Analistas 24/07/2016

Paying the price for Brexit

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Q. The day after the vote, you wrote that the “economic consequences will be bad, but not as bad as many claim.” For whom, exactly, will the consequences be bad?

A. In the long run, I think it’ll be bad for a lot of people - a majority, probably, of the population of Britain. They’ll be bad for a more substantial majority of the population of what’s left in the European Union.

There’s a reason why we think that more trade, freer trade, is a good thing. It makes economies more efficient. It makes the pie bigger. It doesn’t necessarily mean that everybody gets a bigger slice of the pie, and, in fact, it’s quite possible that a substantial part of Britain has ended up worse off, particularly outside London. If we’re talking about people in old, industrial towns in the north of England, they may well be at least a little bit better off from leaving, but overall, Britain is going to be poorer. Europe is going to be poorer.

Q. You wrote that the political consequences would be much more dire. What did you have in mind?

A. At every level, this is a huge defeat for respectable opinion, respectable people. You could say “well, maybe those respectable people don’t deserve to win such things,” but who’s waiting in the wings?

Within Britain, amazingly, both major political parties are in complete shambles now, and the people most likely to emerge on top are going to be more or less the Trumps of England - the people who reject Europe not out of some considered understanding that there are mixed benefits and that Europe is suffering from overreach or anything like that, but who don’t like foreigners, who don’t like people who look or sound different from them. So you’re going to be empowering bad elements.

And then within Europe, the rest of Europe, there are a lot of movements like that. We’re talking about the nationalist right in France; we’re talking about seriously scary right-wingers coming within a hair of taking the presidency of Austria.

There’s a lot of these movements, and all of this increases their strength, while simultaneously crippling whatever there is in terms of combined European efforts to make things better.

So it’s a terrible blow to elite leadership in Europe, which wouldn’t be so bad if there was a reasonable alternative, but there isn’t.

Q. Secretary of State John Kerry is suggesting that Britain may walk back from Brexit. What do you think - is Britain going to leave the European Union?

A. It is going to be very hard not to press through with it. What I think is more likely is that they end up leaving in a way that is as close to not leaving as possible. People are calling it the “Norway solution,” where Norway has special trading relationships with the European Union, and in return for that has basically accepted pretty much everything that the European Union entails, including free movement of labor.

Q. Are there any beneficiaries here, aside from the newspapers, which you slammed for using Brexit to generate sales?

A. There might be [a chance] that some declining industrial cities in Britain will find that they are richer, even though the country is poorer, because a weaker pound has made them more competitive on world markets.

And right-wing extremists on the European continent are cheering. If you’re a Jobbik supporter in Hungary or a True Finn or are among the various parties along those lines that are sprouting up everywhere, this was good for you.

Q. What is the big lesson we can learn from what Britain decided?

A. The really big lesson is: It does not, in the long run, work to try and make policy (even good policy) by ramming it down the throat of the public and telling them that “people who know better than you say this is what you should do.”

You need to explain, you need to make the case. It has to be done in as open a way as possible.

The voters may be wrong - I think the voters in Britain were wrong in doing this - but simply lecturing them, in effect saying “you’re stupid,” is not a durable way to push for policies.

This is the wages of contempt - there was just too much contempt for the general public among people who were running both the European Union and, to some extent, Britain itself. Now they’re paying the price.

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