New type of nationalism a worldwide problem

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This article was published 14/2/2016 (885 days ago), so information in it may no longer be current.

WASHINGTON — At least he's a leader.

That's what — time to get used to these words — Republican front-runner Donald Trump said about Vladimir Putin when he was reminded the Russian president's critics in the press have a nasty habit of turning up dead. It was the sort of thing you might have heard in the 1930s about fascists who "knew how to get things done." Or in the 1970s about communists who seemed to be whipping us at the same time we couldn't even figure out how to whip inflation.

In other words, it's not new for America's democracy to go through a crisis of confidence — just don't call it a malaise — when the economy does. What is new, though, is the kind of crisis the economy is in today. Now, things aren't as bad as they were during the Great Depression or even the Great Inflation, but they aren't as easy to turn around, either. Back then, fixing the economy meant fixing big-picture policies that had failed. It was, as economist John Maynard Keynes put it, a simple matter of "magneto trouble" — our economic engine would work just fine if we replaced a part here and pulled a lever there.

But that's not true anymore, at least not for blue-collar workers. More and more people feel like they're falling further and further behind, even during the "good times." They're mad as hell, and they're not going to take it anymore, which is just another way of saying they're looking for scapegoats. And that's why even if Trump isn't long for the political stage — although who wants to bet on that after his New Hampshire win? — Trumpism is. The only question is whether it will completely capture the Republican party or remain a quadrennial curiosity, you know, like the Winter Olympics.

This isn't just an American problem. It's an everywhere problem. All across the rich world, a new type of nationalist is either taking power or getting close to it. They are often display signs of chauvinism, a sympathy for authoritarianism and skepticism of, if not active hostility to, globalization. On that last point, a lot of them are, put more simply, anti-trade and anti-immigrant. Putin's Russia was really the first, but it's been followed by plenty of others: Erdogan's Turkey, Orb°n's Hungary, and, just in the last few months, Kaczynski's Poland. There are even hints of it in Abe's Japan. And those are just the countries where the new nationalists have already won. Among the ones that haven't, France's National Front and Britain's UKIP have also made big gains.

It's the end of the end of history. That, of course, was Francis Fukuyama's idea that capitalism and liberal democracy didn't and couldn't have any ideological competitors after they vanquished communism. They had won now and forever — which turned out to be for 15 years. What happened? Well, global capitalism has undermined national democracy. The fact is the working class in rich countries have stagnated since the Berlin Wall came down, and they faced increasing competition from the billions of new workers entering the global economy.

It's not exactly a surprise, then, that the people who have been hurt the most by globalization don't like it. Indeed, the working class in countries such as the United States, United Kingdom and France have actually seen their inflation-adjusted incomes fall the past 30 years at the same time hundreds of millions of Chinese, Indian and Indonesian workers have been lifted out of extreme poverty. It's true these rich-world workers are still, well, richer than people in the rest of the world, but that's not much of a consolation for them. That's because the things they need just to tread water — housing, health care and higher education — keep going up in price while their wages do not. That adds up to a financial future where their kids could very well end up being worse off than they are, something 60 per cent of Americans and 85 per cent of French people are afraid will happen.

If that's not depressing enough, there's more. Think about this: Economics 101 teaches us free trade works when you redistribute (through government policy) the gains from the winners to the losers, so you'd hope the countries that do, in fact, redistribute more would have less of a backlash against globalization. The only problem is that sure doesn't seem to be the case. Right-wing populists, after all, are just as popular in tax-and-spend France as they are in tax-and-spend-a-lot-less America. Now, maybe that's because of anti-immigrant hysteria rather than anti-trade anger. And maybe a stronger safety net is enough to get people to support a more open economy. But I doubt it. Why? Well, it goes against Psychology 101: people prefer jobs to welfare. Jobs give them pride, give them purpose, give them a future. You can't make up for that with just a cheque — although that doesn't mean we shouldn't do what we can. It just means we shouldn't expect this to make people who have had their jobs offshored to say it was worth it because they can now buy things for less at Walmart.

That leaves us in a rather dark place. On the one hand, a lot of working-class people feel like our elites have sold them out, but on the other, our elites feel like those people want things that go against basic human decency. They both have a point. The bigger problem, though, is it's hard to do anything about this and harder still to convince people the things we can do are enough. Trump voters don't want to hear we need a president who will strengthen the safety net or a central banker who will weaken the dollar. They want a strongman who will stick it to their enemies at home and overseas — Putin with a New York accent.

So does that mean we're doomed for some kind of democratic breakdown? No, not if we can stall for time. That's because even though it's true free trade has cost us a lot of jobs, it's also true there's only one China. That means the worst of what happened the past 15 years shouldn't happen again. You see, it turns out adding a billion people to the global labour market makes labour worth a lot less. Economists David Autor, David Dorn and Gordon Hanson estimate China alone made the U.S. lose 1.5 million manufacturing jobs between 1990 and 2007, and, in the hardest-hit areas, pushed down non-manufacturing wages, too. But, after 30 years of its one-child policy, China's labour glut is almost over now, and there's nothing to replace it.

As a result, wages should start rising in China, the U.S., and everywhere else, for that matter. That won't stop people from being xenophobic, but it should stop them from thinking xenophobias will solve their problems, because they won't have as many.

It's just a matter of making it till then. That will take a real leader.

Matt O'Brien is a reporter for Wonkblog who covers economic affairs. He was previously a senior associate editor at the Atlantic.

— Washington Post