Trump wins contentious US election for president, but globalization loses with a bitterly divided electorate.
By David Dapice*
It’s Brexit all over again. Donald Trump, a candidate who managed to offend most demographics, shocked the world by winning the US presidential race. The race’s competitiveness suggests deep dissatisfaction with the status quo, and governing such a discontented nation promises to be a challenging task. Republicans retain control of the Senate and the House of Representatives.
In the United Kingdom, the Brexit vote underlined the discontent many felt while the European Union faces rising extremist parties and calls for similar referenda. Meanwhile Syria and Yemen are being destroyed. Deranged democracies in Venezuela and the Philippines and dysfunctional dictatorships in North Korea, Zimbabwe and arguably Thailand all point to an unraveling that is beyond worrying. If this were not enough, a debt-ridden Chinese economy doubles down on old solutions while becoming ever more aggressive externally, and Russia’s economy sinks while Putin fiddles in Ukraine and Syria. Is this where globalization has brought us?
To understand the present, go back a few decades. A combination of mostly technology along with trade and immigration began to reduce the number of manufacturing jobs in many rich countries while depressing wages for entry-level jobs.The burden initially fell most heavily on workers with little formal education and skills that could be automated. They were not reckoned to be important politically, and so little was done. But more families were pressured as machines grew more capable, trade volumes grew with the rise of advanced foreign technology in China, and migration rose to millions of workers in the United States and within the European Union from its newest members.
Meanwhile, a minority with higher levels of education and scarce skills did well. Due to a number of factors, the top 1 percent did incredibly well, as evidenced by the growing gap between median and executive incomes. Income inequality rose to levels not seen since the 1920s. The US political system – meaning both parties, the Congress and the judiciary – responded by becoming more conservative and more responsive to special interests, often creating gridlock. In the European Union, more often the choice was made to protect incumbent workers which meant fewer good jobs for the young. It’s not surprising that the unemployed and under-employed white working class, and others upset by social and demographic changes, provided the rank-and-file of Donald Trump’s revolution.
In China, the Communist Party regained its sanity after the excesses of Mao and began a pragmatic combination of economic growth and party control just short of totalitarianism. It succeeded in bringing China’s income up to where South Korea’s had been in the mid-1990s by 2015. This gave the party some legitimacy, but slowing growth, rising corruption and widening income inequalities threatened stability. The response of the current leader has been to crack down on lawyers, NGOs and ideas that do not fit the party line. There has also been a widely popular crackdown on corruption and the promulgation of the “China Dream,” which at least some of China’s immediate neighbors see as re-establishing the Middle Kingdom rather than making China an attractive place for its citizens, much less a model for others. Still, the lack of US vision in reorganizing the World Bank and International Monetary Fund created an opening for China to establish its own institutions to use its excess capacity to build roads, ports and railways in countries near and far. Since infrastructure is badly needed and underfunded in many places, these initiatives may do more good than harm, depending on the degree of corruption in planning and implementation. Meanwhile, the US pivot to Asia lacks depth due to Congressional resistance to the Trans Pacific Partnership with too much emphasis on military strength and not enough on other elements of a broad strategy.
South and Southeast Asia accommodate China’s increasing pressures in different ways. In Vietnam and Myanmar, the governments try to balance the unpopularity of China with the need to get along. Indonesia and India, while not looking to create divisions, are willing to risk being more confrontational, though they have less successful economies and need capital and technology, some of which China can supply. The Philippines and Thailand defer to China due to domestic weaknesses, while smaller nations, except Singapore, are already highly responsive to China’s pressures. Japan and Korea try to balance China, which is also threatening their air and sea spaces, but lack strength to do much regionally without a better US strategy. Pakistan remains close to China, trying to destabilize India through terrorist attacks and blocking the rise of a peaceful Afghanistan.
These shifting sands might be bad enough without a weak but disruptive Russia, a distracted EU and a collapsing Middle East creating millions of refugees. Turkey’s government has moved to a hard line against the Kurds, one of the few effective anti-ISIS groups, and decapitated the military and opposition professionals. Iran is backing Assad in a murderous civil war, using its own soldiers sparingly but Hezbollah fighters from Lebanon copiously. Libya’s collapse has given the Islamic State another possible haven and released fighters and arms across much of the Sahel. Radical movements such as Al Shabab and Boko Haram make it difficult for northern Africa states to reform and improve their economies. Their outrages drive people away and make others less willing to take a chance on refugees.
The world’s temperatures are rising, and its weather getting more extreme and erratic. Floods or droughts expected once a century come along more often. Farmers find it hard to grow enough food reliably in many developing countries. Coastal zones face rising sea levels and stronger storm surges. These add to the pressure for economic migration and often lead to political instability. This is true even though poverty has been reduced and health and education improved. Widespread use of mobile phones and the Internet have spread information about better conditions elsewhere, and many people are no longer willing to suffer in their current situations. China’s reduced demand for raw materials has also slowed growth in much of Africa and Latin America.
So there is a messy situation of distracted or inward-looking democratic electorates, often insecure, suspicious of globalization as well as their own elites and foreigners, even from nearby countries and certainly from farther afield. Countries such as China and Russia expand illegally on land or sea – and complain when others take defensive measures. North Korea and Iran are determined to assert themselves with nuclear or near-nuclear capability. World trade growth has all but stopped. It’s not a good environment for progress and is, in fact, closer to one where conflict could get out of hand.
Globalization progressed up to 1914 as steamships, the telegraph and then internal combustion supported increased trade and capital movements. Then came two world wars and a global depression that destroyed most of the gains. In the aftermath of World War II, architecture was laid that allowed another wave of global integration helped by trade agreements, containerization, better communications and the end of the Cold War. Now we enter a period of backlash where no nation is willing to provide the leadership needed to keep things moving forward. China and Germany insist on running surpluses, and net importers are unwilling to borrow as before to keep the system going – not unwise given past financial crises.
We are in a time of retrenchment where dangers abound and progress will be difficult. Unless or until more of the major actors develop an inclusive strategy to share the costs of global governance, no nation will be secure or sustain progress. As the next US president, will Trump take the lead in reversing the dangerous global trends
*David Dapice is the economist of the Vietnam Program at Harvard University’s Kennedy School of Government.