Now that the vote is over, what will Brexit mean for most Americans?
The real details of whether the U.K. is in or outside the European Union isn't that relevant to the surface perception of most Americans. Nor is it immediately economically critical in the long term to the U.S., as just 1% of total U.S. gross domestic product results from trade with the U.K.
In fact, once the dust settles, the Brexit is probably marginally a net positive for the U.S. Although London is now very cheap, given the collapse in the pound, the massive loss of confidence in U.K. stability and the U.K. regulatory system must favor a significant amount of foreign money that will go there instead being invested in the U.S.
Already people are talking about a stimulus to New York house prices, so long as the financial markets don't stay in turmoil too long.
As of last week and at least for now, London has clearly taken a huge blow in the fight against New York as the leading global financial center. In addition, the U.K. is likely to realign itself with new trade agreements with the U.S., as opposed to the European Union, which should ultimately favor both the U.K. and the U.S.
But, the significance of the Brexit is much more linked to a broader politico-economic phenomenon across the entire Western world. When actually analyzing the Brexit vote, one can argue that it wasn't really much about the EU at all but had much more to do with the U.K.'s social division. The elite, rich in the south of England and in London voted to stay in the EU. They like and have benefited from the status quo.
But the huge mass of increasingly economically and socially alienated Britons outside the south and commercial centers voted to leave. Their vote wasn't even necessarily a xenophobic one, though it certainly was in some cases, but more a vote against the establishment.
The financial revolution of the past 20 to 30 years, the London real estate boom and, more particularly, the technology revolution have put wealth in the U.K. into the hands of an increasingly limited number of people (mainly in London), while denuding many of the poor and lower middle classes of manufacturing jobs. London turned itself effectively into an offshore financial center that happened to be onshore, and now all those who couldn't play in that financial center are taking a type of revenge.
But here is the thing: Some of that same trend can very much be seen in the U.S. The Gini coefficient, which is the standard measure of wealth inequality, in countries such as the U.K. and the U.S. is higher now than it was 30 years ago. What is occurring in the U.K. and other parts of Western Europe isn't that different from what is happening with many of those who feel alienated in the U.S. This alienation is exactly the reason that we have seen the rise of radical politicians leading up to the U.S. presidential election.
The people want an implicit revolt, and when that type of frustration grows, individuals naturally look to radicals with simple solutions. It is Alexis de Tocqueville's "tyranny of the majority."
In reality, no one running for president has the solutions, just as there are few solutions being offered by the established parties in the U.K. The old-style socialism and high taxation of a Vermont Sen. Bernie Sanders has been tried and tested many times in the past and always shown to be highly destructive of growth.
Donald Trump is merely a simple and probably dangerous demagogue who very few people think has serious political or economic views or insights. Hillary Clinton is herself the establishment. The scion of what is effectively a dynastic U.S. family, she lacks the charisma of her husband and will just hold on timidly to the status quo.
This is the reason that the work of, for example Thomas Piketty is ultimately so unhelpful -- because while he has identified increased wealth inequality in the West, he has totally unoriginal old-style high-tax socialist solutions. Meanwhile, unfettered libertarian capitalism (a la Rand Paul) creates these wealth inequalities in the first place and leads to capitalism imploding on itself eventually.
Meanwhile, the media stir the pot, with partisan reporting that reduces political debate to its lowest common denominator. The media also feed on beating up on those who run for high office, so why should anyone of any real talent do it anymore?
The truth is that a radically new political economics is needed for this technological age, which is genuinely a second industrial revolution. Manufacturing is going the way that agriculture did many years ago, with intelligent machines now being used extensively.
In the long term it isn't even an issue of losing manufacturing to the emerging markets. We will just never globally need large portions of our population to be involved in the manufacturing process, given the extraordinary developments in modern technology and robotics.
This ultimately leads virtually the entire population left in services industries of some kind, with a few wealthy elite owning the technology and intellectual property that will power all the systems. It is how we deal with the political economics of this new world that needs to be addressed by our politicians and economists.
There may indeed be solutions and fine new patterns of economic life, but few politicians are addressing those now. The "masses" are, therefore, as fed up with the liberal establishment on the East and West Coasts as they as with Wall Street fat cats.
The very ideas of the left and the right may need to be abandoned or radically altered as they themselves were just products of the industrial revolution.
And so while, for now, our politicians can provide no new answers, the frustration grows, certainly in much of the Organisation for Economic Co-operation and Development, among those who are alienated by all the economic entropy. As the frustration grows, many people just want the fall of the establishment, in whatever form.
So in the U.K. they vote for the Brexit, a massive kick in the teeth to the London elite. Meanwhile, in Greece there is support for the extreme left wing, Tsipras, while in France it is growing support for the extreme right wing, Le Pen.
And likewise in the U.S. there have been a uniquely high level of radical presidential nominees this year: Ted Cruz, Sanders and Trump.
It is fundamentally all the same phenomena: social and political dystopia caused by radical economic entropy. And it won't stop, and perhaps may get worse, until the Western world finds new ways to live with our fundamentally changed politico-economic circumstances.
See full Brexit coverage here.