Monthly Archives: June 2016

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Some Thoughts on Brexit

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Last night was a long, dark, and sad night. By a 52%-48% margin, the United Kingdom voted to disengage from the European Union. In the aftermath of the vote, serious questions concerning the European Union’s long-term fate, whether the United Kingdom can hold together, and, on a global scale, whether an era of increasing economic and diplomatic integration is pausing or perhaps even coming to a close.

The vote took place in the context of a struggling European economy, considerable uncertainty about the United Kingdom’s economic prospects, anxiety about its future place in the world, and worries about secular trends that are reshaping job and career opportunities. To compound matters, a noisy, fear-driven demagogic “nationalist” movement led loosely by such political leaders as Nigel Farage and Boris Johnson was stirring up divisions among the UK’s residents, suspicion of immigrants and religious minorities, and discrediting both the British and European Union’s governing institutions.

The fight was an uneven one from the onset. That the Bank of England and International Monetary Fund warned of significant adverse economic consequences for a Brexit scenario was not enough to overcome the appeal of the forces backing exit. Those forces held the high ground on account of their being able to leverage raw passion.

People respond strongly to fear and anxiety through emotion. They react instinctively and abruptly to escape their fears. When anger is added to the toxic brew of fear and anxiety, there is explosive potential for overreaction and irrational choices. With group dynamics, the sentiment responsible for overreaction can spread in viral fashion.

In stark contrast, the kind of evidence-based arguments on which the “Remain” side’s case rested, require thoughtful deliberation to have impact. Such deliberation weighs trade-offs and carefully examines alternative scenarios. Building commitment requires a lot of time. Only at the end of the deliberative process can strongly-held positions emerge and decisive action become possible.

Time ran out. Last night’s outcome saw emotion triumph over reason, excess over moderation, and the current moment over future consequence. As a result, the United Kingdom and European Union will be grappling with the fallout perhaps for years to come. Both may wind up fundamentally changed, and not necessarily in a positive fashion.

Across the Atlantic in the United States, some of the same ingredients that fueled Brexit are also in place. Although U.S. economic growth has been stronger and more sustained than that in Europe, it has been stagnant by historic measures in the wake of deep household deleveraging that followed the Financial Crisis and the changes in consumer behavior deleveraging produced. The national unemployment rate has fallen below 5% but anxiety remains elevated. An illiberal Presidential candidate has been exciting passions by dividing Americans along ethnic and religious lines, spreading a sense of fear and helplessness, and delegitimizing both the federal government and the nation’s leaders.

The United States still has sufficient time to avert the kind of short-sighted emotion-driven decision that unfolded last night in the United Kingdom. Nevertheless, complacency that the U.S. is somehow “immune” to a tsunami of populist passion that could threaten its basic values, principles, and institutions invites the risk of just such an outcome. That’s the lesson the U.S. can draw from Brexit.