Is 2016 the beginning of the end for globalisation?

Wednesday, January 11, 2017

 With the collapse of borders and tariffs over the last 40 years, the march of globalisation was long assumed to be unstoppable. But then came 2016 and the backlash against nearly every driving force in politics, including globalisation.

 

The election of Donald Trump was in part a backlash against open trade policies like NAFTA, with states that voted Trump having a population that suffered most from international marketplace competition. Since 2000 (6 years after the signing of NAFTA) the US lost 5 million manufacturing jobs, primarily due to overseas competition. The collapse of American manufacturing left blue-collar workers, both employed and unemployed feeling fundamentally insecure. Trump’s promises of security and prosperity, including measures that favour American manufacturers as well as trade barriers against countries like China won him the support of many insecure and worried workers. This is a disaster for ideological globalists but worse for the general public who can look forward to a future of increased prices for most goods.  

 

For the United States, economic nationalism will be the driving force for the next four years. This is not ideal, but could hopefully lead to a globalist backlash. Trump’s trade policies might demonstrate that global cooperation is better for the general public in getting the best quality goods at the lowest prices. While Trump may be able to delay job losses in ‘dinosaur’ industries through crony capitalism and economic nationalism, he will be unable to halt a general shrinking in the American economy.  An open marketplace is the only system that creates the conditions and competition necessary for innovation and development to occur for the long-term benefit of consumers and workers. Economic nationalism only offers short-term protection that will inevitably slow the process of innovation and adaption in the American economy.

 

Globalism is down, but not out. On this side of the pond, Brexit may have been a direct challenge but ‘Leave’ voters did not want a direct overhaul. Although the polls indicated that the primary concerns of ‘Leave’ voters were sovereignty (49 per cent) and immigration (33 per cent), 90 per cent were in favour of remaining in the single market. Although not all aspects of globalization were supported, it was more against an increasingly centralized government and an open border, rather than free trade out of hand. If globalists want to continue creating an open market place, the data suggests that would be through removing trade barriers and not demanding open borders. By demanding open borders, the public who may support open trade feel alienated and threatened, forcing them into showing support for groups advocating straight isolationism.

 

2016 was the year globalisation was put to the test; a wake-up call for the political and economic elites who lazily assumed the electorate were unanimously against protectionism.  The agenda has to be re-shaped and the focus has to create an economically cooperative world: one better for consumers and workers the world over.

 

 

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