MR. TOM GJELTENThanks for joining us. I'm Tom Gjelten of NPR sitting in for Diane Rehm. Voters in Britain this Thursday will weigh in on whether they want their country to remain a member of the European Union or go for a Brexit and leave. The stakes are high and debate around the question has been intense. The murder last week of a young politician who favored staying in the EU cast a shadow over the vote.

MR. TOM GJELTENWith me to talk about the Brexit vote and its far-reaching financial and political implications, Adam Posen of the Peterson Institute for International Economics, Mark Weisbrot of the Center for Economic and Policy Research and Scheherazade Rehman of George Washington University. Also, from a studio in London, we have Zanny Minton Beddoes of The Economist magazine. Welcome to all of you.

MR. ADAM POSENThank you.

MR. MARK WEISBROTThank you.

MS. SCHEHERAZADE REHMANThank you.

GJELTENYou know, one of the reasons we're talking about this vote on "The Diane Rehm Show" today is because the outcome could have ramifications for us here in the United States as well other countries and you'll have a chance to weigh in. Remember our phone number is 1-800-433-8850. If you have questions about the Brexit vote or a comment, you can also email us, drshow@wamu.org. You can send us a message via our website or Facebook or Twitter.

GJELTENSo Zanny, let's start with you. Less than 48 hours before the vote. What's the latest? I know the news of this latest survey showing the remain vote slightly ahead brought a big stock market advance in Britain yesterday, but how seriously should we take this and other recent surveys on this question?

MS. ZANNY MINTON BEDDOESThat's a very good question. Well, the surveys, for what it's worth, are, I think, showing that it's pretty much on a knife edge. There has been some loss of momentum for the Brexit campaign. Up until last week, the Brexit campaigners were really creeping ahead, possibly even surging ahead. But towards the end of last week and particularly in the aftermath of the tragic murder of Jo Cox, the Labour MP, the campaigns were suspended and that momentum towards Brexit was stalled.

MS. ZANNY MINTON BEDDOESAnd I think now it really is within the margin of error if you believe the polls. The question, of course, is whether you should believe the polls because this is, obviously, a -- we don't have referendums very often and so it's hard to really interpret the polling data. But I think the broadest -- the safest thing to say is it's close. We don't really know and it will depend, frankly, on turnout because it's very clear that young people want to stay and the more young people vote, the higher the turnout, the more likely we are to stay.

GJELTENWell, polls have been wrong in Britain before, haven't they, just like they've been wrong here.

BEDDOESThey certainly have. And this time, I think I would trust the polls even less than usual. But I think the direction of change one can probably trust and so there has been a stalling of the momentum towards a Brexit, but whether it's stalled enough to keep the UK in is not yet clear. We'll only know on, I guess, very early Friday morning.

GJELTENRight. Well, Zanny, I was looking at these polls over the last few months and they sort of have gone up and down. What are the -- what do you see as the forces that either, you know, provide that momentum toward leave or maybe switch it around toward remain? What are the forces at play here, do you think?

BEDDOESI think there are several forces, but two big ones. One is the question of what impact Brexit would have on the economy and on individual voters' pocketbooks and their own financial circumstances. And that, broadly, favors staying in because there is little doubt -- no doubt in the short term that the economy will be hit and, frankly, not much data that it will be hit in the longer term. Certainly by uncertainty and almost certainly with a less attractive trading arrangement following a Brexit leave.

BEDDOESSo on the economy, I think it favors remain. Where things changed in the last few weeks was that the -- those in favor of leaving shifted the attention of the debate towards immigration and towards the fact that freedom of movement of people within the EU means that there is no control, as the Brexit has put it, of who comes in from the rest of Europe. And the UK has had the very big sense that there is -- there are too many people coming in, too much pressure on public services.

BEDDOESAnd although a lot of that is actually misguided in the sense that the pressure on public services comes from lack of investment in public services and that the people who come from the EU are net contributors to the UK treasury, nonetheless, the sense of too many immigrants is one that has really caught a chord here, an emotional chord, and that's the bit of the debate which the Brexit have captured.

GJELTENAnd in response to those concerns, Prime Minister David Cameron has pledged to try to put some kind of break on migration, right, or at least limit the benefits that might be going to...

BEDDOESThere is talk of that, but I think the important thing is that what the Brexit have done is paint a picture, a really -- a sort of grand illusion of what Britain could have if it left. The people who leave, want to leave, claim that the UK can be more prosperous. It can have greater sovereignty and it can control its borders and can control who comes in. And that's actually broadly complete illusion and nobody knows what the alternative to being in the European Union would be, but it would almost certainly be unambiguously worse.

BEDDOESBut because they haven't been forced to articulate what it would be, so everybody who doesn't like the status quo can think, well, actually, Brexit will be better.

GJELTENAdam Posen, not only are you the president of the Peterson Institute for International Economics, as I recall, you were at, until fairly recently, a few years ago, an actual voting member of the Monetary Policy Committee at the Bank of England. So I'm sure you have some very clear feelings about the economic impact that a decision to leave the European Union would have.

POSENYeah, thank you, Tom. I very much would support Zanny's characterization that on the economics, except for a few self interested people trying to get into power, trying to have an excuse to get rid of people who don't look like them, there is no good economic argument or good economic case being made for Brexit. You're taking where, for centuries, the British have had all their trade, a huge share of their trade -- I shouldn't say all -- where they get much of their talent, that is going to be disrupted with both uncertainty -- we're already seeing it.

POSENThere's been a huge postponement, both in construction and in corporate investment in Britain. Not just by domestic industries, but by foreign companies who use Britain as a beachhead into Europe and that's likely to reverse and go away if they're no longer part of the single market, which is what this is about. As Zanny indicated, at a minimum, you have two years of uncertainty redefining the trade deal between the UK and the EU. Probably, it would be a much less favorable deal.

POSENBut I think the really important thing is the long run. Britain has gained hugely from both migration and EU membership in the last 20, 30 years. It's actually outperformed most of the rest of the EU and it certainly outperformed its pre-EU membership decades in the '50s and '60s when it tried to go it alone and had fantasies of that sort. Speaking just finally from the Bank of England point of view, they're going to be trapped in a dilemma because as George Soros argued today and as I and others have been arguing for weeks, this is a huge shock to confidence in the attractiveness of investments in Britain and so you would probably have a very large downward movement in the value of the pound.

POSENNow, that has implications for the U.S. which all of us can talk about, but in the short term for Britain, that means a huge inflationary impact. And so it's going to be hard for the Bank of England, the UK's Federal Reserve, as it were, to offset the shock. They may actually have to raise rates to offset the panic.

GJELTENWell, Mark Weisbrot, as Adam said, George Soros came out and said, my 60 years of experience tell me the pound will plummet along with your living standards, speaking to the people of Britain. The only winners will be speculators. And, of course, anyone knows about speculators, it's George Soros, isn't it? Do you think that there has been any exaggeration of the risks of a Brexit, the economic risks of a Brexit and has that caused any sort of credibility issues for British voters, trying to figure out what, in fact, is the reality here?

WEISBROTYeah. I think there's enormous exaggeration. It's actually worse than that. It's kind of a mafia-like quality to the threats that you're getting. There's another one reported in The Washington Post today from Wolfgang Schauble saying...

GJELTENThe finance minister of...

WEISBROTOf Germany, yeah.

GJELTEN...Germany, yeah.

WEISBROTYou know, it's kind of like if you're gonna have a divorce and you not only say you're going to -- to your spouse, you're gonna fight over the common property, but you're going to do everything you can to punish them for it. And I don't see that as legitimate at all. I mean, you know, they can make their arguments, but they shouldn't be trying to -- it reminds me very much of what the European Central Bank did to Greece when they had the referendum on July 5 on austerity. The ECB actually shut down the Greek banking system before the vote just to give them a taste of the kind of punishment that they would get.

WEISBROTAnd they still voted 62 percent against. And that's what, you know, I don't have any sympathy with the leaders of this campaign, okay. I realize, you know, they're right wing people. There's a lot of racism, anti-immigrant and stuff. But if we want to be more honest about it here, I don't think we can have an honest discussion here because everybody here, in Washington especially, is looking at it in straight power terms. The U.S. is the most, is the tightest, closest ally that -- the UK is the closest ally that the United States has. Tony Blair was the one who supported the Iraq war.

WEISBROTWe might not have even had that war if he hadn't supported it. Germany and France were against. If the UK leaves the EU, you know, that's going to be a huge avenue of influence that the U.S. loses in its most important ally in the world, which is Europe. And so that is how everybody here is looking at it and so you're not going to get an honest picture here of what the stakes really are. It's really -- that's why President Obama went there twice.

GJELTENMark Weisbrot is the co-director of the Center for Economic and Policy Research. He's also the author of "Failed: What the Experts Got Wrong About the Global Economy." Well, we're trying to get this story right today on "The Diane Rehm Show." We're talking about what the impact of a vote by the British people to leave the European Union would mean for Britain and for U.S. interests as well.

GJELTENWe're going to take a short break and when we come back, we'll resume this discussion. Please stay tuned.

GJELTENAnd hello again. I'm Tom Gjelten from NPR sitting in for Diane Rehm today. And we're talking about the vote on Thursday in Britain over whether Britain should remain in the European Union or leave.

GJELTENMy guests are Zanny Minton Beddoes, who is the business affairs editor at The Economist and formerly an economist at the International Monetary Fund. She's speaking to us from a studio in London. Here with me in the studio in Washington, Adam Posen, president of The Peterson Institute for International Economics, Mark Weisbrot, who is co-director of the Center for Economic and Policy Research, and Scheherazade Rehman, who is professor of international business and international director of the European Union Center at George Washington University.

GJELTENAnd Scheherazade, Mark made the point just before the break that some of the sympathy for the remain vote or opposition to the leave vote here in the United States is actually motivated by political considerations, concerns about what the political ramifications of an exit would be. But those are certainly legitimate concerns, I would think. Tell us, what would be some of the political ramifications, you know, with respect to the future of Europe, that a decision to leave the European Union would be?

REHMANSo, you know, Mike's right. You know, clearly, from Washington's point of view, you know, Britain is our greatest ally in terms of free trade, globalization and, clearly, ears and eyes on the ground in closed-room meetings with security issues inside the EU. And we would lose that if they do exit. The bottom line is this, the U.K. is deluding itself if it thinks it can stand alone and sit at the big boys' table by itself. It needs the EU's muscle behind it. It's not the power it once was.

GJELTENMm-hmm.

REHMANAnd so I think there are implications there as well. For the EU at large, clearly, this is a hit on them. It will not undo the European Union by any means. But it does raise the issue of referendums that might follow. There may be a contagion here. And the country that...

GJELTENAnd what do you mean by that, referenda where?

REHMANMeaning that I think the country that is most susceptible to this probably would be France...

GJELTENMm-hmm.

REHMAN...where there's a lot of angst against the European Union bureaucracy, partly because of what is going on in terms of immigration, no growth, unemployment, et cetera, et cetera. And a referendum in the guise of we are supporting the EU. And that might turn on them as well, just as it did on the British government. You know, this Brit exit was a push, it was a lever on the immigration issue, in part, for negotiations. And it basically rolled out of control. This is what we call, in Washington, D.C., a black swan event.

GJELTENMm-hmm.

REHMANDidn't see it coming.

GJELTENRare, but with huge implications, huge consequences.

REHMANClearly. And in retrospect, we can justify it.

GJELTENZanny, so you could argue that the EU had this coming, right? I mean, the EU has, Zanny -- Scheherazade just mentioned, the bureaucracy with which the EU is associated and that there is a feeling that the EU has sort of gotten too bureaucratic in a number of ways. And that feeling is widespread across Europe, no?

BEDDOESWell, I think the origins of this are actually firmly British. And I think they are, frankly, within the Tory Party, within the Britain Conservative Party. David Cameron, the prime minister, announced in 2013 that he promised to hold a referendum. He did so to quell a group of Euro-skeptics within his own party. This was very clearly done for internal party political reasons. I don't think he thought for a second that the referendum, when it actually happened, would be nearly as close as it looks as though it's going to be. So I think it was an entirely avoidable situation. It was a big mistake to promise to hold a referendum back then for the reasons of dealing with your internal party politick.

BEDDOESI don't actually think, therefore, it can -- we can pin the blame of this at Brussels, except insofar as, within British politics, as within politics in many European countries, the European Union has been used as a scapegoat for all things that people don't like. It's bureaucratic. It's too much regulation. We pay it too much money. There is truth to all of that. Of course it is. Yes, there is bureaucracy in the European Union. Yes, it is a slow organization. Yes, it has significant faults.

BEDDOESBut I think what we are learning is that, if you scapegoat the EU, scapegoat Brussels -- which lots of politicians around Europe do, because it is a very convenient scapegoat when you want to blame somebody else for your country's problems -- then this is what you end up happening. So, yes, the chickens are coming home to roost. But I don't think it is so much because the European Union itself could have prevented this. It could have done. It's -- there's a democratic deficit, there are other things there...

GJELTENMm-hmm.

BEDDOES...improvements one needs to make. But I do think that this is, I'm afraid, firmly made in Britain.

GJELTENBy the way, what would be the impact -- this political impact within Britain with respect to, you know, the views of people in Scotland? There's a strong independence movement in Scotland and Wales and so forth. You have Northern Ireland and the Republic of Ireland. What would be the effects there?

BEDDOESWell that, absolutely, is a whole other area of potential consequences of a Brexit that could be very dramatic. I mean, in its most dramatic form, it risks breaking up the union of Great Britain, the United Kingdom. The Scots are very keen on remaining members of the EU. As you know, there was a referendum for Scottish independence last year. They voted against it. But it is quite possible that, if we, in the U.K., vote for Brexit, that there will be another demand for Scottish referendum. There'll also be issues to do with the Irish peace process and indeed the Irish border. Because the border between northern and southern Ireland, which is currently, you know, a notional border, would in fact become the border between and EU country and a non-EU country.

GJELTENAdam Posen, who is to blame for this situation? I mean, why it is that this is such a close vote in Britain?

POSENI think it's important to take what Zanny said but put it in a slightly broader context. There is a very clear parallel, Tom, between what was said about blaming the Brussels Eurocrats...

GJELTENMm-hmm.

POSEN...for what goes wrong and not sufficient attention to local people, to what's gone on in the U.S., where you had people blaming for years Washington bureaucrats, regulation, as being distant. And you had this constant drumbeat from the Fox Newses, the Breitbarts and so on, and you end up with a Trump, who runs basically on the basis of older white men who are unhappy with a more diverse society, unhappy with a society that doesn't seem to be responding to them the way it once did. And obviously economic downturn doesn't help this. But it's this constant litany of, our fault is this terrible, overaggressive government, overaggressive regulation, and they're not our people.

POSENAnd you can see that in the British press. There it takes the form of newspapers, less radio, but it's much the same thing. And so when Mark raises the issue of, you know, it's politics, it's power, he's right. But I don't think it's that much about foreign policy. I mean, Tony Blair is deservedly a complete pariah right now in the U.K. for what he did on Iraq. I think it's more that a lot of people, myself included, would like to draw the line in the sand here against these kinds of right-wing agitation.

POSENThat, frankly, my concern is just like Mussolini being elected in the '20s made it easier for Hitler and Franco to come to power, because you had 10 years of a bad government, a nativist government, a partly racist government that wasn't horrible, legitimizing that kind of thing. I worry about this legitimizing Trump, legitimizing right-wing at least in Europe and so on.

GJELTENMark, you may not disagree with what Adam just said.

WEISBROTI agree with part of it. But I think the other part I have to disagree. I have -- I would draw a different analogy to the United States. You know, we have to struggle for democracy here. Wall Street has a veto over financial reform. The insurance companies have veto over our health care reform. Imagine we had another layer on top of that, which had no accountability at all, how much harder it would be. National sovereignty is -- become a right-wing cause in Europe because the left -- center left has abandoned their base to a kind of internationalism that hurts the majority of their -- of people, of especially workers in the bottom half of the income distribution.

WEISBROTThat's why the PASOK, the Socialist Party of Greece, which had 40 percent of the vote for 40 years, got 4 percent in the last election, you know? And that's why the same thing happened in Spain. And that's why the National Front is rising. So...

GJELTENNational Front being a right-wing party in France.

WEISBROTIn France, yeah. So, yeah, I think that the cause of the right-wing surge is precisely the failure of the center left to defend what they're supposed to defend. And that is why it's taken this right-wing form. But there's a perfectly valid progressive argument that you shouldn't have an unaccountable group of people, the European authorities, you know, doing what they did to Greece, doing what they did to Spain, doing what they did to Portugal, and not -- and people not being able to do anything about it.

GJELTENOkay, Mark, answer this question. What would have to happen or what could happen for a Brexit vote not to have serious economic consequences for the people of Britain?

WEISBROTWell, the European Union would have -- could go for an amicable divorce instead of all these threats and telling them we're going to punish them. And that shows you something right there. Why do they have to punish them?

GJELTENThey may want it to (word?)

WEISBROTWhy do they have to punish them? Because they have to intimidate everybody else who's being screwed by the fact that Europe has lost trillions of dollars of GDP over the last eight years because of bad economic policy.

GJELTENScheherazade.

REHMANThis is not the EU making threats. Look, there's market volatility in all of this. And this -- and Zanny was absolutely right. This was homegrown U.K. issues that could have been avoidable. But we're here now. Bottom line is, the U.K. and city of London serve as the Hong Kong of the EU for investments. And we could see as much as a 15 percent drop in those investments, including the British pound, because of a vote that was avoidable.

POSENI would go one step further, if I could. I think it is entirely progressive to say that you want a strong central government that has a court of justice, that has a bill of human rights, that has labor standards, and that right-wing secessionist movements should be opposed. We did that in the Civil War in the U.S. The Europeans are doing that now. It's -- I agree with Mark totally on the threats that were made to Greece. But that was by an unaccountable European Central Bank. This is being made by elected governments in the EU. And it's being done on the basis of constitutional political matters that you don't get to secede and then we pretend it's all nice and good.

GJELTENZanny, you are yourself an economist. You're also a journalist. Your newspaper or magazine, The Economist, has endorsed the remain option. How do you assess the economic issues here? Are they -- I mean, you said in the beginning of the program that actually there is little dispute that this, at least in the short term, would have serious economic consequences for Britain. How do the advocates of the exit option deal with those arguments?

BEDDOESI think the honest ones acknowledge that that's true, to be frank. I think they're -- I have rarely seen a situation or a question on which there is so much agreement amongst professional economists, both from, you know, whether it's the IMF, whether it's the British Treasury, whether it's the Bank of England, whether it's bank economists, whether it's think tanks, across the board, with very few exceptions, the overwhelming majority says that in the short term the consequences are almost certainly going to be unambiguously negative.

BEDDOESAnd the main reason for that is because a vote to leave will bring huge uncertainty. As Adam said, we've already seen the impact of that uncertainty. It'll only get bigger. Because, and this is one thing to be very clear about, if we vote to leave in the U.K. on Thursday, we're not voting for a particular outcome, because we don't know what that outcome will be, because we don't know what the economic arrangement that the U.K. will make with the European Union will be.

BEDDOESNow Mark is right that it makes -- there is -- it may be shooting themselves in the foot, the Europeans to be terribly -- push terribly hard for a tough arrangement. But the reality is that you can't be a member of a single market, as the European Union is, without signing up to the rules and regulations of that market. And one of the rules of that market is that there is free movement of people. And if the Brits don't want that, they have to have another economic arrangement, which will almost certainly mean less market access, either for trade or for services...

GJELTENOkay.

BEDDOES...which will hit the British economy.

GJELTENZanny Minton Beddoes from The Economist magazine. I'm Tom Gjelten. You're listening to "The Diane Rehm Show." Well, Zanny, there are some arguments, some economic arguments for the decision to leave the European Union, no? For example, I have heard that -- we all know that the European Union is a highly regulatory...

BEDDOESWell…

GJELTEN...operation.

BEDDOES...let me take you on, on that.

GJELTENOkay.

BEDDOESYou're absolutely right. And when we wrote our endorsement lead in last week, we took on this argument. Because there is this, what is to say…

GJELTENWell, lay off the argument, so then...

BEDDOES...a liberal case for leaving.

GJELTENRight.

BEDDOESAnd the liberal case for leaving -- the -- it's proponents would say, would be that Britain could be a Singapore on Thames, if you will, a free-trade oriented, deregulated country. The problem with that argument is that's for -- Britain is actually already relatively lightly regulated. It got -- if you look at the OECD's gauge of regulations, Britain is much less regulated than the rest of Europe. And most of the regulations in Britain that have economic bite are ones that are imposed by the British government. The regulations imposed from Brussels are really relatively small. So Britain manages to be a relatively free-market, deregulated economy, while being in the European Union.

BEDDOESAnd there is little that suggests to me that, if we voted to leave, we would become more deregulated. Because the reason people want to leave is, as we talked about earlier, the question of controlling immigration.

GJELTENMm-hmm.

BEDDOESSo we're quite likely to become a country that closes our borders and becomes more protectionist than if we remain part of the European Union. So I find it very hard to see how we can do the reforms and have the openness that would be necessary for us to be more economically successful outside the EU than inside it.

GJELTENMark Weisbrot.

WEISBROTYeah, I think, you know, there's a left-of-center argument in the U.K. too that is, you know, that supports Brexit actually, some of them. And I think there's something...

GJELTENBoris Johnson, the former mayor of...

BEDDOESWell, Boris Johnson's not left of the center.

WEISBROTHe's right wing. I'm talking about, you know, there's 40 percent of Labor in the polls, for example, who've said they'd end. And Jeremy Corbyn has opposed it. But, you know, if you've looked at his interview on "Sky News," he wasn't very enthusiastic about his opposition.

WEISBROTAnd why is that? Because the European Union has a project now that's very different from what it was, you know, 15, 20 years ago, which is a kind of a neo-liberal project. And it isn't just the Eurozone. I mean, this is the elephant in the room we're not talking about. Look what happened in the Eurozone. They've got twice the level of unemployment that we do. And that's, by the way, part of the refugee crisis as well. I mean, the immigration, not the refugee, but the migration part of this debate is partly because of the mass unemployment that the European authorities have caused.

WEISBROTAnd sure, you know -- and, by the way, I do believe that a lot of people said the same thing when the U.K. didn't want to join the Euro, which is probably the best decision they made in the last, you know, 30 years, that terrible things would happen too. So there's a terrible economic failure in Europe. And there's every indication that the authorities wanted this -- there's the Stability and Growth Pact. There's things that are not just the Eurozone, they're European Union wide policies. And, you know, there's a whole paper trail of thousands of pages of what these people really want to do to Europe. And they really want to make it a very different kind of economy, with less of a social-safety net and...

GJELTENOkay.

WEISBROT...and more unemployment.

GJELTENZanny, I know you have to leave and we have to take a short break right now. So, please, just, you know, one final thought from you before you go.

BEDDOESWell, I think it has to be that, while I applaud Mark's passion on this, I just think he's wrong. I think that in the -- on the economic side, there really is very little argument and very little case that the U.K. would be better off, once you've looked at the likely direction the U.K. will take. I think the only rationale for leaving is, if you think that, notwithstanding the economic damage, you are so concerned about not having immigrants that you want to leave because of that. And I think that would be a wrong decision.

GJELTENWell, a good summary of the issues from Zanny Minton Beddoes. She's business affairs editor at The Economist. She used to be an economist at the International Monetary Fund. Thank you very much, Zanny. We're going to take a short break right now. When we come back, your comments, your questions and your calls. Stay tuned.

GJELTENAnd welcome back. I'm Tom Gjelten from NPR. I'm sitting in today for Diane Rehm, and we're talking about the vote in less than 48 hours, on Thursday, in Britain on whether that country should remain in the European Union or not. My guests here in the studio are Adam Posen, president of The Peterson Institute for International Economics and a former voting member of the Monetary Policy Committee at the Bank of England. Also Mark Weisbrot, Weisbrost, co-director of the Center for Economic and Policy Research, and Scheherazade Rehman, professor of international business at George Washington University.

GJELTENAnd Adam, let's just for a moment at least, before we go to the calls, bring this back to the effects that this vote would have on us here in the United States. I mean, we've seen estimates of how much of a hit to UK growth this actually would mean. George Soros and others have actually even talked about what it would cost the average British household in terms of lost income. What would be the effects on Americans of this?

POSENI think this is important to distinguish, as we usually do in macroeconomics, between the short-term, sort of immediate shock and the longer term, what happens as people adjust. In terms of the short-term, medium shock, it's all sort of transmitted at a distance from the U.S. So the U.S. has a lot of trade with the UK by UK standards but a very small amount by U.S. standards. So the effects of this directly on the U.S. economy will mostly not come through trade but through the financial system, that, say for example, the UK currency falls 20 percent as IMF or George Soros suggests is likely to happen.

POSENProbably the euro also falls, not as much but a lot because there are direct spillovers on Europe and a great deal of uncertainty. We've already seen a loss of half a percent of GDP over the last year because of a stronger dollar. This would make it worse, and we would have some slowdown, not huge but meaningful.

GJELTENAre you making any predictions in terms of, you know...

POSENI mean, quantitatively, if, say, the pound goes down 20 percent against the dollar, and the euro goes down 10 to percent against the dollar, you grind through the algebra, it's going to be something that would take off two or three tenths of a percent of GDP, probably closer to two than three, but that still translates to much -- maybe even a rise in unemployment, certainly a slowdown in the continued re-employment.

POSENThe longer term is, in a sense, worse. We've had back and forth on this program about the European project and how useful it is to the U.S. or not to have the UK at the EU table. But what I worry about is this creates a very bad dynamic. On the one hand, you have a Europe that becomes an economic policy, German-dominated without any counterweight, and potentially having more successful right-wing parties surrounding Germany.

POSENAnd that leads to bad economic decisions and more friction with the rest of the world, but at the same time I think you have a UK that will race to the bottom. One thing I've been very concerned about is, you know, this isn't a neutral decision. This isn't that if you make this decision, suddenly there's a bunch of small government, justice-loving leftists who take power. It's going to be a bunch of very desperate, power-grabbing, right-wing people who don't believe in regulation, who want to get the UK out from what few regulations it's in.

POSENThey'll have a recession. What are they going to do? They're going to say oh my God, let's try to build the banking system up, let's try to keep these jobs here. And so we get another hole in the world financial system, the way the UK was with AIG financial products. So I worry about the UK becoming another Cayman Islands or Panama, even more so if Brexit goes through.

GJELTENOkay, those are some of the economic consequences. Catherine is on the line from Indianapolis. And Catherine, I believe you have some concerns about the political consequences or the political issues involved in this vote.

CATHERINEYes, I do, and actually in listening to this conversation, you've addressed a lot of what I was concerned about, and I guess at this point I'm just wondering, it seems to me most of this is coming out of a mismanaged and/or encouraged xenophobia over immigration, a rise in nationalism that we've seen in Europe and as well as in this country, and I just -- I have to ask, is there any really good reason for the Brexit to happen, or is this just about stirring up conservative, nationalist politics? And I'll be happy to hear your responses on the air.

GJELTENWell, I'll put that to Scheherazade Rehman. She is, in addition to being a professor of international business, she is director of the European Union Center at George Washington University. How much of this is fueled by nationalism, nationalist sentiment, and again not only in Britain but throughout Europe?

REHMANSure, I mean absolutely there's no question, and Zanny mentioned before this is homegrown politics. Cameron was playing politics. He used the referendum as a lever and basically it got out of control. I don't think he ever expected this to turn out the way it has.

REHMANI just want to remind everyone to step back even further than even Adam went, and that is the whole impetus behind the job losses, the slowdown in growth, running Greece into the ground, and the refugee crisis of course was unpredicted, is all coming from the 2008 financial crisis. You know, the U.S. created this crisis, it went global, everyone got hit. We haven't finished reeling from that. Europe then precipitated another crisis on its own in 2010. Those ramifications are in the system. People lost more than 40 percent of their wealth, and in Europe the hits are even harder with zero percent growth.

REHMANSo they need something to push back against, and this is what you are seeing. And the immigration crisis has poured kerosene on this.

GJELTENAnd that is -- everything that you're saying sort of resonates with the current political situation in this country, doesn't it?

REHMANAbsolutely.

GJELTENWith the rise of Donald Trump and his concerns about America no longer being first.

REHMANYou know, the underbelly of this country, the entire middle class in the United States, got hit in this financial crisis, and we haven't recovered. You know, there is unemployment numbers that seem to be okay, but there's massive hidden unemployment in the system and under-employment.

GJELTENLet's go now to Eric, (PH) who's on the line from Michigan. Hello, Eric, you've called the Diane Rehm Show.

ERICYes, I grew up in the UK and actually voted in the original referendum, whether or not the UK should join the common market, which eventually became the EU.

GJELTENYou voted against -- you voted against that, Eric, back then?

ERICVoted against it, yes. I was one of the few who voted no. And I do feel that the British feel that the EU has not been as financially successful for them as it has for other members. And they're getting short-changed. And I wonder if, if they do vote to stay in, that there will be changes in the way they do business to be more beneficial towards the British.

GJELTENAnd what do you mean by that? What can you imagine?

ERICWell, I think Britain feels that they put a lot of money into the EU, and they don't get much out of it. There seems to be a strong feeling that all we get is regulations that are aimed to benefit places like Germany and Spain and France, and nothing benefits the UK.

GJELTENWell Mark Weisbrot, that certainly is part of the argument for leaving, isn't it, that Britain does pay an awful lot to Brussels in terms of its, I don't know what you call it, membership dues, you might say.

WEISBROTYeah, I don't give that one that much credibility. That's why I don't disagree with everybody here on some of these things. The arguments that are made by the right are really not that strong. I think the biggest argument is really the long-term economic failure of Eurozone and EU, the current project, you know, the massive unemployment that they're trying to create as the new normal.

WEISBROTAnd it isn't just the Eurozone. For example, we looked at the Article IV agreements that all the EU countries have with the IMF. They have this discussion, and they produce a paper, and there's thousands of pages of these during the crisis years, and they all say the same pattern, they all have the same pattern. It's cutting health care, cutting pensions, reducing employment protections. And they've done -- you know, and reducing the bargaining power of labor through labor market reform, and you've seen that already in Spain and in Italy.

WEISBROTAnd now in France, why are all those strikes going on? That's because they're trying to do the same thing to France. So, you know, there's a reasonable argument can be made that this is a bad economic project. It's a neoliberal project that's really against the interests of Europeans. And for that reason, I think there's a much more rational argument against the European Union policies than the one that's being made by the people supporting -- leading the Brexit movement.

GJELTENQuickly, Scheherazade.

REHMANSure, you know, I disagree here with Mike. Look, the EU has a greater good in mind. Yes, it's unaffordable, yes, they're having trouble paying for it, but in part this is because of the financial crisis. This is no grand plan to scam governments. This is a better way to live as far as they are concerned, so...

WEISBROTNot for most people.

GJELTENAdam, you made the point earlier that if -- that there might be a shift in sort of the power within the European Union should Britain leave. I mean, if you look at a country like France, they have a record of having a much more statist approach to economic development, perhaps even more protectionist. I mean, could we see sort of a different economic footprint of the European Union in terms of policy, absent Britain?

POSENI think that's a risk right now with the Merkel- Schauble team in charge in Germany. It's less that way than it used to be. I think it's more a risk, Tom, to pick up on things we were saying before, that remember Europe is two things. There's 28 members, counting the UK, and then within that there's a group that are within the so-called Eurozone, the members of the currency union.

POSENWhen the UK is in, then it's not just a bunch of tiny countries or poor countries that are in Europe but not in the euro area, and that's an important way to keep things from being decided on the basis of some of these concerns that I agree with Mark on, about excessive budget austerity or insufficient monetary stimulus in the area, but more broadly that Europe has a mandate that isn't just about making the euro areas survive.

POSENSo if the UK stays in, you have potential alliances of Britain, Poland, as well as people skeptical about the euro in other countries. If the UK leaves, then that shifts the balance of power much more to the so-called core, which would be Germany, Netherlands, Austria, and Scheherazade can talk more about this, and especially if you get a rightwing France. And that would be a Europe that goes down a bad path for growth for everybody.

GJELTENAdam Posen is president of The Peterson Institute for International Economics. I'm Tom Gjelten. You're listening to "The Diane Rehm Show." Scheherazade, maybe you could answer Adrian, who has sent us an email. Please discuss the claim that the results of the referendum are not binding on the UK parliament. Can they really ignore it?

REHMANNo, they can't ignore it. This referendum was called. This is a legal referendum. You know, and if it goes in a negative way, if the vote is leave the EU, you know, it is binding. The question it'll be long, protracted negotiations with the European Union and how to do so. And Zanny mentioned, you know, earlier that it will take years to then suss out the economic arrangements within this.

REHMANI think an interesting aspect to this would be, and no one's mentioned this, is Russia. You know, Putin's watching this on the sidelines I'm sure with quite some interest because an EU without the UK is very, very different than an EU with the UK in it.

GJELTENNow we've all talked about, and Zanny from London mentioned that, in her opinion that concerns about immigration are really perhaps the most powerful force driving the thinking of those who want to leave. But should Britain leave the European Union, they may still have some obligation, no, to take the migrants or take workers throughout Europe. I mean, isn't it the case that Norway, for example, which is not in the European Union, under its arrangement with the European Union, still has to accommodate workers from throughout Europe?

REHMANSure, and I can bet you anything that when the EU renegotiates a trade arrangement with Great Britain, if they do exit, immigration is going to be part of that deal.

GJELTENLet's go now to Nancy, who is on the line from Concord, New Hampshire. Hello, Nancy.

NANCYHi, thanks for taking my call. I have read several articles over the past day or two about the potential for the impact in Ireland on the peace process and a possible destabilization. I -- but none of the -- they seem to be speaking long-term. I've got a couple of family members who are actually flying into Ireland and going to be traveling in Northern Ireland, this Thursday is when they leave. And I'm just wondering what your guests think about is there a potential, depending on how this vote, for there to be some flashpoints, public demonstrations, violence and whatnot in Northern Ireland.

GJELTENGo ahead, Adam.

POSENWell, the only reason I'm leaping in is because while I was at Bank of England, I actually visited Northern Ireland to see the economic conditions there and talk with people there, and two images or realities of that trip that stay with me are it was the only time in my three years as an official I had to have a security person with me because there is still real division, as much progress as has been made on the peace process.

POSENBut secondly, we stopped at -- there's a huge supermarket literally on the border between Ireland and Northern Ireland, and as was mentioned earlier, right now it's a very porous, almost nonexistent border, and there are a lot of people whose livelihoods are based around these border activities that would be disrupted, and then also there's a lot of EU money actually that comes into Northern Ireland to help the peace process, in part directly for that, in part because the -- Northern Ireland is very poor by EU standards, and so they get support, as do some parts of Wales from Brussels.

POSENBut anyway, leaving that all aside, in terms of your family, they're probably fine. I mean there -- this is not going to happen overnight, certainly not in the next couple weeks. There are parts of Northern Ireland where if -- I would not wear orange in a Catholic neighborhood or where I would not wear something obviously Catholic in a Protestant neighborhood. But that's a general thing.

POSENWhat will be sad and truly tragic is the potential for real violence and the reactivation of political strife in Ireland in the coming months and years.

GJELTENBut the truth is that Ireland is a member of the European Union, the United Kingdom is a member of the European Union. So this is in some senses, that border you're talking about, is in some sense an internal border, at least with respect to Europe. Should Britain leave the European Union, the quality of that border changes.

GJELTENHugely, and so, you know, these are very small numbers of people involved. There are probably more people of Irish descent in the U.S. than there are people in Ireland at this point. And so you mess with a few thousand jobs here or there, by people being disrupted at the border, you're messing with a very big chair of people around Ireland, around Northern Ireland that is to say.

GJELTENOkay, finally an email here from Jason, who writes, the eastern counties of the European Union are becoming more and more intolerant to human rights. If Britain leaves, there'll be a shift of power away from the west and to the east, where the Poles, Hungarians and so forth will undermine human rights without counterbalance. Very quickly, Scheherazade, what's your reaction to that concern?

REHMANIt's real. The shift has happened, it's happening as I talk. Having said that, I don't believe any of those countries are contemplating leaving the EU in any way because Russia is sitting on the other side of this.

GJELTENScheherazade Rehman is professor of international business and an international director of the European Union Center at George Washington University. My other guests are Mark Weisbrot, who is co-director of the Center for Economic and Policy Research, he's the author of "Failed: What the 'Experts' Got Wrong About the Global Economy." And of course the experts have been at issue in Britain in this vote, as well. Also, Adam Posen, president of The Peterson Institute for International Economics. Earlier, Zanny Minton Beddoes from "The Economist" magazine, formerly an economist at the International Monetary Fund. Thanks to all of you.

REHMANThank you.

POSENThank you.

WEISBROTThank you.

GJELTENI'm Tom Gjelten, thanks for listening. This is "The Diane Rehm Show."