Contrary to the predictions of most pundits, Britain voted to leave the European Union. The first reaction of many on this side of the pond was, “Well, hooray for those plucky Brits.” Their own Declaration of Independence from those unelected EU regulators in Brussels! Welcome back, pounds and ounces! Rule Britannia! An economy freed from such chains will grow and prosper.
Such a benign or even positive result might come to pass. We hope it does. However, a closer analysis of the political coalition that voted for the Brexit indicates it may not be channeling Thomas Jefferson. Those for the Brexit were older, less educated, lower income from both Tory and Labour constituencies. Plus, many young people who supported Brexit regarded the EU as guardians of corporate privilege. Kind of like a coalition of Trump voters and Sanders voters—an odd and unstable coalition. The first see foreigners as the source of all their woes and the latter see big corporations as the source of all evil. Can these two ideologically disparate groups get along in the UK or in the United States?
There is a way—and it is truly scary. Wed the nativists/protectionist tendencies of the Tory-Trump right with the redistributionist/regulatory zeal of the Labour-Sanders left. Send lots of illegals back and restrict immigration to protect native workers. Trash all previous free-trade agreements and put a high tariff wall around the domestic economy. Jawbone and threaten any domestic company that dares leave its shores. Add to this a jacked-up minimum wage, and make it easier for unions to organize and impose a boatload of mandates such as paid parental leave. Raise taxes on the wealthy to expand entitlements, and, presto, we have heaven on Earth.
Until, of course, we don’t. But then all the reigning administration will have to do is double down. We haven’t set the tariff barriers high enough; we haven’t socked it to those evil corporations enough—we should mandate they shift production from overseas to the home country, or they will face more punishment.
To our mind, such an economically closed welfare state on steroids is a recipe for stagnation, massive underemployment and unemployment and a prescription for expanding the rolls of those dependent on the welfare state. Yet it might be politically stable enough for long enough to do real and lasting damage. Surely the United States and our British cousins will avoid this fate! We hope.•
Bohanon is a professor of economics at Ball State University. Styring is an economist and independent researcher. Both also blog at INforefront.com. Send comments to email@example.com.