Ed Yardeni on the Brexit, Free Trade and Immigration

by Laura Ehrenberg-Chesler on July 8, 2016

in Brexit,Geopolitical

Over the past few weeks I have posted two blogs about the Brexit, quoting Peggy Noonan from the Wall Street Journal and George Friedman from Stratfor. Today, Ed Yardeni gave much the same explanation the other two gave for why the Brexit as well as the rise of Donald Trump. I found it fascinating that three smart, influential thinkers have all arrived at the same conclusion. Here is a section from Mr. Yardeni from today:

It seems to me that the backlash against Globalization reflects that in the real world, rather than the theoretical world of economists, free trade can come at a high price. The citizens of the UK have been enjoying the benefits of free trade within the European Union. However, they’ve also had to accept more and more regulations imposed by the EU’s parliament and regulators.

However, of all the reasons for the Brexit vote, it seems to me that the majority of British citizens were most concerned about the immigration issue. When German Chancellor Angela Merkel opened Germany’s (and therefore Europe’s) door to the flood of immigrants streaming from the Middle East and Africa, many Europeans, not just the Brits, were alarmed by her doing so.

Here at home, Donald Trump became the presumptive Republican presidential candidate first and foremost by promising to build a wall between the US and Mexico to stop illegal immigration. He even promised to deport all illegal aliens. He broadened his populist message by also sounding protectionist themes stating that he will renegotiate America’s trade agreements to make them fairer and bring jobs back home. It’s hard to deconstruct how much of his appeal is based on his supporters’ fear of unchecked immigration versus free trade. Again, it seems that immigration was the issue that swung so much support behind Trump in the first place.

The backlash against Globalization in the UK and the US is a vote of no confidence in the governing elites who have promoted unchecked immigration, in my opinion. I doubt that Brexit and Trump would have succeeded if the issue were just about free trade. However, now that they have succeeded, free trade is at risk.

My hunch is that around the world, people understand that free trade is beneficial. However, they want governments that will promote it without also opening up their borders to all comers and imposing more and more regulations on them without their say-so. In other words, Globalization is getting a bad rap because it has been wrapped up with other controversial issues. Nevertheless, I expect that free trade will remain relatively free since on balance it tends to be a win-win even in the real world.”

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