Trade wars, populism, racism: The liberal international order could be in danger
Trump reprised his role as a cheerleader for Brexit and complained that everyone was taking advantage of the US. Negotiating with Putin would be easier than dealing with allies, he said. It was all transactional, about price tags and deals. Values found little airtime. At almost every step, in tweet after tweet, he sneered at the liberal western order built from the ashes of World War II, underwritten through institutions like NATO and the UN and protected under the US nuclear umbrella, an order that has given much of the world unrivaled peace and prosperity.Former US Vice President Joe Biden said last week that Trump was (wittingly or otherwise) helping with Putin's agenda, which is above all to break the liberal western order that faced down the Soviet Union and stands for everything the Russian leader despises.But is that order really in danger, and if so what might replace it? Some hark back to the 1930s, when the aftermath of economic crisis, protectionism, hostility to minorities, the collapse of international institutions and a sense that democracy had failed, allowed fascism to take root.This parallel can be overdone of course: we live in an age of relatively full employment. We appear not to be on the brink of war, with fascist powers re-arming. Paramilitary groups don't stalk the streets, most nation-states are stronger than they were in the 1930s, and the concept of human rights is now entrenched in democratic societies. But when in doubt, quote Mark Twain, who is reputed to have said that "History doesn't repeat itself but it often rhymes." And if some echoes of the 1930s are faint today, there are many contemporary trends that are equally alarming.
The most obvious parallel is a resurgent economic nationalism. Trump called the Trans Pacific Partnership a fraud, attacked the North American Free Trade Agreement as the worst deal in American history and imposed tariffs on imports from China, Europe and elsewhere — with more promised. He said the US would remain in the World Trade Organization, whose mission is to advance a free and fair trading system, but added: "We've been treated very badly … It's an unfair situation." WTO Director-General Roberto Azevêdo warned that if the U.S. were to leave the organization, the law of the jungle would prevail. It's hardly surprising historians recall the infamous Smoot-Hawley Act of 1930 which imposed steep tariffs on America's trading partners. The arguments of the act's supporters — that American industry and agriculture needed protection from unfair competition — are similar to those used by Trump today. In each case, US action prompted retaliatory tariffs. As yet unknown: whether today's trade wars will have the same disastrous consequences as Smoot-Hawley, which only deepened the Great Depression, or whether at some point, after all the brinkmanship there will be a "deal." It all depends on whom Trump listens to. Related: Trump's Fast And Loose Trade Policy Endangers American JobsIn any case, today's interdependent markets and technologies coupled to a global economy in good health (the IMF expects global growth of 3.9% this year and next) are in stark contrast to the rampant unemployment and inflation of the inter-war period. German unemployment stands at 3.4%; in 1932, 30% of the country's workforce was unemployed. The following year, 25% of Americans were out of work. And the working wage then was much closer to the poverty line than now; far fewer people had savings. Economic crisis and political disarray fueled the rise of paramilitary groups. Almost every European country had their own versions of the Nazis' Sturmabteilung — the Brown Shirts — in the 1930s. It is hard to see how the peripheral fascist groups of today could challenge sophisticated states, even if another Great Recession came calling. All the same, it's little wonder that a fringe of far-right groups feel enabled — especially with nationalist, anti-EU parties either in power or on the brink of it across Europe. Amid the confrontations at the "Unite the Right" rally in Charlottesville last year, Trump said there were "fine people" on both sides. Far-right attacks injured 560 migrants in Germany in 2016. The British government's latest counter-terrorism strategy contends that "the threat from the extreme right wing has evolved in recent years and is growing."
We may not be facing a return to the 1930s, but our age has fault-lines of its own. The rise of populism didn't start with Brexit or Trump. To Trump's ideological mentor, Steve Bannon (and he's not alone), it began with the financial crisis of 2008, the failure of what he calls crony capitalism. In the long slog of recovery, traditional "good-paying jobs" have vanished in the US rust-belt towns that voted heavily for Trump. The National Employment Law Project found in 2012 that 58% of the jobs regained in the US since the recession were in low-wage occupations, paying less than $14 an hour. Millions of mid-wage jobs had disappeared. In Britain, unemployment is low but again, the jobs that have come back are largely semi-skilled and poorly paid.Inequality has widened dramatically in the past generation: in the US the richest 1% held 20% of the national income by 2016, while the lower 50% had just 13%. The trend, while less dramatic, is similar in Europe. And most research shows it's the poorest workers whose wages and job prospects are hurt by an influx of migrants.One of the themes of the pro-Brexit campaign was that migrants from eastern Europe were depressing wages and stretching social services. The same dynamic is playing out in Italy, where two populist parties won elections in March.Related: Brexit's Broken Promises: Health Care, Immigration And The EconomyIf the events of 2016 marked the Revenge of the Forgotten, their resentment is no less today. Populist politicians — Donald Trump, Nigel Farage of the UK Independence Party, Italian Interior Minister Matteo Salvini — have expertly exploited that. ("I love the poorly educated," Trump declared in 2016.) They say ordinary people have been forgotten by the "liberal elites," including pampered international bureaucrats, crony capitalists and the "fake news" media — what Hitler called the lugenpresse, or the lying press. But Hitler also wrote in Mein Kampf that, "in the big lie there is always a certain force of credibility." Rather than jack-booted paramilitaries, the peril today seems more insidious: a growing animosity towards "others" expressed in inflammatory language and through outright falsehoods. His critics say Trump turbocharged this: by describing some countries as "shitholes" and saying his opponents want illegal immigrants from central America "no matter how bad they may be, to pour into and infest our Country."This extends beyond the US. Trump derided Germany (and Chancellor Angela Merkel) for "allowing in millions of people who have so strongly and violently changed their culture." He asserted, falsely, that crime was way up in Germany.But the message resonates among a growing minority in Europe. So Salvini refuses to allow boats carrying migrants to dock at Italian ports and wants a census of Roma people. The Hungarian government has made it a crime for people to offer help to illegal migrants. Hungarian Prime Minister Viktor Orban, recently elected to a third term, has spoken approvingly of societies that "are not Western, not liberal, not liberal democracies, maybe not even democracies, and yet are making nations successful." Steve Bannon says Orban was "Trump before Trump."French President Emmanuel Macron lamented this trend a few weeks ago: "They [the populists] are saying the most provocative things and no-one, no-one, is outraged. We're getting used to all kinds of extremism from countries that a few years ago were just as pro-European as we are."Related: Hungary Is A Beacon To Europe's Populist StrongmenDespite nearly a decade of recovery from the Great Recession, intolerance and racism has flourished. How the mood may further sour when (not if) the next economic crisis comes along, especially if those good-paying jobs that were promised don't materialize. And who will be the scapegoats? As the old certainties crumble, Merkel has declared that immigration is Europe's existential issue and "we Europeans must fight for our own future and destiny." She told a rally in May: "The era in which we could fully rely on others is over to some extent." Related: Migration 'Make Or Break' Issue For Europe, Warns Germany's MerkelThe trouble is, in the midst of Brexit and badly split over immigration, Europe looks ill equipped to sort out its own destiny, especially as Russia seems so intent on meddling in European politics on the side of the populists. On multiple fronts, the international liberal order is being challenged because it has lost the confidence of people who feel left behind and "swamped" by immigration, as former British Prime Minister Margaret Thatcher put it 40 years ago. Trump, Orban, Salvini, Marine Le Pen of the Mouvement National in France, have become their champions.As Martin Wolf asks in the Financial Times, "Should we expect the old America back? Not until someone finds a more politically successful way of meeting the needs and anxieties of ordinary people."The same question might be asked of Europe.