The crisis of the middle classes is leading to a return to protectionsm in developed countries. From Trump to Montebourg, the purveyors of deglobalization are on the wrong track.
Today, a new era is dawning, headed up by the threat of deglobalization. World trade is progressing at a slower rate (2.4%) than world growth, which shows a disquieting sluggishness (2.9%). The temptation to become protectionist is ever stronger, as shown by the WTO blockage, the refusal of the US Congress to ratify the Trans-Pacific Partnership, and growing opposition on both sides of the Atlantic to the TTIP plan for a wider market. Nations are seeking to regain control of markets and the digital sector by increasing regulations and taxes. Politicians are becoming nationalistic even within the European Union, which could break up if Brexit happens. The euro zone and the Schengen area are coming apart at the seams. Borders are back and walls are going up on every continent (with the exception of Latin America): 66 as compared to 11 in 1945. The rise of geopolitical tension as a result of the awakening of empires and religious fanaticism is bringing about the fragmentation of global space.
Notably, the most virulent opposition to globalization and free trade is seen in the developed countries. Deglobalization is becoming the hobbyhorse of populist forces, bringing together nationalist and anti-capitalist feelings. Although America invented globalization, it has converted to neo-isolationism under Barack Obama and could close up if Donald Trump were to be elected and put his program into effect – a program based on a 20 to 40% tax on imports, the expulsion of 11 million illegal immigrants and the building of a wall along the Mexican border.
Deglobalization is a result of the crisis facing the middle classes, who are the backbone of free nations. It crystallizes their fears of having their status downgraded and their deep concerns about identity and increased security risks. Globalization is now being accused of being the origin of the crisis facing democracies. The rise of emerging nations, headed by China, is used to explain deindustrialization and delocalization, and therefore unemployment. Competition between fiscal and social systems are supposedly behind nations’ indebtedness and the collapse of welfare systems. Immigration is seen as pushing wages down and forcing the move to a multicultural society. Major players in the economic and social sectors are seen as overriding national government and causing political impotence and the powerlessness of people to shape their own destiny.
However, the tragic events of the 20th century are a reminder that deglobalization is much more dangerous than globalization. The outbreak of nationalism in 1914 ruptured the dynamic of the second industrial revolution and triggered the tragic cycle of world wars and the fight to the death between democracy and totalitarianism which only ended in 1989 with the fall of the Soviet Union. Having recourse to protectionism means commercial and monetary reprisals. It would cause the exchange and global payments systems to disintegrate, as we saw in 1930 when the USA voted the Hawley-Smoot law. The collapse of the flow of international finance would fuel instability, as shown by the effects of the Brexit hypothesis on currencies and stock markets. The immediate consequence would be to block the rise of emerging countries, investment and innovation, thereby obstructing growth and employment. Therefore, deglobalization would mean a new Great Depression. Furthermore, a worsening of economic and social tension would harden any diplomatic positions in case of confrontation. The dynamic of closure, fear and hate would inevitably heighten the risks of war.
This is why we must fight deglobalization. In order to stifle nationalist and protectionist feelings, we must produce stability and security. Hence the urgency to bolster up the guarantees against risk that nations need. And hence the need to bring emerging countries into closer associaiton with world governance, implying that, in return, they share the responsibility and the costs of underpinning capitalism and an open society. It must be made understood that globalization is in everyone’s common interest in the 21st century.
(Column published in Le Point, 19th May 2016)