Brexit is terrifying — and no, not because of the economics

Britain’s decision to leave the European Union is one of those rare events that should chill you to your core, as it has already chilled me to mine.

Why? Because it calls into question the best thing humanity has created in its political history: the post–World War II global order.

"What’s terrifying about Brexit [is] that a lot of the global economy takes certain rules of the game as given," Dan Drezner, an expert on the global economy at Tufts University’s Fletcher School of Law and Diplomacy, told me. "They’ve assumed for quite some time — really, the past 70 years — that the global economy is moving in one direction, and that one direction is towards greater openness. ... Those rules of thumb are now being thrown out the window."

This global order depends crucially on a set of supranational institutions, like the EU. These institutions can only function if member states can keep nationalism in check and submit to a shared framework for governing the world. The global order has served us astonishingly well, making the post–Cold War era the richest and least violent time in human history.

But that optimism is now threatened. British voters, motivated largely by xenophobic nationalism, have opted out of one of the pillars of the postwar order, the European Union. For the first time since World War II, Western nationalism has beaten globalism in a major way.

"This could begin the unraveling," Ken Gude, senior fellow with the National Security Team at the Center for American Progress, wrote to me the night of the vote via Twitter.

The Brexit vote was about xenophobia trumping Britain’s self-interest

(UKIP)

"During this referendum, I don’t think you could point to a distinguished expert, institutionally or personally, who said Brexit would work out fine for the UK," said Drezner. "And yet British voters said, ‘I don’t care.’"

In fact, they went further than that: They explicitly rejected economic links with the EU as the problem. The "Leave" argument was that EU migration rules and other economic regulations let in too many foreigners and infringed on British sovereignty.

Those two things — migration and a shared set of institutions — are the very rules that integrated Britain into the EU economy and helped it prosper. A little less than 50 percent of UK exports go to the EU, and most experts believe that losing privileged access to EU labor and import markets would shave a significant amount off British GDP.

Yet British voters took a look at all of that and said, screw this. We want to keep immigrants out. To hell with supranational institutions. We want our country back.

Here is the context for Brexit: Between 1993 (when the EU was founded) and 2014, the foreign-born population nearly tripled, from 3.8 million to 8.3 million. Over that time period, the percentage of Britons ranking "immigration/race relations" as among the country’s most important issues has gone from near zero to about 45 percent. Today, 77 percent of Brits believe that immigration levels should be reduced.

An Ipsos MORI poll, pre-vote, found that 52 percent of Leave supporters said immigration was "very important" to their decision on how to vote in the referendum, while only 14 percent of "Remain" voters said the same. Meanwhile, 41 percent of Remain voters said the economy was "very important," while only 18 percent of Leave voters felt the same way.

"EU law demands that the UK has an open door to European countries," the website of the official Vote Leave campaign explains. "If we Vote Leave, we will take back control."

This anti-immigrant rhetoric appears to have been particularly powerful among Britain’s least advantaged. Pre-election polling consistently found that lower-income and less-educated people formed the core of the pro-Leave side, while Remainers typically had more money and advanced degrees.

An analysis of the results by Torsten Bell, director of the UK economic think tank Resolution Foundation, looked at the relationship between the wealth of the area the share of votes for Leave and income in areas around Britain. He found a strong correlation between lower hourly incomes in a region and its likelihood of voting for Leave:

(Torsten Bell)

According to Bell, these lower-income areas aren’t places that lost out recently due to the financial crisis. It’s about a legacy of poverty and inequality. "The shape of our long-lasting and deeply entrenched national geographical inequality that drove differences in voting patterns," he writes.

These people had little reason to believe Britain’s status quo was benefiting them. They had no reason to restrain their fear and angst at seeing foreigners and no resources for understanding the way in which immigration benefited the UK as a whole. They also had no reason to trust UK or EU elites, or their dire warnings of impending economic doom, given their catastrophic mismanagement of the 2008 financial collapse and the eurozone crisis.

Instead, they saw more and more foreigners coming into the country and understood it as a threat to their way of life. Fear of foreigners is deeply ingrained in British national culture, as it is almost everywhere. Polling data shows high levels of hostility to immigrants going back decades, and mass immigration brought it to the fore.

This is the biggest defeat for global institutions in their history

Look at this chart for a minute. It shows the average number of battle deaths, per capita, since the 1940s. It tells an extraordinary story — one of fewer and fewer people dying in conflict as the past 70 years have gone on. Of war, in short, in rapid and astonishing decline:

(Joe Posner/Vox)

During the same time period, the whole world — Europe included — has gotten much, much richer. Here’s a chart of Europe-wide GDP, and UK GDP, between 1950 and 2000. The pattern is obvious:

Behind these successes sits the post–World War II international order — a set of organizations and alliances set up by the US and Europe designed to make sure that carnage on the level of World War II would never happen again.

The United Nations is the most famous of these institutions. NATO is another one, a cooperative security alliance designed to bind European countries together and deter Russia from starting more conflict on the continent. A third is what’s now called the World Trade Organization (then the General Agreement on Tariffs and Trade), an organization designed to keep trade flow open.

A much lesser-known pillar of this order was something called the European Coal and Steel Community (ECSC). Dreamed up in 1949, and formally founded in 1952, the organization created a shared market for coal and steel on the European continent.

The idea was that if resources necessary for fighting a war were part of a shared market, war among the members of the shared market would become "not merely unthinkable, but materially impossible," as one of the plan’s architects put it. You can’t fight a war against someone you need to trade with in order to fight wars in the first place.

The ECSC was a huge success, and kept expanding. It gave way to the European Economic Community (EEC), a broader common market, in 1957. After decades of integration and expansion, the EEC morphed into the European Union (in 1993).

The point, then, is that the European Union has been (in various forms) a pillar of the postwar order that’s lasted for 70 years. This order depended on a bargain: States give up little bits of sovereignty, and in exchange they get access to organizations that make them much wealthier and much safer.

We’re not sure which parts of the order, exactly, are necessary for it to function — but we do know that the entire thing depends on countries agreeing to limits on their sovereignty in exchange for reaping the benefits of a free, open global economy. Specifically, it depends on big, wealthy, powerful countries participating in this system. Countries like the UK.

Why Brexit is scarier to the post-WWII order than the financial crisis

(Pascal Le Segretain/Getty Images)

Britain leaving the EU is by far the biggest blow to the liberal system to date. The financial crisis may have been more damaging the world, but it wasn’t an explicit rejection of the global system by voters in an advanced democracy. The low-income, low-educated voters in the UK haven’t seen the benefits from globalism, didn’t understand them, or — most worryingly — cared less about those benefits than they did about keeping out foreigners.

The thing that is truly scary about Brexit is that it may be just the beginning. Donald Trump is the presumptive Republican nominee, and anti-immigrant populists are surging in polls in France, the Netherlands, Germany, and Sweden. These countries, too, have low-income, low-educated voters who don’t see the global order’s greatest benefits.

The concern is that politicians in these countries marshal the same xenophobic nationalism that fueled Britain's Leave campaign and use it to push their own countries out of various parts of the global order.

"I hope this victory brings down this failed project and leads us to a Europe of sovereign nation states," Nigel Farage, the leader of the UK Independence Party and one of the driving forces behind Brexit, said in his Friday morning victory speech. "We'll have done it not just for ourselves, we'll have done it for the whole of Europe."

Farage’s hopes, experts say, are not entirely in vain. "The [fear] is that the UK exit will encourage a lot of other rejectionist forces to call for national referenda for exiting the EU," Drezner says. "In that case, God knows what the hell happens in Europe."

You can see how badly this could go. Instability in Europe rocks the US economy. The recession elects Donald Trump. Trump’s rejection of international institutions and norms further destabilizes the global economy, which leads to the election of right-wing populists in key countries like Germany and France, who deliver the coup de grace to the EU. This creates further economic instability, breeding further discontent, which pushes voters even further to the extremes.

It’s a vicious cycle — the precise opposition of the virtuous one created by global institutions. By keeping major powers united politically and keeping global markets open, these institutions reduced the incentive for conflict. In the absence of major conflict, countries grew wealthier and more integrated, which in turn reduced the risk of conflict further. On and on again.

But Brexit raises the prospect of a reversion — of one shock to the system begetting another. Each shock undoes a bit of the global order, which makes people poorer and angrier, begetting more xenophobia and international tensions. As xenophobia and international tensions rise, markets panic, making everything worse.

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