On Brexit

TAGS: Letter to the editor

Dear Sir,

What I think is more problematic with the arguments in favor of Brexit is that they communicate a highly distorted image of what it means to be a sovereign state in a globalized world. The argument about immigration, which apparently won the day, was connected with the notion of taking back control of labor mobility and hence being able to control the distributional effects of economic policies. Consequently the UK’s welfare system would cease being dragged down by people who are supposedly producing much less than they contribute to the economy.

I think this argument is absurd and inaccurate for two reasons: first of all because it gives a misleading image of how open economies work. As long as you keep yourself open to trade and capital flows, the idea of being able to fully control distributional consequences is just a fairy tale. The new economic conditions that will emerge after Brexit will create new sets of winners and losers. In fact initial economic projections suggest that economic developments after Brexit will not favor the people who voted in favor of leaving. Fewer trade flows, monetary pressures, reduced economic activity and political instability will offset any wage increases, making blue-collar labor worse off. Hence, I am highly skeptical of the idea that leaving the EU will make the UK government better able to control the distributional effects that accrue from running an open economy in a globalized world.

The second reason I think this argument is absurd, and dangerous, is because it implies that economic benefits and externalities are somehow distributed along ethnic lines. My understanding is that ethnic lines are not so relevant when it comes to economic consequences, unless you run a segregated command economy where Greeks are supposed to sweep the roads while Britons do finance. In all other instances, a person’s economic activity and taxable income are more relevant to her welfare status than where she comes from. This is why this argument is so dangerous: It decouples welfare from economic activity, public revenues and expenses and links it to ethnicity. It creates social divisions on characteristics that go beyond policy-making and into the mystified sphere of identity. To put it plainly, we may be able to design political programs that help people to enhance their economic status and gain more welfare benefits, but we cannot do much to change people’s origin. The idea that sovereignty, a highly contested concept in today’s world, is somehow connected to the ability to design welfare schemes based on ethnicity and identity seems to come as the last push towards a very slippery slope.

An obvious question is why well-educated people who understand the consequences of such a debate opt to take such a path. I guess they see themselves as being among the winners of this new normal. This is brilliantly summarized by a recent comment in the FT: “If you make £200,000 a year, a recession is just an irritation. But if you make £20,000, it’s a personal crisis, and if you now make £15,000, then soon you may be struggling to feed your children.”

Is there anything we can do if we don’t want our ethnic status to determine our economic status? Yes. Don’t vote for people who claim that this should be the case. Obviously this message goes far beyond Britain. It applies equally well to a wide range of cases, from a country at the southern tip of the Balkans to a great place across the pond.

Angelos Angelou
MRes/ PhD Candidate
London School of Economics and Political Science | European Institute