Exploring Brexit from the Perspective of Echo Chambers

brexit-referendum-uk-1468255044bIX

Faculty and students engage in a discussion on the economic history and policy that led to Brexit, and its expected global impact. 

By Charity Hemphill-Frierson ’17 and Luke Murphy ‘17

Last fall, over 50 Kellogg students attended an insightful analysis of the U.K.’s vote to leave the European Union and the significant impact that “Brexit” would have on the future of the geopolitical climate of the E.U. and the Western world. Coincidentally, the event occurred on the same day as the U.S. presidential election, which parallels “Brexit” in terms of voter priorities and demographics. The discussion, led by Professors Sergio Rebello and David Austen-Smith and hosted by the Public Policy Club, European Business Club, and Kellogg Public-Private Interface (KPPI) was designed to help students make sense of the economic history and the communication tactics that those for and against the “leave” vote used to push their vision of the United Kingdom.

Exploring the European economic pie prior to the Industrial Revolution

Professor Rebello grounded the discussion in background on the 14th through 17th centuries, explaining how prior to the Industrial Revolution, the economic pie was a “constant, with war serving as the main industry” as the British built an empire where the ‘sun never set.’ One of the key features of the British economy before the 19th century included ongoing conflicts with France. Things began to change, however, with both the Industrial Revolution and Pax Britannica, a 100-year period of relative peace in Europe after the defeat of Napoleon in 1815. These developments gave way to the emergence of a prosperous middle class and an economy that transitioned from industrial to knowledge-based. During this time, the significant growth in the U.K. economy was mostly attributed to the growth in London.

This flattening of the GDP per capita outside of London later coincided with the country’s participation in the European Union, which, among other things, made it easier for individuals from other parts of Europe to come to the U.K. and work. Though the British Empire had long included people from around the world, the timing left many feeling as if their economic stability was compromised by the ability of those from across the E.U. and the world to obtain employment. These factors all converged to create an environment that was primed for Brexit.

Understanding Brexit voter demographics

In hindsight, it’s easy to segment those who voted for and against Brexit: the majority of those who live in London as well as upper income, younger, and foreign-born voted to remain in the European Union. While 52% of British voted to leave, only 40% of Londoners voted to leave. London, the historical financial center of Europe, had the most to lose from the uncertainty around Brexit. The effects are already palpable – in December, the 328-year-old Lloyd’s of London insurance giant became one of the first major U.K.-businesses to announce that it will move part of its operations to the European continent in 2017.

On the other hand, those living in rural areas, the working class, and those over 65 felt that the policies of the E.U. had been most detrimental to them. Another large group of proponents included older males who had fought in the war against Germany and saw the U.K. as taking orders from the E.U. (and by extension Germany) as a form of weakness. Still, it remains unclear if the vote to leave the E.U. will provide those who supported the leave campaign with the results they seek.

Avoiding ‘echo chambers’

The talk left us in deep thought about the importance of avoiding echo chambers – networks of people who share similar backgrounds and experiences and thus share similar, self-reinforcing perspectives. As MBAs, many of us would have related to the London educated class who were content with employment opportunities and free trade with the continent. In London, as in Evanston, it can be difficult to understand the personal impact of immigration policies and a shift from manufacturing to services economy. While debating the merits of each position does not always lead to constructive or tangible outcomes, it is important for us as leaders to acknowledge the perspectives of others. It is critical that we understand how these sometimes competing perspectives impact the way in which decisions are made, how our own perspectives affect the setup of organizational structures, and how a healthy dose of conflict can make ourselves, companies, and countries stronger.

Charity Hemphill-Frierson is a second-year student in the 2Y program. Prior to Kellogg, Charity was a financial performance analyst for the Mayor of Indianapolis’ Office of Education Innovation.

Luke Murphy is a second-year student in the 2Y program. Prior to Kellogg, Luke was a Sales Director at Nasdaq covering public and private companies on the West Coast.