The magical thinking of America's pro-Brexit conservatives
Economicus growthus leviosa!
Britons who voted to leave the European Union did so for all sorts of reasons: immigration fears, English nationalism, economic and cultural nostalgia, post-recession funk, and so on. But many "Leave" voters are people who think life in Britain is getting worse year after year. They are highly skeptical of modern global capitalism with its disruption, dislocation, and "creative destruction."
But did they actually end up voting for lots more of the very globalized capitalism they seem to loathe?
Many conservatives on both sides of the Atlantic seem to think so. Daniel Hannan, a pundit and Conservative member of the European Parliament, repeatedly argued that a U.K. free of the EU would be a greater trading nation, as well as one "unshackled" by EU regulation. American conservative columnist Lawrence Kudlow called Brexit a "Thatcher moment" that could put Britain "on the pro-growth path of free-market supply-side policies." Similarly, the Wall Street Journal editorial page explained that "now more than ever Britain will need supply-side economic policies that reassure investors and make Britain a growth model for Europe."
Indeed, such views were at the heart of the pro-Brexit economic case. By detaching from the EU regulatory superstate, an unchained Britain would return to its risk-taking, free-trading roots. London would become a sort of Hong Kong on the Thames, England a Texas on the North Sea. With the Voldemort of Brussels vanquished, free-market magic could be unleashed. Economicus growthus leviosa!
This is the sort of magical, fantastical thinking all too common in the Republican Party and among American conservatives. Slash taxes and regulation and watch economic growth accelerate to warp speed. This is why Donald Trump can offer a $10 trillion tax cut plan that would need to quintuple GDP growth to break even — all with scant criticism from many leading voices on the right.
To make these post-Brexit growth arguments sound even remotely plausible, the free-market Brexiteers had to paint an overly gloomy view of the U.K. Because without the possibility of a tremendous upside, Brexit would never have been worth the risk of severe instability.
Even if you doubt the potential for long-term damage — permanently slower economic growth, the disintegration of the EU — the short-term post-Brexit picture is pretty ugly. The pound has plunged, both the Labour and Conservative parties are in turmoil, and top banks such as Goldman Sachs see a 2017 recession as likely. Not to mention that disentangling from the EU might consume British politics and policy for years.
And all for what, exactly? The U.K. isn't some statist, socialist hellscape. It already ranks ninth for global competitiveness, says the World Economic Forum. And it ranks 10th — just ahead of the U.S. — on the Index of Economic Freedom, created by the Heritage Foundation and the Wall Street Journal. The picture the index paints of the U.K. is that of a nation well-positioned for the future:
Economic freedom has been on an upward path in the United Kingdom over the past five years. … Disciplined fiscal adjustments have helped to restore economic dynamism, steadily reducing the budget deficit. The corporate tax has been cut from 28 percent to 20 percent. … With an effectively institutionalized legal system that enforces the rule of law and guarantees security of contracts, the U.K. is able to benefit fully from open-market policies and a relatively efficient regulatory environment. The labor market is well developed and vibrant. [Index of Economic Freedom]
In other words, Britain is already a relatively well-run, free-trading nation. And now it's made a tremendous wager to maybe become a bit more efficient, to be somewhat more dynamic, to grow modestly faster. Not only have the free-market Brexiteers urged a big gamble, but the "pro-growth" policies they are pushing are unlikely to be particularly popular among many populists in the Leave crowd. (Same goes for the U.S. version.)
Never has so much been risked for potentially so little.