Inquiring before advocating

The United Kingdom (consisting of England, Scotland, Wales, and Northern Ireland) voted 51.9% to 48.1% in favor of exiting the European Union (EU) last week. The reaction of my Twitter feed was overwhelmingly negative. It ranged from expressing disappointment towards those who voted to leave, to criticizing them, to making fun of them.

The best summary I came across for the events which led to the referendum, the thinking of those who voted to leave the EU and those who voted to remain in, and the likely future repercussions of the vote (if Britain does indeed leave, which isn’t certain because the British parliament has to ratify the vote, and individual countries where a majority of people voted to remain, like Scotland and Northern Ireland, could call for separate referendums) are in the Featured Comment by Gareth in response to this Wait But Why post.

Although there are other reasons why people voted to leave, including most notably the limitations which EU membership places on a country’s ability to operate outside of EU regulations and directives (the former must be implemented whereas the latter give members some room to decide on the specific implementation), my take is that the primary reason is economic. Basically, the UK’s EU membership allowed for the unconstrained flow of people and goods across the borders of the UK and other EU members, and this doesn’t benefit everyone in the UK.

The unconstrained flow of people, in other words immigration, makes a country’s workforce more competitive. However, this can come at the expense of locals who, because they are less qualified or work less hard or both relative to immigrants, lose their jobs.

As for the unconstrained flow of goods, according to the theory of comparative advantage, this lets each country focus on producing that good that it produces at the highest output to cost ratio, and then freely trading that good for other goods produced by other countries.

While the unconstrained flow of goods contributes to the overall economic strength of each EU member it also disadvantages specific sectors in each country. If you happen to be part of a sector where your country doesn’t have a comparative advantage, being part of the EU makes you economically worse off.

Locals who are negatively impacted by the free flow of people and goods can make up for these challenges by acquiring new skills and moving to other sectors but this isn’t always possible or takes a lot of time. Voting to leave is an easier short-term solution.

And this is why economic growth alone isn’t sufficient for a country’s well being. Income distribution, training programs for those adversely affected by immigration and free trade, and safety nets for the same also matter.

Although the results of the vote were surprising to me, my Twitter feed, and likely most of the readers of this blog, rather than criticize or make fun of those who voted to leave, we need to understand where they’re coming from. We need to inquire before we advocate. Only then can we hope to come up with sustainable long-term solutions.

Also published on Medium.