History’s greatest emotional spat

I was just having a debate online about Brexit.  My opponent’s position was that Brexiteers were stupid because the economic consequences of it were far more complex than anyone thought they would be, and yet they voted for it anyway.

Rationality deals poorly with emotions, especially when it thinks it shouldn’t have to deal with them at all.  By my argument opponent’s train of logic, all you would have to do to make some union permanent would be to make things so intertwined, so complex, that they could not be un-done without extreme measures and sophistication, on a par with that which created it.  Eternal victory through mandarinism!  But it makes no sense.  In a revolution, whether peaceful or violent, you don’t have to have all the details worked out for the new government before you pull down the old.  It might be better to, and the new one might turn out to be worse than what it replaced– the Czars didn’t kill tens of millions of their own people– but revolutions– the build-up and release of previously unseen or underestimated economic, social or political forces– are sudden by nature.

Now, Brexit was a fight over policy, and major arguments about policy usually boil down to first principles.  The first principle in question here is “what is the public good?”  If good means low prices, then at first free trade is nothing but good, because everyone has the low prices with their existing incomes, and everyone feels a lot richer.  But soon the economy shifts and reaches a new point of equilibrium.  People who were producing things that are now produced much more cheaply outside the country have so much more competition.  Their incomes drop, and so does their happiness, unless equivalent jobs appear to make up the difference.  They haven’t.

But if by contrast “good” means the greatest happiness of the most people, though, that calls for a more complex set of governmental policies.  Apart from lifestyle factors like exercise, watching what you eat and avoiding excesses in drugs, happiness seems to be evoked– to the extent that it can be– by social trust and human connections and meaningful work paying enough.  Almost never do free traders acknowledge that free trade in goods supports those ends unevenly at best.  Free trade enriches people whose jobs aren’t subject to overseas competition.  Same income + lower cost of living = increase in net margin = increase in wealth.  But as mentioned above, it impoverishes those people whose incomes, after all economic adjustments, have gone down by a greater percentage than the cost of living has.   Lower cost of living (at first) + much lower income = decrease in net margin = major political problem.

You may have noted that “at first” part of the last two paragraphs.  Being my usual heretical self, I think free trade in goods isn’t nearly as good as it at first seems to be.  At first glance it seems like nothing but good, right?  Fewer hours worked for everyone, to pay for any given good!  The problem with this is that in the end what people compete for is other people’s labor, or the labor that goods represent.  That eternal truth is not changed by free trade.  If the labor inherent in goods is lower, both from automation and from the cheaper-overseas-cost-of-living component of goods prices, it doesn’t reduce competition.  It shifts it.  Like squeezing one end of a balloon and seeing the other end bulge out, it forces competition into areas of labor intensity that aren’t subject to overseas competition, such as education and health care (both of which have recently and repeatedly been called bubbles, no surprise).  In the poorest areas of the world where a lack of basic goods is a significant part of their poverty, there’s no trouble– it’s a vast and very real reduction of poverty, and it’s glorious– but in rich places it’s a different kettle of fish.

International free trade in in-person services is even more dubious.  The free migration of workers that Brexiteers could not stomach was that.  Say one thing about free trade in goods; your Chinese-made toaster does not change the character of your neighborhood.  Those families of Polish construction workers and Yugoslav nannies that moved in down the block, on the other hand, do.  Diversity, for all its good qualities, decreases social trust, and that helps destroy happiness.  Equals major political problem.

And that was basically my argument in the debate I mentioned at the beginning.  You can argue about economics.  But you can’t argue about whether people get to have this or that emotion, such as about neighborhood change, and you don’t get to insist that they must not weight their desires more highly than your economics arguments.  And when with bias, erudition and self-serving logic you’ve forced all their arguments into emotional areas, you don’t get to scream at them for their irrationality without being guilty of a lot, yourself.