Brexit is a major wakeup call for world leaders. Trade and globalization are under fire.
Outside of the urban elites, many people don’t see the benefits of a flatter, more interconnected world. What they see is this: their pay isn’t going up and their job prospects aren’t great.
“They feel they have, in a sense, lost control over their own destiny,” former British Prime Minister Tony Blair told CNN Friday.
Donald Trump certainly sees it that way. He immediately applauded the nearly 52% of British voters who wanted out of the European Union. America is next, Trump proclaimed, pointing to the nearly 14 million people who voted for him in the Republican primaries (not far off from the 17.4 million Brits who voted for Brexit).
It’s easy to look at Brexit and see the spark of a populist, nationalist or even racist revolution. But here are three good reasons to think there’s still a chance for globalization to win out — in Europe, the U.S. and elsewhere.
1. Brexit isn’t looking so good for the little guy. The U.K. stock market is tanking, the British currency is worth the lowest amount since the early 1980s and banks and other big businesses are seriously considering whether to pack up and move most of their workers out of the U.K.
Voting to ditch the EU doesn’t look like a great way to boost the average Joe’s income. In fact, it looks like it will do the exact opposite, at least this year.
“If Britain goes into a recession and the country breaks up, it won’t look so good” to U.S. voters, says Fred Bergsten, senior fellow and founding director of the Peterson Institute for International Economics.
Millions of Brits who voted in favor of leaving the EU are already saying they’re sorry and they want a do-over (call it “Regrexit”).That doesn’t make the nationalism that Trump and some other world leaders (notably France’s Marine Le Pen and Austria’s Norbert Hofer) are pushing look like the way to go.
2. World leaders are getting serious about inequality. There were always going to be winners and losers from trade. It’s very apparent who the losers are: the “blue collar” class in the U.S. and many parts of Europe. They see manufacturers closing up in their towns and fewer job prospects. Meanwhile, the booming high tech and service sector workers don’t necessarily realize how much they benefit from the global economy.
Former British Prime Minister Blair says rewinding the clock to the closed-off world before the 1980s isn’t the answer. Instead, world leaders have to do more to help those who have been left behind.
“The way to give jobs back to people who are marginalized in our society today is better education, building the right infrastructure, making sure we use technology” to improve lives, Blair said Friday.
Robert Scott agrees. Scott is the senior economist at the Economic Policy Institute and one of the biggest critics of U.S. trade policies. His analysis found the U.S. lost over 3 million jobs since 2001 because of trade with China.
“It’s time to engage in fiscal stimulus like infrastructure spending and spending on education. Those are the things that create jobs and put people back to work,” says Scott.
Hillary Clinton has made infrastructure spending a huge part of her economic plan. Trump also says he would do more to repair U.S. infrastructure. There are also renewed calls for European governments to spend more to boost growth and provide a bigger safety net in the EU as well.
3. The top reason Brits voted for Brexit was sovereignty. Yes, many “leave” voters in Britain wanted to get out of the EU because of concerns about too many immigrants flooding the U.K. However, the top reason for Brexit was that people didn’t want to be ruled by Europe.
“Nearly half (49%) of leave voters said the biggest single reason for wanting to leave the EU was ‘the principle that decisions about the UK should be taken in the U.K.,'” found Lord Michael Ashcroft, a prominent British politician and businessman.
CNNMoney heard that sentiment numerous times as well as reporters went around Britain in a camper talking to people around the country.
“We need to take back our country, not being ruled by others,” Heather Towell, who voted to leave the EU, told CNNMoney.
This is important, experts say, because this is not the issue Americans face. When the U.S. signs a trade deal with Mexico and Canada, there isn’t a new government-like organization set up.
“The EU is a nameless, faceless bureaucracy,” says Scott of the Economic Policy Institute. “People don’t feel like they have any stake in what’s going on….that’s very different.”