Vote for "Brexit" is ominous for all

Unless you've been trekking the Australian outback, you probably heard of "Brexit" and last week's British referendum on whether to stay in or exit the European Union. The British stunningly decided to leave the EU, a big deal for them and all Europeans. But it also matters a lot to us.

The EU is a political and economic joining of 28 countries, including the United Kingdom. All EU countries abide by a standard set of laws that allows free movement of goods and services, people, and investment across borders.

The EU is somewhat analogous to the United States, but instead is a combination of countries. Each country has its own culture, but they have more in common than they have differences. The cultural differences across the U.S. are much smaller, but that's largely because we've worked at it for nearly 21/2 centuries. The EU has been around only for a quarter-century.

The importance of Brexit is as much about the outcome of the vote itself as about why the vote occurred at all. Supporters of a British exit gave many reasons for why they wanted to leave the EU, but what seems to have motivated them most are the immigrants moving to the U.K. from the rest of the EU.

Many of those migrating to the U.K. are highly skilled and educated people landing jobs in London's thriving financial institutions. Many others are poor with few skills, attracted by the U.K.'s generous social benefits. The British cut a deal with the EU to allow them to provide fewer benefits to these immigrants until they have lived in the U.K. awhile, but that was not enough for those who voted to leave.

Perhaps even more fundamentally, those wanting to exit the EU are scared. Like many American families, especially those with lower incomes, the British have been put through the financial wringer. The Great Recession ravaged their living standards, and they worry that they will never recover. Why, they ask, let immigrants, even other Europeans, come to our country and take our jobs?

What is particularly disturbing about this sentiment is that it is felt in much of the world. It is clearly evident in other European nations. Each has at least one consequential political party whose members are motivated by distrust of immigration and globalization more broadly, including trade and investment: the National Front in France, the Alternative for Germany party, Podemos in Spain, Five Star in Italy, to name a few. Their skepticism of immigration, trade, and just being part of a larger Europe runs deep.

That the British could even entertain the idea of leaving the EU makes possible what seemed impossible. The powerful political centrifugal forces already at work in Europe could gain momentum, and the EU could splinter. Perhaps not this year or next, but when the European economy weakens again, which it will, and nativist sentiments are inflamed even more. A fractured Europe is a diminished Europe.

And this brings us back to why Brexit matters so much for us. Many of our businesses, and jobs, rely on trade with Europe and the investments made by European institutions. Europe also matters to our geopolitical security, as it is a long-standing ally in combating terrorism and adventurism by Russia and even China. A strong and unified Europe is vital to a strong United States.

Moreover, anti-globalization sentiments that fueled the enthusiasm for a Brexit also plague us. The presidential political discourse shows our increasing distrust of a globalizing economy. Presumptive Republican nominee Donald Trump wants millions of undocumented immigrants living and working in the U.S. to leave, and he has proposed much higher tariffs on Chinese and Mexican imports.

He has also excoriated trade deals such as NAFTA - the 1990s agreement by the U.S., Canada and Mexico - and the Trans-Pacific Partnership among the U.S. and many Pacific Rim nations (but not China), which Congress is currently considering.

Presumptive Democratic nominee Hillary Clinton takes a far different position - she wants immigration reform to allow more skilled and educated people into the U.S. - and has no interest in higher tariffs. But she is also no fan of TPP, saying she doesn't support it as currently drafted.

Unlike the British who voted to leave the EU, we should reject policies that step back from the global economy. Instead, we should embrace globalization more fully. Our businesses are among the most competitive in the world, and we will all be winners if they are able to sell what they produce across the globe. That can happen only if we promote a more global economy, not run away from it.

Mark Zandi is chief economist of Moody's Analytics. help@economy.com