other hand how do you think um how do you think politics is reacting to something you've been writing about for a while now which is what you see as the
stagnation of innovation the problems of lack of income growth for large parts of society what effects do you think this is having on the broader kind of political Mia that we're living in I would just say we have so much debt and have some high implicit liabilities and furthermore we're committed to paying off interest groups that we're actually now at a margin we can't do that for
everyone now so you have Republicans controlling every branch of government they can't agree on tax reform they can't agree on how to alter Obamacare at least not yet and those are signs it's not really gridlock in the 2011 sense but we don't have the resources to make deals by paying off the complainers and so on all sides a lot of parties are ceasing to cooperate and it's more kind
of incoherence than a gridlock but with that we must end and thank you all for listening thank you Steve thank you thanks for listening to conversations with Tyler you can subscribe to the podcast in iTunes Stitcher or your favorite podcast app and if you like this podcast please consider rating it on iTunes and leaving a review this helps other people find the show [Music]