Why
the new nationalists are taking over
Our
post-Cold War system might be a triumph for peace and security, but
it’s built on unsustainable economic ideas.
By MICHAEL HIRSH
6/28/16, 9:16 AM CET
It’s time to
acknowledge that Donald Trump and Boris Johnson have far more in
common than funny hair, and that the movement once known as
conservatism—to which both men retain only the barest connection—is
taking on a new form, that of an unabashed, xenophobic nationalism.
Trump and Johnson have tapped into a profound trend in world politics
that isn’t going away anytime soon. Let’s call it the New
Nationalism: a bitter populist rejection of the status quo that
global elites have imposed on the international system since the Cold
War ended, and which lower-income voters have
decided—understandably—is unfair.
Displaced working
people of the world are uniting—in their demand, paradoxically, for
disunification. The common refrain is “we want our country back.”
Back from whom or what is unclear, but the biggest bogeymen appear to
be international institutions, open trade and (let’s be honest) the
influx of brown-skinned migrants. It hardly seems an accident that
Trump has made his slogan “America First” (and is often accused
of racism and bigotry against Mexicans and Muslims), while the
homicidal lunatic who shot and stabbed the anti-Brexit MP Jo Cox to
death days before the Brexit vote shouted, over and over, “Put
Britain first” (and was apparently a purchaser of white supremacist
literature). Or that Trump has signaled his distaste for NATO and the
U.S. alliance system around the world while a majority of Britons
have rejected the greatest unification project in world history, the
EU, and Europhobe-in-chief Boris Johnson, who could now take over the
Tories, has all but assumed the mantle of ultranationalist party
leader Nigel Farage as he declares this to be Britain’s
“independence day.”
Perhaps most
unsettling of all is that the U.S. and Europe are only catching up to
a trend that has already taken hold elsewhere in the major
industrialized nations: In Russia, Vladimir Putin was perhaps the
harbinger of this new global nationalism (and Putin is no doubt
gloating over the prospective weakening of the EU, whose unity—as
well as sanctions—have threatened him). Putin rose to power
exploiting the sense of humiliation that Moscow’s proud elites felt
at the hands of the West after the Soviet Union collapsed in late
1991, which was followed almost immediately by the Clinton
administration’s relentless efforts to bring what used to be the
Soviet bloc countries—and post-Soviet Russia itself—into the
Western sphere. That policy started with the high-handed (and mostly
failed) economic advice Washington gave to Moscow about free-market
economics in the early ’90s—the era of “privatization”
(ordinary Russians called it “grabitization”), which led directly
to the reign of the hated oligarchs. Meanwhile NATO expanded
fecklessly into the old Soviet bloc, aggravating anew the raw nerve
of Russian paranoia about Western intentions. Cue Putin, and the
fierce Russian nationalism he has used to lay claim to Crimea and
part of Ukraine.
The question now is
how far it will all go, this potential unwinding of the international
economic system that too many of us have taken for granted.
But in China too,
for different reasons, nationalism is the order of the day. For the
past two decades the mandarins of the communist party have encouraged
nationalist fervor as a replacement for their failed socialist
ideology; hence Chinese President Xi Jinping’s slogan of “realizing
the great rejuvenation of the Chinese nation.” This has taken the
form of aggression in the South China Sea, recalcitrance over open
trade and rousing the masses to oppose China’s “humiliation” at
the hands of foreign powers, as a 2013 official editorial put it.
Even in Japan, which along with Great Britain has been America’s
most loyal postwar ally, President Barack Obama was greeted by
surprisingly large anti-U.S. protests on his visit in May, when Prime
Minister Shinzo Abe hosted the G-7 leaders at the Ise Shinto shrine,
which to some critics evoked Japan’s fanatic nationalism before and
during World War II.
The question now is
how far it will all go, this potential unwinding of the international
economic system that too many of us have taken for granted—and
which was designed in large part to preserve world peace. To be sure,
the mere departure of Great Britain from its uneasy marriage to the
European Union does not bode destruction; even in Britain, many
voters (especially younger people) see the benefits of a united
Europe and international alliance system that is far deeper than any
that existed before in history. But it seems very likely that Brexit
represents only a beginning, not an end, in the European story.
“Brexit is German re-unification in reverse,” Ivan Krastev of the
Center for Liberal Strategies in Sofia, Bulgaria, told POLITICO
Europe. “A period in European history that started in 1945 has
ended today.”
What exactly is
starting anew? Will the next to go be the Netherlands, where
anti-immigration politician Geert Wilders is demanding a “Nexit”
vote. Perhaps even France, the sine qua non of European unity? Maybe
euro-disadvantaged countries like Italy and Spain? Or Hungary, where
the increasingly autocratic Prime Minister Viktor Orban has sought to
emulate Putin and embraced what he calls “a particular, nationalist
approach,” declaring: “The new state that we are building in
Hungary today is not a liberal state.” In some of the Western
European countries such as France and Austria, the nationalist
impulses are cloaked as a defense of the liberal Christian West
against the Islamic threat. But the unavoidable fact is that many of
these European nationalist parties, which have been dwelt in
obscurity for decades, are now enjoying real legitimacy; in May
Norbert Hofer’s anti-immigrant Freedom Party just barely lost the
presidency of Austria, winning 49.7 percent of the vote.
Geert Wilders,
leader of the Freedom Party, after casting his vote in the EU-Ukraine
trade and association agreement referendum | Jasper Juinen/Bloomberg
via Getty Images
Geert Wilders,
leader of the Freedom Party, after casting his vote in the EU-Ukraine
trade and association agreement referendum | Jasper Juinen/Bloomberg
via Getty Images
What is at stake
most immediately is the world economy, as the $2 trillion drop in
world market values on Friday showed, and U.S. and European markets
took another bad hit on Monday. But in the longer run, world peace
could be threatened as well. It’s important to note that, starting
with the Bretton Woods agreement on world trade and the creation of
the United Nations in 1945, this integrated postwar
trading-and-alliance system was intended not to make our elites rich,
but to keep the peace. The primary impetus behind the EU also was the
prevention of another war. While the particulars of the 1992
Maastricht Treaty that created the eurozone were dryly economic, the
unspoken subtext was always unmistakably political: Europeans had to
unite, if only because continued disunity would keep them at the edge
of the abyss. To put it more bluntly, everyone (especially the
French, the original architects of the European Union) wanted to be
protected from the Germans, and the Germans wanted to be protected
from themselves, as then-Chancellor Helmut Kohl used to suggest
publicly, saying repeatedly that the question of a monetary union was
one of “war or peace.” The German decision to support the
European Monetary Union was a frank quid pro quo with the French for
allowing German reunification: If the rest of you Europeans allow
Germany to grow powerful again, we will hitch our future permanently
and peacefully to a larger Europe.
Will things now
start to disintegrate? History is not an encouraging guide. Most
people, except for historians, forget that the pre-August 1914 era of
globalization was also a moment of peace that the world took for
granted—a halcyon time when, as John Maynard Keynes wrote, “The
inhabitant of London could order by telephone, sipping his morning
tea in bed, the various products of the whole earth.” Back then
there was complacency too, like that of Norman Angell, who infamously
argued in The Great Illusion in 1910, only four years before the
destruction of the Great War, that economic interdependence should
prevent another major war. Instead there were two.
***
Today our elites
would like to believe that conditions are much different, that
democracy and global trade are far more entrenched and
institutionalized, and the threat of nuclear Armageddon makes war too
scary to contemplate. But perhaps conditions are not entirely
different: The unaccountable monarchs of pre-World War I Europe have
been replaced by the not-terribly-accountable elites of post-World
War II Europe, and no one has a good solution for the dysfunction
inside the EU.
How did a positive
idea—that of more open trade, and peace-promoting international
postwar institutions like the EU—come to be identified with this
unsustainable economic system? It certainly wasn’t intentional, but
faulty economics and an excess of faith in markets was largely to
blame. The advocates of globalization and trade deals and capital
markets in both parties plainly underestimated how badly the middle
class would be hurt, even as they oversold the benefits of agreements
like NAFTA. On the other side of the Atlantic, the problem of
unaccountable elites dictating from Brussels has dogged the European
project from the start, and in Britain, particularly,
Euro-phobia—especially resentment of Germany—has always run just
beneath the surface. “We can’t get over the fact that they [the
Germans] are much more powerful than we are,” British historian
Timothy Garton Ash said in the late 1990s. The war “was our finest
hour—and our last.” Boris Johnson and other advocates of Brexit
claimed that the EU was choking the U.K. economy with what Johnson
called “an opaque system of legislation: the vast and growing
corpus of law enacted by a European Court of Justice from which there
can be no appeal.” They argued that leaving the EU would mean an
extra 350 million pounds a week for the ailing British National
Health Service (though after the vote they appeared to back off this
claim) and would dramatically cut immigration.
In both the U.K. and
the U.S., the rebellion against globalization and integration is
embraced by both right and left.
Today, the European
Union remains a chimera, neither true working unity nor separate
nationalities but something in between that never seems to run
smoothly; this is especially true of the Eurozone, whose
administrators refuse to confront the central contradiction of the
euro concept (of which Britain is not a part): If the weaker and more
indebted economies have no monetary means to recover—because they
can’t devalue their own currencies—then all European Monetary
Union members have to submit to some form of fiscal integration that
reduces their individual power over spending and taxes. This was one
of the demands made by the rescue deal offered to Greece: Athens lost
control of part of its budget. But the Germans, who dominate
policy-making, have resisted submitting themselves to such a regime.
Thus, the
long-awaited popular backlash has begun. Tellingly, in both the U.K.
and the U.S., the rebellion against globalization and integration is
embraced by both right and left. Even a former close ally of David
Cameron, Steve Hilton, wrote in May that the EU has “become so
complicated, so secretive, so impenetrable that it’s way beyond the
ability of any British government to make it work to our advantage.”
Hilton called the EU “a stinking cesspit of corporate corruption
gussied up in the garb of idealistic internationalism,” and a
majority of voters seemed to agree.
And that is someone
who was known as a conservative. In the United States, Trump has also
turned GOP conservatism on its head, seizing the party base for his
own after its leaders failed to realize that the angry, often white,
often older voters they took for granted no longer embraced
trickle-down free trade.
In Europe, much of
this trend is driven by anti-immigration fervor, especially since
hundreds of thousands began fleeing the civil war in Syria and other
unsettled places of the Middle East. But in Europe, as in the United
States, the rising anti-immigrant sentiment seems more of a symptom
than a cause; xenophobia becomes virulent usually only when people at
home feel threatened; and they feel threatened when their jobs do.
For the bottom half of societies in the West, the jobs are either not
there or not considered good enough.
Postwar
globalization achieved two major things: Open trade made conditions
more equal between countries, but at the cost of creating more
inequality within countries, thanks to the flood of industrial jobs
that fled to cheaper shores, seeking a lower “China price,” as it
was once called. Under U.S. trade policy embraced by both the
Democratic and Republican parties, these trends were only encouraged,
and their economic impact dismissed as a minor trade-off in exchange
for cheaper consumer prices.
That is at the heart
of the present rebellion by lower-income voters, who have borne the
brunt of globalization in the major economies, including the U.S. and
Britain. In the aggregate global trade does bring growth—but in the
richer countries, that growth has been largely captured by elites and
white-collar workers, and it often comes at the expense of people who
actually make the things that get traded. As the Nobel-winning
economist Michael Spence wrote in 2011, fully 98 percent of new U.S.
jobs since 1990 have been lower-paying “nontradeable” (meaning
not in goods and services that are traded abroad) jobs, especially in
government and health care, while “employment barely grew in the
tradeable sector of the U.S. economy, the sector that produces goods
and services that can be consumed anywhere, such as manufactured
products, engineering and consulting services. That sector, which
accounted for more than 34 million jobs in 1990, grew by a negligible
600,000 jobs between 1990 and 2008.” Another study showed that the
U.S. goods trade deficit with China alone from 2001 to 2013
eliminated or displaced 3.2 million U.S. jobs, three-fourths of which
were in manufacturing.
We are witnessing
now is a broad-based rejection of the tarnished idea that a world of
transnational institutions bodes some kind of happier end state.
The 2008 financial
crisis and Great Recession dramatically accelerated this loss of
wealth among lower-income voters, and just as dramatically widened
the income gap. That in turn transformed our politics far more than
both political parties understood, leading to the Trump-Sanders
backlash. Nor is there any fix in sight because neither political
party is willing to create a whole new welfare state to help the
displaced, who are only going to be worse off, Spence argues, because
“it is unlikely that government and health care in the U.S. will
continue growing as much as it had before the current economic
crisis.”
The EU, meanwhile,
with a chronically malfunctioning Monetary Union at its heart, has
indeed proved a bureaucratic nightmare. In a 2010 House of Commons
study, the UK government estimated that about 50 percent of UK
legislation with “significant economic impact” originated from EU
legislation, mostly relating to agriculture, fisheries and trade with
non-EU states. According to the advocacy group Business for Britain,
which campaigned for a renegotiated deal with the EU, Brussels has
issued no fewer than 3,589 new regulations totaling 13 million words
only since David Cameron was elected prime minister in May 2010.
Thus, we are all
finding out that internationalism often isn’t pretty. And in
Britain, in other European countries and in the United States what we
are witnessing now is a broad-based rejection of the tarnished idea
that a world of transnational institutions bodes some kind of happier
end state—or even, in what now seems a charmingly quaint idea, the
“end of history.”
***
In the frustrating
void left by that flawed ideology—and with nothing else to fill it,
since parties across the spectrum refused to deal forthrightly with
their various nations’ inequality problems—it’s only natural
that the age-old standby, nationalism, would return in force. In the
West, perhaps the most common thread is that people appear to feel
that their political parties no longer represent them; just as in the
United States both Democrats and Republicans signed on to the
free-trade globalization agenda for a generation, in the UK both
major parties ended up mostly pro-Europe (at least since Margaret
Thatcher). And just as clueless about the backlash they were creating
as their counterparts across the Atlantic.
The split in the
Conservative Party mirrors to some degree what has happened to the
Republicans, and Cameron seems as surprised about what just happened
to him as Marco Rubio, John Kasich and Jeb Bush were when Trump
humiliated them. The same goes for Hillary Clinton, who can’t seem
to grasp why so many Democrats love Bernie and hate her. Trump and
Sanders simply threw out the old conventional wisdom, which had taken
hold of both parties; just as pro-EU ideology dominated both the
Tories and Labour in Britain.
That’s why
Clinton, the Grand Mistress of this global Status Quo, ought to be
quaking over what happened last week: It’s not just Bernie. It’s
not just Trump. It’s a political earthquake, and it’s gone
global. And Clinton ought to be aware that every time a member of the
GOP elite comes forward to endorse her—the latest being Hank
Paulson, he of “Government Sachs” provenance—it’s probably
only worse news for her campaign.
Is there any way of
altering these now-ingrained trends —besides a return to
protectionism, mercantilism and perhaps war? It is even possible that
Brexit will shock EU bureaucrats into changes they have resisted
until now: In the immediate aftermath of the British vote, the
foreign ministers of Germany and France issued a paper calling for a
European security compact, a common European asylum and migration
policy and improvements to the monetary union. Franco-German business
leaders, meanwhile, demanded “immediate, credible and visible
measures to strengthen the governance” of the Euro area and said
their countries should pursue “national reforms to make our
economies stronger and more competitive to assure the sustainability
of our social model.” Even Boris Johnson sounded a bit conciliatory
on Monday , writing in an op-ed in The Telegraph: “I cannot stress
too much that Britain is part of Europe, and always will be. …
British people will still be able to go and work in the EU; to live;
to travel; to study; to buy homes and to settle down.”
But European
ministers representing 28 member-states tend to issue a lot of
papers, and politicians make a lot of promises they can’t keep
(Johnson’s claim about Brits working and living in the EU suggests
Britain will not be able to shut down immigration as readily as the
Brexiters promised). And even if they went further and took some kind
of action, most economists say it’s far too late to counter the
most dire effects of globalization. The enrichment of developing
countries at the expense of the rest—countries that are now
producing high-value-added components that 30 years ago were the
exclusive purview of advanced economies—“is a permanent,
irreversible change,” says Spence. But what’s clear is that
politicians interested in preserving the postwar order will need to
figure out a new way to address the political discontent that springs
out of the deeply flawed economic model the order is built on. It
won’t be an easy adjustment, or an easy gulf to bridge: That model
has been far better to politicians and administrators than the voters
to whom they owe their jobs.
Michael Hirsh is
national editor for POLITICO Magazine.
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