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[–] TelescopiumHerscheli 0 points 2 points (+2|-0) ago 

People sometimes say that the goal of economics is to "improve people's living conditions". Personally I don't think this is the whole story, because what I do will probably never improve anyone's living conditions (certainly not my own - I could probably get have got a better-paid job working for a bank) as it's very obscure and theoretical, but I think it's identifiably economics. Nevertheless, this opening definition certainly has a great deal of truth in it: economists are very often concerned with finding ways to make people's social and domestic living conditions better.

The traditional approach to this has been by saying something like "people's lives will be better if they are richer (have more stuff) and healthier, if they have better access to resources when they need them, and better protections from the vicissitudes of life when they need them". I think that this is a large part of what's behind the broad European project. The EU is, in very large part, simply a trading bloc within which people can trade with each other more easily. The EU's general position would be something like "we make lives better for everyone in Europe by making them all materially better off" and the EU would claim, with a great deal of good supporting evidence, that free trade and free movement of people do this, at least on average. I'll come back to this last phrase in a moment.

Before we go any further, though, you need to understand why free trade is generally a good idea. A good place to start is by reading this Wikipedia article on "comparative advantage". I'll warn you right now that this is a difficult concept. Most people can easily understand the idea of "absolute advantage", but it is only once you understand "comparative advantage" that you start to understand what's really going on. I freely admit that I found this subject difficult the first time I encountered it; the way I learnt was by making up lots of examples on scraps of paper, testing them out by doing the sums myself, and playing with the idea in my head for several days. Once you understand the principle of comparative advantage, though, you will start to see why the free-est possible trade is a good idea: it makes people better off.

Now, many people, particularly at the political extremes, think that free trade is a bad idea, and seek to replace it with more restricted forms of trade (e.g. the so-called "fair trade" advocates). There is very good evidence that these alternatives don't work as well as free trade, when we consider the population as a whole. Notice again the italics.

The problem is that very often when we introduce free trade this leads to a restructuring of the productive industries in the affected countries. People in these industries find themselves out of jobs, which is why governments will very often phase in free trade agreements over several years, to give their labour forces time to adjust and find new jobs. The problem is that many older workers are very underqualified for possible new jobs, and this is made worse in many cases by a refusal to recognise economic reality and re-train. In the UK many older people have not been able to find jobs that were as satisfying, or paid as well, and this has hurt. Remember my italicised phrases earlier on? Although the average has improved, some people have been left behind and are worse off in real terms than before freer trade was introduced.

It's because of this (amongst many other things) that economists are sometimes regarded by non-economists as cruel or unfeeling or misguided: when we look at the world our first reaction is to look at the big picture. In the big picture, the average person is better off, so economists think this is a good thing. Problem is, there aren't any average people: some are going to do better than average, and some will do worse. Some of the people who voted for Brexit are people who have done worse as a result of free trade. However, I suspect that on their own these people would not have been sufficiently numerous to lead to a victory for the "Leave" campaign. I think there was something else going on too.

I should remind you at this point that this isn't my professional area, so what I'm going to say next is not certain, but seems likely to me...

What we do know about recent changes in almost all areas of the productive economy is that we are seeing a world evolve in which a small number of people, many of whom are from what is sometimes called the "cognitive elite", are big winners. Whereas a few decades ago a successful company would have a large number of employees, all of whom would be to some extent compensated for increased company profits, these days a successful company can easily be built round a few "stars", who can easily capture the lion's share of any increased company profits they generate. For example, Google and LinkedIn seem to have made a few people who had good or clever ideas very rich indeed. The productivity gains in many economies are no longer being shared so widely, but are being concentrated in a small number of "winners", while the rest of the population, although they may not be "losers", are certainly not making large gains. Wage inequality and wealth inequality seem to be increasing in many countries. This, I think, is where the problem lies. Like it or not, humans aren't robots: we have feelings. In particular, there seems to be good evidence from cognitive and behavioural economics that we become less happy when we can see other people making gains, even if we ourselves do not make losses. We feel poorer if we can see other people getting relatively richer. In a world where a small number of people are becoming richer as a result of changes in the structure of the productive economy this will create a (potentially large) number of people who feel that they are doing worse (even if in absolute terms they're not), and who will be susceptible to a wide range of economic snake-oil salesmen.

What, then, do I think can be done? Well, I think the first thing is not to throw away the gains of free trade. I hope more than I can easily say that some way is found of preventing Brexit: even now, most people cannot see how utterly disastrous this will be for the country, because they can't do the mathematics. Beyond this, I think the central challenge for governments in many parts of the world is to deliver something that isn't, but perhaps should be, part of the goal of economics: dignity. At heart, I think many people voted "Leave" because they were feeling smaller and smaller in a world where a few are growing richer and richer. How to deliver this I do not know. It might be possible to impose some sort of rule restricting the wages of the cognitive elite, but I don't see how this is politically feasible. What I do know is that Brexit will make everyone worse off, and it seems highly likely to me that the people who will be made proportionately the worst off after Brexit are the very people who voted for it.

I recognise that this isn't a particularly satisfactory response, but I'm still working out all my thoughts on this topic. Please let me know if you can help me to understand this better.