By Maria Demertzis, Deputy Director at Bruegel. She has previously worked at the European Commission and the research department of the Dutch Central Bank and has also held academic positions at the Harvard Kennedy School of Government in the USA and the University of Strathclyde in the UK. Originally published at Bruegel
Populist shocks in the UK and US threaten the multilateral order on which the EU depends. What lies behind these earthquakes, and what does it mean for Europe? Withdrawing from the world is no solution to geo-political upheavals, but Europe needs to reassess the future of globalisation.
European integration, the ‘ever closer union’ of Europe’s states and economies, has faced a very difficult 10 years. Even as growth finally re-emerges, the legacy of the financial crisis is far from resolved. Meanwhile, poorly managed migration and refugee pressures saw huge population flows into and around the continent from the South and South-East. For many, this decade has brought echoes of old and very different eras.
These long-running crises exposed major imperfections in the architecture of European integration. Internal EU reform is long overdue. But two more recent events have also forced Europe to rethink its place in the wider world. Europe’s allies are withdrawing.
First, the US unexpectedly elected Donald Trump. This has only accelerated an existing trend: the US is questioning its role as the anchor of the global system. And this is not just about withdrawing from an active leadership position. Trump’s ‘America first’ rhetoric argues that the US can make better deals for itself if it acts alone – possibly outside the confines of multilateral frameworks.
Second, the UK voted to withdraw from the EU. The government now attempts to brand the move as the launch of ‘Global Britain’, an open country finding its own ways of engaging with the rest of the world. But the campaign rhetoric of ‘taking back control’ is not all that different to the US tendency to look inwards, to protect one’s turf and adopt an antagonistic rather than cooperative position with others.
These are two very different events, but to European eyes they reflect a similar desire to ‘withdraw, as a way of doing better.’ This is quite different from the multilateral creed the EU follows internally and in the world: ‘work together, as a way of doing better’. European integration and globalisation are both built on this idea.
Are these US and UK withdrawals a sign that globalisation and multilateralism are in reverse? Or are they simply domestic reactions? If so, to what? The answers will determine Europe’s path.
I would like to offer two possible explanations of these events, with rather different implications for the future of globalisation and Europe’s place in the world.
The first explanation is that these political earthquakes are actually aftershocks of the worst financial crisis in 50 years. On both sides of the Atlantic, also in Europe, the last decade has brought a rise in populism, protectionism and ultimately even nationalism. In my view this is a consequence of decisions taken in order to correct large economic imbalances in the financial system. The system was saved, but there were many innocent losers.
Now, while this phenomenon can be seen across most of the western world, continental Europe has managed to contain populism more effectively than the US and the UK. And while the populists, and even nationalists, are still there, electorates have held back from bringing them to power. There is as yet no withdrawal.
The reason behind this difference is that Europe has been better in distributing the benefits of openness and trade to its citizens. European welfare states manage to prevent large inequalities, and as a consequence they ensure a more consistent support for globalisation. This is less the case in the US and the UK, where citizens’ resentment about inequality enabled populist voices to force huge changes in direction: Trump and Brexit respectively.
On the upside, if inequality was all that lay behind this observed discontent, active policy could eradicate the causes of populist calls to withdraw. More effective redistribution and social protections could re-establish support for openness and global trade.
However, I believe there may be another reason, more entrenched, that will prevent this: there is a slow but epochal shift in the balance of global powers.
The emergence of China on the international stage, along with the US’ steady withdrawal from global leadership, has led to a tri-polar system of global powers shared between the US, Europe and China. But why would such shift lead to greater inwardness in the US or some European powers like the UK?
One possible explanation is that tri-polar is not equivalent to truly multilateral: bargains still need to be struck. But now they are more difficult, as the rules under which countries interact can no longer be agreed between just the US and Europe; there needs to be Chinese consent as well. The west won’t always come out on top. Voters and workers will notice.
There are real and serious difficulties here: China has very different views, in particular about the role of the state in the marketplace. This inevitably means that the west’s traditional laissez-faire ideology is now challenged. Competition won’t always feel fair. Multilateral governance has never been easy, but disagreements about the very principles of economic interaction are an obstacle to globalisation for the Europeans and US alike. It could very well be that withdrawal is a reflection of this standstill on what the collective rules ought to be.
The US is threatening to reject multilateral fora in favour of bilateral agreements, as a way of exerting its direct power. The UK is turning away from the world and its neighbours alike. The EU is less clear on how to proceed. On the one hand, it wants to preserve what has always been the most natural of partnerships with the US; but on the other hand, it also wants to protect multilateralism, which it cannot do alone. China is a staunch defender of multilateralism as a concept, but its economic values are quite different from Europe’s.
The question, then, is whether the prevalence of different views on ‘how to do business’ puts a natural limit to globalisation. Protectionism, and even the threat of protectionism, runs against the spirit of globalisation and threatens to destroy economic relationships made in the past. But perhaps a populist shift toward protectionism is inevitable, given the shift in global powers. Must the west withdraw, or can powers with different underlying economic ideologies still unlock the benefits of closer economic cooperation?
The future of European integration depends on the answers to these questions. Here in the EU there remain major unresolved problems and populist pressures that could still push us into the trap of isolationism or even European disintegration. Withdrawing is not the way to do better. We must all find a way to do business together, but success is far from guaranteed.
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The world is reordering itself and the losers don’t like it? Why should an uneducated, unskilled American or Briton be paid more than an equivalent Indian or Chinese person? Trump and Brexit are desperate grabbing at straws by voters who are suffering losses and facing continual declines in living standards and facing no solution. Think of your rational, reasonable,sensible friend told that they have an incurable disease and who then turn to crystal therapy or shamanism?
Could you try that again?
It’s no just the unskilled getting bloodied by the globalization buzz-saw.
As I used to ask my ex customers, after one tooling jawb after another that I quoted on ended up in China, where is my $1 per day teacher, cop, fireman, lawyer, politician, electrician, plumber, so that I could effectively compete? That always drew a blank stare.
Good answer.
The statement of kk is preposterous, to say the least, because it ignores that the cost of living, which has been inflated by the FIRE sector, is not the same in the US and Europe that in the emerging countries, where financialization has not reached the same levels (yet).
Even when compete with them over here, an American often needs more money, because many of us refuse to live 6 to one bedroom.
Even when competing with them when they are over here on our home turf, an American often needs more money, because many of us refuse to live 6 to one bedroom.
By definition, we can’t all be part of the 1%, or even the 10% … except in Lake Wobegon, where all the children are above average. The efficiency that saves one cent per hundred dollars, on thousands of items … how do we balance that against the 1000 who are unemployed as a result? Frederick Taylor is a gift that keeps on giving. This would be true if we were a “one world” “one law” “one currency” world. Since we are not, those can be leveraged by those who hold the levers.
They aren‘t being paid more. They’re unemployed.
To extrapolate Kk’s reasoning, why should an educated, skilled American (lawyer, doctor, dentist, engineer, or financial professional) be paid more than the equivalent educated Indian or Chinese?
Kk’s statement is unnecessarily restricted only to low wage, unskilled labor.
It seems to me Kk should extend it to all labor both skilled/unskilled.
Is there any reason to suspect that an educated American will be able to command a wage premium over an equally educated Indian/Chinese?
And frequently low wage labor in the USA has a physical presence that makes it difficult to outsource, for example, home health care, requires a USA local worker, while a task requiring more education (accounting, reading medical x-rays, tax law) might be easily transferred overseas.
Kk implies an education can assure a high income… If this is viewed as true now, I suspect it will not be in the future.
High income is only assured by being in management, who outsource the labor of non-management, but little of their own. Ultimately, with outsourced labor in non-English speaking areas, it will eventually become necessary to replace management here with management there. But nobody in management sees that. They will have moved on or retired, before that happens, so they think. A personnel tragedy of the commons.
When the poor people decide to redistribute wealth through force and violence, The Chinese poor will be killing their fellow Chinese. The unskilled American, kills his fellow Americans.
You’re quite right, we should all be paid much more.
If the unskilled America worker is paid “a lot”, that means the unskilled American worker has “a lot” of money to spend. He or she will spend that lot of money on buying desired goods and services from other Americans, both skilled and unskilled alike. Those other Americans will then have “a lot” of money to spend on yet more goods and services from yet other Americans, both skilled and unskilled alike. Money circulates more quickly around more lateral social circles, while goods and services counter-circulate more quickly back around the money-for-value and value-for-money circle. This keeps more people at the middle and bottom of the class pyramid working more and getting more benefit for the more work that more of them can do.
Of course that process can only work in a protected body political-economic. Free trade short circuits the spinning circle of money for value for money for value from hand to hand to hand to hand.
Your question could be turned around. Why should the unskilled Indian or Chinese person make any less than the unskilled American?
..imperialism, british or “murkan” style, based upon “total global military conquest”, which is all remaining U.S., post Wall Street financial sector takeover of U.S. economy-economic disaster-control accounting fraud-destabilization of entire Middle-East, refugee crisis:
“Project For A New American Century” (neocons)
“The Project for the New American Century (PNAC) was a neo-conservative think tank (1997 to 2006) that had strong ties to the American Enterprise Institute. PNAC’s web site said it was “established in the spring of 1997” as “a non-profit, educational organization whose goal is to promote American global leadership.”
PNAC’s policy document, “Rebuilding America’s Defences,” openly advocated for total global military domination. Many PNAC members held highest-level positions in the George W. Bush administration. The Project was an initiative of the New Citizenship Project (501c3). [1]
In 2009 two of PNAC’s founders, William Kristol and Robert Kagan, began what some termed “PNAC 2.0,” The Foreign Policy Initiative.”
https://www.sourcewatch.org/index.php/Project_for_the_New_American_Century
Firstly, Imho, the author has things backwards in this post. The US isn’t so much questioning its leadership role in the world as having its role questioned by the “international community” it purports to lead. “America first” was a campaign trail rhetoric with a nice ring to it and certainly catchy enough to strike a chord with the disaffected and disenchanted masses in the US. It’s pretty obvious that Trump has been steadily backtracking on a lot of the campaign promises he made, as such to use as a premise for this post something he said seems to ignore the reality that’s unfolded since his election.
As for the future of multilateralism, well, countries are waking up to the realisation that their own interests and those of the US don’t always overlap. As such, instead of blind loyalty and following the dictates of the empire unquestioningly in multilateral fora, we’ll see countries putting their interests first and accomodating US interests where plausible (or going it “alone” entirely, or with China). This fracturing of the established international order will of course be accompanied by a lot of turbulence as the empire throws its toys out the cot with belligerent displays of anger and incredulity at what’s occuring.
A former UK ambassador to Uzbekistan, when being inducted into his new role, is said to have been told in no uncertain terms that “your role here is to support the US ambassador in whatever he’s doing, no more, no less”. If such a stern tone could be taken with a country sitting at the top table in the affairs of the “international community” (albeit not at the top of the table), imagine how much sterner and possibly dismissive the tone was/is with countries whose influence barely moves the needle. It is the fracturing of this hierarchy of command that that will rile the empire to no end.
More like: “We Europeans”, rather our leadership, were blindly following America into more than two decades worth of bombing and regime-changing for nothing in return, turning almost the entire middle-east into a dilapidated snake-pit filled with rubble and fatherless children looking for revenge. Removing Ghadaffi was the final pinnacle of stupidity, uncorking the terrible mess we created and allowing it to leak into the EU.
That was already a serious issue, a significant part of the population thinks that Tony Blair and Anders Fogh Rasmussen should be treated as war-criminals over Iraq, yet, our leaders continued down the same path.
Then Donald Trump was elected – To many Europeans Donald Trump *exactly* represents both America and the true American values – feeding right into every possible prejudice there is about Americans. Now, what is clearly seen by everyone with Internet access does not look good to be too close to, and cannot be hidden or explained away by compliant media channels used by a smooth-talker like Obama.
In response, the European leaders have adjusted at least their public posture, now facing the risk being diminished or even replaced by more responsive people – the nationalists or “populists”, who by inner nature don’t give a flying fig about the need for spreading “Democracy” from the bomb-pods of F16’s or Israel or the Palestinian Problem. People voting nationalists are truly fed up with it all.
In fact our leaders fad for “Regime Change/Democracy by Force” / “Responsibility to Protect” sounds – even to many people not yet ticked off enough to be voting nationalists/populist – too pretty damn uncomfortably close to the Islamists rantings about the spreading of Islam, with only the boot on a different foot. That kind of stuff gets people out of the sofas and voting “Whoever is Against”.
When Donald Trump is reelected, I would expect to see a more official distancing form the USA to take place, right now our leadership are sort-of ducking their heads and hoping it will all blow over soon.
In the meantime China is looking quite calm and rational and in any case China, unlike perhaps Russia, is a market one cannot ignore whatever anyone in the US says. The risks are different than those present in the American markets but not worse; at the moment China is seen as safer, easier, to establish a business in than the US where establishing a business, especially when a foreigner does it, is seen as being bogged down in bureaucracy, huge volumes of regulations and spurious legal actions.
I am not sure if the US and UK withdrawals are so much a sign that globalisation and multilateralism are in reverse but more like that those people who had been excluded from any benefits from these trends, and in fact had been punished for not being among the ‘winners’, saying ‘oh hell no!’ to more of the same. The 2008 crisis only served to demonstrate to them that governments will throw ordinary people under the nearest bus rather than risk that billionaires not be made whole for their reckless bets.
And as for the claim that ‘Europe has been better in distributing the benefits of openness and trade to its citizens’ I would contend that instead some nations were designated as losers (such as Greece) while other countries such as Germany reaped all the benefits to be grabbed. As for the worry about the rise of China, it will rise whether some people want it or not. Did people stress out so much about the rise of America in the late 19th century? Seems kind of pointless now after history ran its course.
I wish the UK position was as coherent as it is portrayed. The problem IMO is that, having voted to leave the EU, the UK has no agreement on what to do next. If you use the referendum result as a guide you could hypothesise that maybe 48% want to stay in the EU, about 35% might support a free-marketeers’ paradise outside the EU while 17% want a greater degree of socialism also outside the EU. This balance of forces makes it extraordinarily different for UK politicians to chart any sort of path forward as whatever they do will probably be against the wishes of a large majority of the population. Some one described the UK as having manoeuvred itself into a trap from which there is no escape. As a Briton, I can say it feels like that at times.
I’d agree with you 100% on this, and I think its something that isn’t given nearly enough attention – that Brexiteers are split down the middle ideologically between the ‘little Englanders’ isolationist vision and the free wheeling libertarian wing – the former being I think many of the Brexit voters, while the latter are to a large extent the people who paid for the campaign and have the ear of government. Mind you, I’ve met quite a few people who manage to fall into both camps, depending on what issue they are talking about.
I suspect that within the Tory party the real issue that is making life impossible for May is that she can’t reconcile the differing camps of Brexiteers visions of a future UK, this may be a more fundamental difference that between Brexiteers and Remainers. I suspect that even if the Tories had a competent leader, reconciling these visions would be impossible, which is why political chaos for years to come seems inevitable.
Exactly. My problem with this entire piece, and the ilk of which it is part, is that it commits the political science fallacy of giving entire countries (individual) human agency. Thus countries only think or do one thing, unitarily. A swing of a few hundred thousand votes would have made HRC president and led to the US thinking and doing in a vastly different way. Talk about schizophrenia!
Seriously?
I think we need to be clear that people who have been excluded from the benefits of globalization make up perhaps 90% of the population of most western countries. I’m tired of politicians and economists condescendingly expressing pity for “the losers”, as though they were a small and obscure sect somewhere. You might as well say that not everybody benefits from drug smuggling, or that financial crime creates losers as well as winners. If the elites don’t realise this quite soon, there are going to be problems.
Our mission, should we decide to accept it, is to force the problems onto the 1%, rather than suffer the 1% imposing the problems on the 99% as happens now.
Europeans constantly overrate the “threat” of Trump. Brexit came before Trump, not after. Brexit is real, Trump is not.
I’d question one assumption of this article, which is that the EU is fundamentally internationalist in outlook. In reality, I think the EU has from its inception been deeply reluctant to engage with trade outside Europe, and to an extent was dragged into an internationalist outlook through (mostly) UK internal pressue and external pressure from the US. The huge growth in China as a potential market was also a major driving factor (the Germans being particularly late to realise they had more to gain than lose by open trade with China). The EU project was always about expanding the internal market at the expense of external trade, the latter having grown on a sector by sector basis, usually through pressure from individual member states or sectors. As one example, the EU has never sought the same sort of trading relationship with its neighbours in north Africa or central Asia as the US has sought with its immediate neighbours through NAFTA.
So there was always an internal tension between opening up national markets to competition, while being quite protectionist and mercantilist in certain sectors, most notably agriculture, but this also applies to many manufacturing sectors – coal and steel for example. There was always too a conflict between EU policy and the former colonial countries wishing to protect their international interests.
While the elites in the US have always favoured internationalism in trade (as within the UK and some individual European and Asian countries), key EU members, most notably Germany and France, tend to reflexively see trade as a zero sum game. They are all in favour if it benefits them, but will become isolationist if the winds change. So I think seeing the European dynamic as ‘populist movements’ being against free trade while ‘elites’ push for more and more openness is not a true reflection of the real politics, and this is one reason why the sort of political movements we’ve seen in the US and the US have not gained the same foothold in most European countries.
Thanks for the comment, it helped me clarified the difference between the EU and the US (and UK) on ‘trade’. But on:
Just a quibble, a refinement really. US elites since the late 1890s (yes, for over a century) have decided that ‘trade’, meaning an open door, meaning a one-sided arrangement for selling the US’s surplus production, was the way forward to prevent a collapse of US manufacturing profits (this was back in the day before financialization was the favored way of making money).
When the US talks of ‘trade’, they don’t (and have never meant) a equable exchange of products, goods, and services. How else did they get to be the big dog internationally?
…actually, “financialization” today is return to JP Morgan monopoly, 1800’s…Morgan had no intention of “competition”, having colluded Wall Street “trusts” leading to depression era. The FED was actually oriented largely to control “trusts”-financialization, which was run by JP Morgan and insiders (Gilded Age):
“Morgan was called to testify before a congressional committee chaired by U.S. Representative Arsene Pujo (1861-1939) of Louisiana that was investigating the existence of a “money trust,” a small cabal of elite Wall Street financiers, including Morgan, who allegedly colluded to control American banking and industry. The Pujo Committee hearings helped bring about the creation of the Federal Reserve System in December 1913 and spurred passage of the Clayton Antitrust Act of 1914.”
“In 1913, Congress established the Federal Reserve System to regulate
the money supply and manage the economy. The Federal Reserve formally assumed the role of central banker that had been informally held by J. Pierpont Morgan for years. The Federal Reserve Act of 1913 gave national banks the right to make real estate loans and exercise trust powers.”
https://www.jpmorganchase.com/corporate/About-JPMC/document/shorthistory.pdf
The first offered explanation – the worst financial crisis in 50 years:
Would/could the worst financial crisis have happened if the gains of productivity had been distributed in another way? If the original distribution is good then there is no need for redistribution through taxes or?
I’d have preferred if the productivity/efficiency gains led to longer paid vacations, earlier retirements and longer paid parental leave. But instead the capital owners went for monetary compensation to be divided which increased in the long term the capitalist class negotiating power. If so then the strategy of the capitalist class paid off.
The second offered explanation: shift in balance of power between global powers
Well, it was needed to offer up another explanation because if there wasn’t another explanation then we could focus on dealing with the one remaining explanation. Some say that climate-deniers and/or corporate apologists use that strategy.
If this is true, then the leaders of the EU must have a very peculiar definition of ‘working together’. Where was all this togetherness during the banking crash? Where was all this togetherness when Merkel unilaterally decided to open the floodgates to millions of undocumented migrants? Where was all this togetherness when Berlin ordered an end to the South Stream pipeline in the Balkans while building a second Nordstream pipeline for Germany?
The real problem with the EU is that, in practice, it isn’t multilateral at all. In practice, it’s an economic Fourth Reich.
I think that’s a bit of an exaggeration. Trump has opposed certain multilateral ‘free’ trade agreements, such as NAFTA and TPP; but I don’t recall him ever advocating the abandonment of the WTO or the Bretton Woods institutions.
Anyone familiar with Leopold Kohr? I just started reading his books – Development without Aid, Breakdown of Nations and The Overdeveloped Nations.
Wow, never heard of him but Illitch, EF Schumacher and Kirkpatrick Sale as supporters!
The first comment I read paralleled exactly my thinking. In the context of the growing realization that “the economy” has been run by the elites for the elites forever, people are looking for a way to stop the elites from grinding us into dust. I suspect that the election of Donald Trump is an attempt at throwing a monkey wrench into the gears of government (lacking the resources to buy sabots) as I also suspect was the election of Barack Obama. The Trump election is telling, though, in how a so clearly unqualified candidate was able to gather so many votes, had to have been indicative of his standing as not being a representative of the “more of the same” crowd.
Trump and Brexit are examples of “we do not want to keep going in the same direction” motivation and having limited opportunities to communicate that feeling.
A thought about the ‘shocks’ to the system:
The brexit was after the public was given a binary choice, in or out?
Trump was after the public was given a binary choice, Trump or Clinton?
In countries where there are less binary choices, proportional representation more than the first by the post system, it is possible for smaller parties to get into parliament. If/when that happens then either the bigger parties take notice and change their policies as indicated by what people vote for (instead of making policies based on samples). The elites in many European countries are deeply concerned about that, political parties all over Europe are actually doing just that – ‘normalising’ views that the elites do not like by adapting the policies to be more in line with the polcies of the new ‘populist’ parties. The so called ‘shock’ is therefore slower.
In the US and in the UK the ‘shocks’ will be further in betweeen in time but due to the binary nature of the first by the post system the ‘shocks’ might be bigger. There might be political parties in both countries that might be able to get 15-20% of the public vote but not much more than 1-2% of the representatives in the parliament. However,if the hidden party might get 35-40% of the vote then it might end up shocking the system by gaining a majority in parliament.
As for this
Not exactly the words I’d use. My words would be more in line with co-exist, live together or possible to co-operate together.
The early neoclassical economists hid the problems of rentier activity in the economy by removing the difference between “earned” and “unearned” income and conflating “land” with capital”.
To ensure thinking didn’t stray down unwanted lines, they took the focus off the cost of living.
The West has now made a right pig’s ear of globalisation.
The knowledge that lead them to repeal the Corn Laws for free trade had gone, it was all about the cost of living. The businessmen wanted lower corn prices, to lower the cost of living so they could pay lower, internationally competitive wages.
You need a low cost of living to be able to pay low, internationally competitive wages. You need to be able to pay the same wages in all nations.
Disposable income = wages – (taxes + the cost of living)
Neoliberals are fixated on tax cuts, missing the other variable in the brackets due to bad economics.
Neoliberals want globalisation, free trade and the free movement of capital, but housing costs need to come down to Asian levels so we can compete on a level playing field, they have missed it because of neoclassical economics.
The cost of living should have been going down in the West to meet the rising cost of living in Asia, so the same wages could be paid in all nations.
The cost of living = housing costs + healthcare costs + student loan costs + food + other costs of living
Disposable income = wages – (taxes + the cost of living)
It’s why the young are flocking to Corbyn and Sanders.
Extractive elites need closed economies, e.g. North Korea.
“Income inequality is not killing capitalism in the United States, but rent-seekers like the banking and the health-care sectors just might” Angus Deaton, Nobel Prize Winner
The US needs a closed economy, its priced its labour out of global markets due to the cost of living and extractive elites.
It’s like the old days with the aristocracy wanting high corn prices and preventing free trade.
Land owners/ real estate interests are always directly opposed to those of open, free trade capitalism.
All rentier costs have to be covered in wages.
…last thing “neoliberals” want is “free trade”…rather, relying on privatization, authoritarian command of economics (see Chile’-Pinochet-Friedman-“Chicago Boys”):
“The term neoliberalism was coined at a meeting in Paris in 1938. Among the delegates were two men who came to define the ideology, Ludwig von Mises and Friedrich Hayek. Both exiles from Austria, they saw social democracy, exemplified by Franklin Roosevelt’s New Deal and the gradual development of Britain’s welfare state, as manifestations of a collectivism that occupied the same spectrum as nazism and communism.
In The Road to Serfdom, published in 1944, Hayek argued that government planning, by crushing individualism, would lead inexorably to totalitarian control. Like Mises’s book Bureaucracy, The Road to Serfdom was widely read. It came to the attention of some very wealthy people, who saw in the philosophy an opportunity to free themselves from regulation and tax. When, in 1947, Hayek founded the first organisation that would spread the doctrine of neoliberalism – the Mont Pelerin Society – it was supported financially by millionaires and their foundations.
With their help, he began to create what Daniel Stedman Jones describes in Masters of the Universe as “a kind of neoliberal international”: a transatlantic network of academics, businessmen, journalists and activists. The movement’s rich backers funded a series of thinktanks which would refine and promote the ideology. Among them were the American Enterprise Institute, the Heritage Foundation, the Cato Institute, the Institute of Economic Affairs, the Centre for Policy Studies and the Adam Smith Institute. They also financed academic positions and departments, particularly at the universities of Chicago and Virginia.
As it evolved, neoliberalism became more strident. Hayek’s view that governments should regulate competition to prevent monopolies from forming gave way – among American apostles such as Milton Friedman – to the belief that monopoly power could be seen as a reward for efficiency…”
(FDR “New Deal” = rough U.S. approximation of European “social democracy”, which is reason rightwing has been all about ending, since inception; “The Plot To Seize The White House”, Jules Archer…)
https://www.theguardian.com/books/2016/apr/15/neoliberalism-ideology-problem-george-monbiot
The use of the word ” Uneducated ” in the above context annoys me as it implies that anyone below that of degree level is a retard. To me uneducated means the likes of the Londoners interviewed by Henry Mayhew in Victorian London, who showed shocking ignorance of the world & were totally illiterate. Almost everyone in the West is now educated to a certain extent & I imagine that those deemed as the thickos probably quite rightly resent it & possibly add it to their list of perceived insults from above, especially from Remainers.
Over my sixty years I have met stupid people with degrees & very intelligent people without & as far as the information that the majority of the ” Elect ” are basing their assumptions on, it is also loaded with untruths. I imagine that those who received a degree in David Beckham studies feel very good about themselves.
Obviously it is a generalisation & people with higher education are most likely to be more informed, but I for one cannot help but notice that it has been the PhD’s etc that have got us into this mess & not those who they stare down at in disgust from their ivory towers.
..PhD’s do not = Wall Street financialization…”education” – schools – unions – immigrants – the poor – social security – medicare – were all scapegoats following 2007 Wall Street control accounting frauds which destroyed world economies…(the round robin continues):
https://www.youtube.com/watch?v=mcJmzEawWi0
Asia has subsidized housing,
This article is a fantastic example of what is wrong with “European” elites and the approach taken to unifying Europe. One hardly knows where to begin, so let’s start with the byline:
Just from the byline we can see that the author’s worldview devalues practical real-world business or democratic political experience relative to academic wonkery, think-tank living, and participating in non-democratic institutions. Those who have not benefited economically for the past 2-4 decades recognize IYI academics as generally being tools of the elites who have robbed them of their fair share of economic growth.
There were no “shocks”, except to those too blind to see the reality of life for the 99%. Anyone having seen the economic charts which disaggregate “growth” by income or wealth tranches could see this coming. So could anyone with enough empathy to recognize that millions of innocent people were dealt great injustice by governments’ response to the financial crisis. In fact, the real shock is that nothing happened sooner.
Integration on non-democratic terms, driven by Brussels bureaucrats’ mandates, is doomed to failure unless it improves the lives of the average European.
Not sure if the author actually looks at European economic data? Eurostat has been reporting growth for over 4 years, so “even as” is sophistry. Alternatively, what about real per capita growth for median incomes and below?
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That’s what happens when leaders deny the human need for justice.
Ah yes, the problem with immigration was “pressures”. Nicely phrased to remove any notion of accountability, almost as though these were not policy choices made by specific people in power? And the populations are characterized as “from the South and South-East”. It’s clear to everyone willing to speak clearly that the “poor management” wasn’t due to the geographic location of these migrants, but due to the fact that the migrants have entirely different religious and social values than the natives. To speak only of “South and South-East” is to refuse to confront the issue.
If European elites wonder why no one trusts them or has confidence in their ability to work for the common good, look first to their perpetual preference to speak in weasel language rather than facing reality.
Really? Have U.S. troops been moved out? Have treaties been terminated? Or is it more the case that the U.S. has simply looked at, say, the language of the NATO treaty and woken up to the fact that Europe hasn’t exactly carried its promised share of the financial burden of “mutual” defense?
As many see it, the change in the U.S. is not about “withdrawing from leadership”, it’s about Leading In A Different Direction. One that doesn’t presume that the American populace will blindly pay for whatever the elites think they should pay for.
I love how this is framed as “allies withdrawing”, as opposed to say old friends being driven away by outrageous non-democratic central-planning mandates from the Brussels Bureaucracy… Had the European leadership not outstripped their democratic mandates, Britain might not have left at all. The tighter the elitists squeeze, the more popular support will slip through their fingers.
Perhaps the prior “cooperative positions” weren’t mutually beneficial? Europeans have an unfortunate tendency to define “cooperative” as “you pay me” … and then complain when the payers question the equitability of the arrangements… Germany in particular has government policies which make financial imbalances inevitable, and yet when the inevitable occurs they blame their counterparties instead of fixing their policies.
Most people recognize that when something isn’t working, a rethink is needed.
That’s a nice propaganda piece. The reality is that the EU has the many working for the few, the south working for the north (debt service), and everyone working at the whim of Brussels rather than “together”. If in fact the EU approach were “doing better”, that would be evident in the data. But it isn’t. Therefore the lie is exposed.
That’s a tall tree in the forest of of economic injustice, but it’s only one tree. In many nations the majority of the people are no better off after 40 years of globalization. That’s the forest. When they are THEN stripped of their wealth by policy choices made by elites in response to the financial crisis created by the elites – that is what set the forest afire.
Weasel language again, and flat out wrong to boot. The decisions perpetuated, rather than “correcting”, the “large imbalances”. Wealth and income inequality is worse than ever, and the credit/debt bubble is larger now than ever. And “innocent losers” is only referring to half of a two-sided coin. There were guilty winners as well. The stripping of many trillions of dollars/euros of wealth from the innocent to the guilty was perhaps the greatest crime in history. And no one went to jail or even had to cough up all of their fraudulent profits!
The “containment” phrasing is symptomatic of the disease of the European elite mindset. Europe should be adapting to populism, recognizing its legitimate complaints and taking steps to address them, in order to defang populism. The support of the people is the ONLY source of legitimacy of any government. The last populist wave, in the early 1900s, was not “contained”. In some places it was successfully accommodated. In other places it destroyed nations and triggered global wars.
Logical fallacy, trying to create guilt by association.
Except in Britain, which is part of Europe; Catalonia, which is part of Europe; Greece, which is part of Europe; Italy, which is part of Europe… France was a very close call…
The distribution of welfare payments is demonstrably not the same as “distributing the benefits of openness and trade”. The inequality that matters is not between the welfare-poor and the elites, but between the working former-middle-class and the elites. And while Europe may not have reached crisis, that’s not “being better”, but at best being “less bad” – or perhaps coopting more of the welfare-poor.
The cure for inequality is not “redistribution”. It is to prevent the original maldistribution in the first place. The cure is not to take from the rich and give to the poor, as though the rich are generous: it is to recognize that the current system is constructed to unjustly siphon wealth from the poor to the rich. Let competition flourish: businesses will have to charge lower prices to compete, and pay workers more (as a share of revenues aka GDP) due to lower profits. That will do more to “redistribute” wealth because the inequality will right itself.
Yes, but it’s not from the West to China. The Chinese business elite have more in common with the western elites than with their own people. The “globalized” system benefits all of them at the expense of all the people of the world. The epochal shift was from the workers to the corporate elites and their academic lackeys. That shift was inevitable due to demographics and the addition of China to the global economy, with the resultant massive labor surplus, but that wave has crested. The epochal tide is turning as demographics demands.
The latter is dubious, given that the U.S. now has more wars and more overseas military commitments than ever.
Laissez-Faire is not the west’s traditional ideology…
More weasel language. The competition is NOT fair. Not when the legal and regulatory environments create massive opportunities for arbitrage and political capture.
There is no such thing as “multilateral governance” between sovereign states. For there to be governance, there would have to be a supra-national government. That does not exist. The missing term here is “diplomacy”. It’s an elitist fallacy to presume that a few diplomats “govern” the world, multilaterally or otherwise.
Really? The ports are being closed? Trade and tourism have stopped? They’ve replaced the Queen with a North Korean Kim? The UK is defending its self-interest. That’s not turning away.
China is a staunch defender of China. No one defends “a concept” except in academic debates; what counts are the practical decisions. One might believe in Chinese multilateralism after seeing, say, joint Chinese-Japanese space missions, or Chinese-European projects similar to the US-European collaborations. But China’s 4000-year history is one of unilateralism, and those roots are deeper than any other nation’s.
If the “spirit of globalization” were producing just, mutually beneficial economic outcomes for the majority of the people of the major nations, there would be no need for protectionism. It is the evil present within the current “spirit of globalization” itself that has created the populist, protectionist backlash. A more populist globalization would be a good thing.
Of course they can, if the “benefits” are genuine benefits for the majority of the people of all powers involved. The problem is that the “benefits” have gone to the few, except in China.
‘The UK is defending its self-interest.’
I wish that were true. The UK is already poorer as a result of the referendum and has lost allies and influence. It is diminished by its own actions.
I see. We are to wait endlessly for our share of the fruits of globalism to end up in our humble pockets and to raise no questions about it.
Meanwhile anti-democratic voices such as yours bristle impatiently about your lagging profits, and the impetuous poor.
I wish you a Merry Christmas too, Mr. Scrooge.
Very well rebutted. I find at the crux of all this globalism both a lack of empathy and a general ignorance.
Are we invisible or just beneath contempt? I do not see another explanation. This continual lack of regard for the woes of the citizens of the various nation states by the technocrats and the bankers is grotesque.
The only sane choice is to leave this loveless marriage.
Very simple problems are proving very difficult to resolve.
We can pretend that deficit nations can stay that way forever. Eventually they will go bankrupt and end up like Greece, mired in debt deflation with international creditors selling off everything that is not nailed down.
Free trade was supposed to lead to an automatic convergence of nations but this has not been the case and the fault lines in the global economy have just opened up. If protectionism isn’t the solution, those that want free trade had better think of another one fast, time is running out.
“Let’s pretend it’s all going to work out fine” is favoured by surplus nations like China and Germany but they are just being silly. Their surpluses require deficits somewhere else and it isn’t sustainable. Greece used to like buying Germany luxury products on credit but eventually the debt maxed. out.
R. G. Rajan highlighted this unsustainable situation in his book “Fault Lines” in 2010.
The global elite crossed their fingers and hoped the problem would go away; it didn’t (much like the problems of the Euro-zone).
R.G. Rajan tried to resolve these problems when he was working at the IMF, but everyone said:
“It’s not our fault, it’s their fault”
Not terribly constructive.
….that would be intended meme, rather than “accident”….aka, “Shock Doctrine-Rise of Disaster Capitalism”…
This is a persuasive and convivial document to my way of thinking. I agree USA and UK, each in its own way, are weary of discussion and accommodation. Both want to limit opinion to domestic sources which hopefully address domestic concerns. Both act internationally and have hence attracted swarms of foreigners with political or financial hopes they expect to be met by lobbying. Its a messy and uncertain scene when the most probable outcome involves mostly luck.
I think the author is right that political actors in North America and Europe are taking nationalism on board and abandoning globalisation. Instead of squeezing countries into the new shape they are feeling the obligation to persuade, urge and encourage them. I am grateful this is happening because the only good agreements are those entered voluntarily with both eyes open. Only then can one expect the will and energy of the national government to be spent in promoting the aims of both parties.
This is the high road to success. It may take a bit longer. It will not be concerned with election cycles or political factors – it will derive progress by meeting social concerns. There are several predictions one can make as to its flavour which I shall not consider here. I just believe we have hit upon the right way forward.
…”nationalized” economies have appeared dominant since OPEC…which is again nothing but return to Gilded Age dynamic..