On Sunday, Swiss voters narrowly approved a referendum to place a cap on immigration. What this means for its relationship with the European Union:
Switzerland is not an E.U. member, but it has a bilateral agreement on free movement with E.U. countries. European citizens can freely move and work in Switzerland, as can Swiss citizens in the E.U. The immigration cap is clearly incompatible with this agreement, and as all the agreements between the E.U. and Switzerland are tied together by a so-called “guillotine clause”, the E.U. could potentially revoke all of them, including crucial agreements on banking and taxation.
The vote’s outcome has severe economic consequences for the Swiss economy even aside from its relationship with the E.U. Switzerland is has one of the highest share of immigrants relative to all E.U. countries: 23 percent of the population does not have Swiss citizenship, and 63 percent of these residents come from E.U. or European Economic Area countries. Immigration from E.U. countries, particularly from Germany and Portugal, has played a large role in sustaining domestic demand in recent years.
Walter Russell Mead calls the vote irrational but understandable:
No other country benefits economically as handsomely from its migrant population as Switzerland does, but it would be misleading to try to view the vote in overly rational terms.
It is better understood as a primal scream rather than a calculated policy. The Swiss voted with their guts, not with their heads, and in so doing they followed a deeper instinct felt by many of their European peers. As German Finance Minister Wolfgang Schäuble perceptively commented on the outcome of the referendum: “Of course it shows that in this globalized world, people are increasingly uneasy about unrestricted movement. I think that’s something we must all take very seriously.”
Ryan Avent thinks it may have something to do with Switzerland’s expanding welfare state:
I’m more interested in, and perhaps worried by, the (possible) interaction of the Swiss immigration vote with a fledgling movement within Switzerland for a universal basic income.
The basic income plan is anything but a sure thing, and residence does not equal citizenship. But at a time at which economic conditions—like stagnant wages, falling employment rates, and declining labour share of income—make extension of the safety net look reasonable, a large foreign-born population may come to look like an obstacle to such extensions: either because making the safety net available to migrants is socially and financially impractical or because the idea of a second class of poor migrants is unappealing.
Cowen wonders if there is an upper limit to immigration levels:
In my view immigration has gone well for Switzerland, both economically and culturally, and I am sorry to see this happen, even apart from the fact that it may cause a crisis in their relations with the European Union. That said, you can take 27% as a kind of benchmark for the limits of immigration in most or all of today’s wealthy countries. I believe that as you approach a number in that range, you get a backlash.
Bryan Caplan draws the opposite conclusion:
Swiss anti-immigration voting was highest in the places with the least immigrants! This is no fluke. In the U.S., anti-immigration sentiment is highest in the states with the least immigration – even if you assume that 100% of immigrants are pro-immigration. The natural inference to draw, then, is the opposite of Tyler’s: The main hurdle to further immigration is insufficient immigration. If countries could just get over the hump of status quo bias, anti-immigration attitudes would become as socially unacceptable as domestic racism.
A big question is whether the referendum will embolden opponents of open borders elsewhere in Europe:
Other governments, including Norway, have suggested removing themselves from the Schengen Area, and there’s been widespread opposition to allowing recent EU members Bulgaria and Romanian to join. EU leaders reportedly discussed scrapping Schengen and reimposing border controls in the event of Greece deciding to exit the eurozone—which for the time being appears to be a remote possibility.
The depth of anti-immigrant sentiment in Switzerland is a bit puzzling, given that with a quarter of its residents being foreign-born, it has the lowest unemployment rate in Europe at 4 percent and its economy is among the strongest. If a law like this can pass there, it seems like the dominoes could fall pretty fast for the rest of the continent and the days of passport-free borders might be numbered.
The Dish 