Lessons learned and fallout from Brexit
Some of the same forces that were at play in persuading a majority of British voters to make the mistake of leaving the European Union have shaped the United States presidential election as well. These include isolationist yearnings, fears of immigration, a rejection of the reality of a 21st century global economy, and a nostalgic longing for days gone by.
Motivating Brits to separate the nation from the EU was nationalistic hubris, a sense that while it may not recapture its empire, Britain will be stronger going it alone. Brussels or Bonn will not dictate to them, said Brexit supporters.
Likewise in the United States, businessman Donald Trump captured enough votes to win the Republican presidential nomination and self-labeled socialist Bernie Sanders made a serious run for the Democratic nomination in large part by attacking free trade.
Indeed, the global approach has meant the loss of U.S. manufacturing jobs to nations with far lower labor costs. In Britain the greater concern is a perpetual welfare class. But globalization has also kept inflation in check. And, as economies grow in developing nations, it is opening up expanding international markets for resourceful entrepreneurs in the West.
In both Britain’s decision to remove itself from the EU experiment only 16 years into the 21st century, and in Trump’s call to “make American great again,” is the same desire to go back.
But the reality is that there is no going back. As the sharp decline in markets globally showed following the Brexit vote, the world economy is inextricably interlinked, economically and technologically. Nations can either manage those linkages through alliances such as the EU and by way of negotiated trade deals, or subvert those links by imposing protectionist policies, collectively dragging down global productivity in the name of self-interest.
Britain’s exit is a major blow to both that country and the 28-nation EU. The EU's loose politico-economic alliance has led to common rules on trade, monetary policy and environmental regulation. It serves as a bulwark against a return to the divisions and national rivalries that led to two world wars in the prior century.
Whether the EU further dissolves given the Brexit vote, it is too soon to stay. It is in the interest of the United States that the union survives. U.S. voters, meanwhile, should reject the protectionist populism espoused by Trump and show confidence in the ability of this nation to compete globally.
British Prime Minister David Cameron, who announced his resignation in the wake of the vote, made a terrible mistake in trying to assuage the nationalistic elements within his Conservative Party by allowing a vote on an EU exit. Cameron was confident he could put the calls for leaving the union behind him when voters rejected Brexit. He miscalculated.
It would likewise be a mistake in this country, lulled by his low poll numbers and high negative ratings, to underestimate the threat posed by Trump’s anti-immigrant, divisive form of populism.
Removing the world's fifth-largest economy from the EU will create economic instability at a time when the global economy is shaky. Britain will still trade with its old union partners, but the exit will greatly diminish its ability to help set the rules. Ironically, Great Britain itself may divide, with Scotland again expressing interest in independence given the Brexit decision.
Meanwhile, Germany's economic dominance of the EU will grow.
Rapid technological and economic change will continue to buffet all nations. These technological changes and the rise of global corporate networks have displaced jobs in some sectors and boosted them in others. The response should be raising the level of education and pursuing policies that act as a check on corporate power.
Abandoning sensible global partnerships fixes nothing.
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