Brexit in Context

MILAN – I do not believe that foreigners contribute usefully by issuing strong opinions about how a country’s citizens, or those of a larger unit like the European Union, should decide when faced with an important political choice. Our insights, based on international experience, may sometimes be helpful; but there should never be any confusion about the asymmetry of roles.

This is particularly true of the British referendum on whether to remain in the EU. Just days before the vote, the outcome is too close to call, and there appear to be enough undecided voters to tip it either way. But, with political and social fragmentation extending well beyond Europe, outsiders may be able to add some perspective on what is really at issue.

First, it will come as no surprise that, in terms of the distribution of income, wealth, and the costs and benefits of forced structural change, growth patterns in most of the developed world have been problematic for the past 20 years. We know that globalization and some aspects of digital technology (particularly those related to automation and disintermediation) have contributed to job and income polarization, placing sustained pressure on the middle class in every country.

Second, Europe’s ongoing crisis (more like a chronic condition) has kept growth far too low and unemployment – especially youth unemployment – unacceptably high. And Europe is not alone. In the United States, while the formal unemployment rate has fallen, large-scale failures in terms of inclusiveness have fueled disenchantment – on both the left and the right – at growth patterns and policies that seem to benefit those at the top disproportionately.