Faculty Forum - Featured Post Posted on Monday, August 22, 2016

The Politics of the Brexit and Beyond

On June 23, 2016, Britain voted to leave the European Union. “Leave” won despite the opposition of every major party leader, and dire warnings from economists. In the United States and across Europe, similar political movements opposed to free trade, immigration and the European Union are ascendant. Was there “something in the water” in Britain, or are western democracies going through a fundamental realignment? Why did the Brexit succeed, and what does it mean for the rest of the world?

While EU membership has many implications for Britain, none is more contentious than freedom of movement for EU citizens. Support or opposition to the EU maps well onto attitudes toward immigration. It is not without reason that UKIP leader and “Leave” campaigner, Nigel Farage, stood in front of a poster depicting a long line of Syrian refugees below the words “breaking point”. Support for immigration into the country polls poorly in Britain, while net migration remains high by historic standards. Given the importance of immigration to the EU issue, it is useful to examine what we know about the politics of immigration.

Political scientists studying immigration initially considered two competing models: a labor market threat model (voters fear labor market competition with immigrants) and a cultural threat model (voters fear the cultural threat of “the other”). Some important evidence from surveys, however, contradicts the labor market threat model. If labor market competition drove anti-immigration politics, high-skill residents should oppose high-skill immigration, while low-skill residents would oppose low-skill immigration. Yet low-skill natives oppose all forms of immigration at higher rates than their high-skill peers.

Although social-cultural explanations dominate the literature, some findings are stronger than others. There is evidence that opposition to immigration clusters among voters with nationalist views, stronger prejudice, and fewer immigrant friends. Debate continues, however, on whether there is a general “fear of the other” or if the content of specific prejudices matter. Although overall racial resentment and resentment toward immigrants are correlated, they are not identical. Similarly, the effects of proximity to immigrants are unclear – increasing support in some contexts, decreasing it in others. While individualized labor market threats do not motivate anti-immigrant attitudes, perceptions of national economic conditions do. When they perceive tough times, voters are more likely to express fears that immigrants will take scarce jobs and resources. Complicating this discourse is evidence that voters drastically overestimate the size of immigrant populations.

All of this can help us understand why the Brexit vote was successful. The postwar British party system formed largely around competing views of the welfare state. As a result, the “European question” has proven a headache for Britain’s major political parties. In 1970s and 1980s, the issue was Britain’s role in the European Economic Community, a free trade pact. The EEC issue split the British left between the more protectionist Labour Party and the Europhilic LDP-SPD Alliance. When Britain signed the Maastricht treaty in 1992 – accepting free migration, participation in a broader political union and the possibility of joining the Euro – the politics shifted. Now it was Conservatives who found themselves divided between Europhiles and Eurosceptics.

Views on immigration map poorly onto the extant party system. Tory and Labour elites both support continued large-scale immigration, even as many of their constituents oppose such policies. However, a referendum waged on Britain’s role in the EU, heavily framed as a migration question by the “leave” camp, enabled a new coalition to emerge, corresponding with those areas political scientists would expect to hold anti-immigrant views. In places with high immigrant populations (e.g. London and other cities), more integration, or less English nationalism (e.g. Scotland, Northern Ireland), the “remain” side won. In contrast, the “leave” side swept the rest of England. Deciding the future of the EU (and of free movement) with a referendum enabled a different coalition to emerge than that we see in ordinary elections: institutions matter.

Britain’s response to the 2008 financial crisis may have also aggravated regional differences, producing a recovery for London, but not elsewhere. While Britain launched a massive £500 billion (about 1/3rd of GDP) bank bailout in 2008, stimulus measures were limited and soon followed by fiscal austerity. Thus, while the bailout blunted the effects of the crisis on the financial sector, many elsewhere experienced hardship. On the monetary front, the Bank of England slashed British interest rates, soon reaching the zero bound. To further inject liquidity into the economy, the Bank launched multiple rounds of quantitative easing: purchasing non-government securities. By the Bank’s own estimates, QE raised the price of assets it was buying (housing debt, in particular), with richer Britons benefiting disproportionately. Collectively, this meant Britain’s recovery was strongest where pro-EU/immigrant sentiment was highest (London), and weakest where anti-immigrant sentiments were deepest.

What does the Brexit mean for the United States? Institutionally, there is a difference between a referendum and a national election. Although Donald Trump might seek to frame the U.S. Presidential election as a contest between globalism and nationalism, he must nonetheless fuse his campaign with a party infrastructure designed to fight traditional left-right politics. And while the disparities of the extent of an economic recovery are large across the United States, the recovery itself was much more robust in the U.S. compared to Britain.

At the same time, the resentments behind the Brexit vote reflect a paradox worth some attention: we govern global economic forces with national institutions. When globalization causes dislocations, the reaction is debated through the prism of the nation-state. This leaves important stakeholders (e.g. refugees, non-citizen immigrants, or undocumented immigrants) out of the discussion, limits the possible transfers between actors, and prevents the development of a transnational civil society. Although the EU contains a parliament, it lacks a strong party system, EU citizens rarely discuss politics with people from other countries, and Europeans get their news from national sources. Elites may use the EU and other institutions to play two-level games in their own countries, deepening perceptions of an EU democratic deficit.

This article is part of a series of Roosevelt House Faculty Associates’ commentary on the Brexit vote. Click here to read the full series.