By Jeffrey D. Sachs – JUNE 27, 2016
BRITAIN’S VOTE to leave the European Union raises three huge questions. Why did a majority vote “leave”? What will be the consequences? And, of course, what should be done now? These questions are as pertinent for the United States as they are for the UK and Europe.
Brexit is part of a deep trend in the United States and Europe: a rejection by roughly half of the population of globalization as currently implemented. Almost every country in Europe now has a rising populist, anti-immigrant party, while the United States has Donald Trump. Yes, there are differences in the various movements, parties, and personalities, but the similarities are also unmistakable.
The supporters tend to be older, whiter, less educated, and working class. They believe that immigration is out of control, culturally destabilizing, and adverse to their economic interests. They believe that the political and financial elites have joined forces to abuse power, evade taxes, and twist globalization toward narrow ends.
These attitudes are not racist, xenophobic, or fascist (despite claims to the contrary, and despite enough racists and xenophobes in our midst). They are based on facts on the ground. In the past half century, the United States and Europe have experienced a massive surge of migration, both legal and illegal. The foreign-born share of the US population soared from 4.8 percent in 1970 to an estimated 13.9 percent in 2015, and in the UK the share of foreign-born surged from 5.8 percent in 1971 to 13.1 percent in 2015. At the same time, inequality of income has soared; the top have made off with the prize.
The rich countries lost effective control of their borders, or at least much of the public feels that way. Populations in the source regions surged, leading to huge pressures for out-migration (Mexico and the Caribbean Basin are the main sources of US immigrants; the Middle East, North Africa, Western and Central Asia, and sub-Saharan Africa are source-regions of Europe). The economic elites took little interest in this: Companies made profits on low- wage immigrant labor, while richer consumers enjoyed the low-cost services supplied by the immigrants. The elites turned a blind eye to the falling wages of the working class, who were also being hit by increased trade competition, offshoring of jobs, and automation.
US militarism has greatly amplified the migration. The US war on drugs in Latin America has caused mass violence and a flood of refugees into the United States. The senseless, absurd contra wars of Central America in the 1980s destabilized the US neighbors. The recent CIA-led efforts to topple governments in Afghanistan, Iraq, Syria, Sudan, Somalia, Libya, Yemen, and elsewhere have been the single biggest cause of the influx of refugees to Europe.
Brexit by itself will not be catastrophe. The UK leaving the European Union is a moderate-size economic shock. The UK has 0.9 percent of the world population and around 2.4 percent of world output, while around 4 percent of global foreign exchange reserves are in pound sterling. Yes, the UK economy and pound will both take a hit, and global reserves will move out of sterling. Yet the adverse economic effects, even for the UK itself, are likely to be small unless seriously mishandled.
Dire effects could arise from bad policy responses. The worst would be to mock or ignore the underlying causes of Brexit. Anti-immigrant, populist politics require a change of policies in the United States and Europe.
The rich countries really do need border controls. The potential flow of migrants in search of peace, jobs, and generous social benefits will otherwise be overwhelming. Yet the pressures on migration will be unstoppable unless the source regions are themselves peaceful and economically viable. The United States should ask itself why its near-neighborhood is so violent, war torn, poor, and financially strapped (including the recent bankruptcy of Puerto Rico). And then it should look in the mirror, heaven forbid, to remember how US policies have contributed to these awful outcomes.
The United States has been the magnet for narcotics trafficking; the overwhelming supplier of small arms throughout Central America and the Caribbean; the hub of regional organized crime; the author of countless CIA-led coups against democratic governments (too many to list here), often to protect US corporate interests; and the leading contributor to human-induced climate change that now creates environmental refugees. Through it all, the US political elite has been generally uncaring of the consequences.
Europe’s circumstances are trickier. Europe faces immigration pressures from Asia, the Middle East, and Africa. According to the UN basic forecast, Africa’s population will soar from 228 million in 1950 and 1.19 billion in 2015 to an astounding 4.39 billion in 2100, compared with 646 million in all of Europe in 2100 (including Russia and Ukraine). These demographic pressures are gravely exacerbated by wars, mainly US-led, in the Middle East and Africa, putting millions of displaced people on the move, with many crossing the Mediterranean into Europe.
Yet here, too, there are practical solutions. Africa’s astounding demographic surge, for example, would be decisively eased by a simple, humane, decent, and wise policy to ensure that every African child has the realistic prospect of at least a secondary-school education. The result would be a dramatic voluntary reduction of the sky-high fertility rate. Yet funding expanded access to education in poor countries requires that the US and Europe shift funds from wars and armaments to girls’ education.
Brexit, in short, is a powerful signal of deep and pervasive problems in our approach to globalization. The proper response is to fix the deeper problems. Within our economies we need to combine realistic limits on migration with a social-democratic ethos to take care of those left behind by globalization. Abroad, we need to shift from war to sustainable development. The United States and Europe will be secure only when their neighborhoods are also prospering and safe.