The Real Lesson From Brexit

Luigi Zingales at ProMarket:

The Real Lesson From Brexit: ...What we have observed in Britain and ... in the U.S. with Trump is a growing mistrust of voters toward experts. In the Brexit debate it was hard to find any economist justifying a departure from the European Union. In fact, many were willing to make forecasts so pessimistic as to be accused of scaremongering. Not only did these forecasts fail to rally the vote for Remain, they probably contributed to the victory of Leave.

In the Financial Times Chris Giles lamented this phenomenon as an example of voters’ irrationality. I fear this has nothing to do with irrationality, but has everything to do with mistrust; a mistrust that, while exaggerated, has a very rational basis: the disconnect between the intellectual elite and the population at large–the very disconnect that caused pollsters, betters, and journalists to miss the mounting Brexit wave. ...

Today wealth concentration allows a few rich individuals to singlehandedly fund think tanks, which have increasingly become loudspeakers of vested interests, rather than centers of elaboration of public policy. Campaign financing and future lobbying jobs are increasingly transforming elected officers from representatives of the people to “butlers of industrial interests,” to use a famous muckraking expression. 

The effects are there for all to see. Doctors are perceived to promote the medicines of the companies that sponsor their lunches...; scientists to minimize the effect of pollutants produced by companies that fund their labs; economists to defend the interests of banks that pay them hefty consulting fees. Even journalists, when they are not perceived to promote the interest of their advertisers and owners, are accused of turning a blind eye to their problems. ...   

Even when there is no financial incentive distorting experts’ views, there is a cultural affinity between the experts and the economic and political elites. A combination of legacy admissions and selection based on the quality of the high school (and thus the census) the students come from has created an increasingly homogenous academic population at top colleges, detached from the vast majority of the country. Scientists, journalists, and intellectuals all belong to the same world and so inevitably look at the world from the same perspective.       

All these factors together lead to a mistrust toward experts. They lead to a presidential candidate who is proud not to rely on them and receives support for this reason. They lead to political decisions, like Brexit, that might have negative consequences for the very people who voted for it. ...

Fault does not lie with the people mistrusting us. We need to rebuild that trust. It is not sufficient that most doctors, intellectuals, and journalists do a very fine job. We should have transparency rules in place to ensure that they all free from conflict of interest. We should have admission rules that favor not just ethnic diversity, but also economic and social diversity. We should have campaign financing rules that free our representatives from the yoke of vested interests.

In sum, we need to create the conditions to undermine this mistrust of experts. This is the most important lesson from Brexit.