Yes, Brexit will make Britain poorer. It’s hard to put a number on the trade effects of leaving the EU, but it will be substantial. True, normal WTO tariffs (the tariffs members of the World Trade Organization, like Britain, the US, and the EU levy on each others’ exports) are low and other traditional restraints on trade relatively mild. But everything we’ve seen in both Europe and North America suggests that the assurance of market access has a big effect in encouraging long-term investments aimed at selling across borders; revoking that assurance will, over time, erode trade even if there isn’t any kind of trade war. And Britain will become less productive as a result.Even though Krugman is a liberal, he (like almost all economists) thinks that on the whole trade is good, barriers to trade bad.
Saturday, June 25, 2016
The Neoliberal Consensus on Trade
Here is Paul Krugman, the Democratic Party's favorite economist, writing about Brexit: