Brexit and sustainability

The Brexit vote in Great Britain sent a message about the need to maintain social stability along with economic development. There was xenophobia and racism before and after the vote, but that can always surface during a period of instability. The most important message is that people were very unhappy with the way economic development was going, and with social changes brought by greater European integration. That unhappiness is not limited to Britain. In the United States, Donald Trump, the presumptive Republican nominee for the presidential race this year, is also reaching out to the growing number of unemployed and underemployed who saw good manufacturing jobs move to lower wage countries following free trade agreements. He adds an anti-immigrant message as well. There is similar dissatisfaction with the results of freer trade and unemployment in a number of industrialized countries.

In many industrialized nations, middle class income has been virtually stagnant in recent decades. Meanwhile the rich are getting much richer. In the United States, income inequality, or the gap between the rich and the rest, has been growing for some 30 years. Inequality is greater now than it has been since the 1920s. In a June 29 speech to Canadian Parliament, U.S. President Barack Obama said, “we also see a rise in inequality and wage stagnation across the advanced economies, leaving too many workers and communities fearful of diminishing prospects not just for themselves, but more importantly, for their children.” He continued, “If the benefits of globalization accrue only to those at the very top, if our democracies seem incapable of assuring broad-based growth and opportunity for everyone, then people will push back out of anger or out of fear.”

Much of this pushback is blamed on freer trade, which has allowed corporations to close factories in higher wage countries and move production to lower wage nations. On the environmental side, there are many complaints that companies are allowed to sue governments that enact some environmental laws if those laws reduce corporate profits. If governments do not build in more protections and income equality for their citizens they risk even more reactions against freer trade, which has brought many benefits.