Monday, March 12, 2018

The "Stop Globalization" Or Populist Movement Soars!

Populism & Anti-Globalism - A Power To The People Theme
Populism has been on a tear the last several years altering how events are being framed. One of the major issues confronting us today is trade. Whether you share Trump's view that tariffs will help set things straight most likely depends on your view of the world. President Trump's announcement to levy tariffs on steel and aluminum imports is consistent with anti-globalist shifts seen in this presidency. Obviously, Trump feels his action to slap tariffs on steel and aluminum will improve his position to negotiate a better deal for America which has been battered by a huge trade deficit year after year. By this action, he has put other countries on notice, mainly China, that America is dead serious about standing up for its rights.

The longer this deficit continues to grow the worse things become. In many ways, Trump faces a damn if you do, damn if you don't situation. It developed over years as the result of policies that provided benefits, often short-term, to a small number of special interests, but at much greater costs to the rest of America. These policies were sold to the American people with the promise that as low-end jobs were lost we would move up the economic food chain and the jobs would be replaced by better paying high tech jobs. In reality, the promise was not filled and globalization has hollowed out the heartland of America and left future generations to question their fate. Globalization has elevated the importance of creating jobs and a balanced economy that supports a strong middle class. 

The fact that populism is gaining momentum around the world is not only exacerbated by mass population displacements and surging income inequality but the forces causing these trends. Over the years global trade policy has been hijacked by big multinational businesses hellbent on maximizing profit and politicians wrangling for ways to meet their goals. Rather than addressing growing problems, central banks have attempted to paper over issues in a way that has benefited the rich at the expense of the many. Cross-border money flows have also pushed along the feeling those from other countries are causing us grief and breed discontent in that this money tends to disrupt local economies.

Today society is paying the price for the missteps over decades that moved China from a backward overpopulated mess into a power that rivals and threatens to dominate us. While many people look at the tariffs as a form of protectionism that is not only economically inefficient but also inherently unjust. It is the equivalent of a tax on the people in the way of higher prices on goods. In this case, it may also be seen as simply saying enough is enough and pointing out to the world that free trade is not fair trade when your trading partner engages in predatory behavior. History has shown that change often takes a toll on people and they tend to search for a place, person, or thing to blame, this time it is globalism.
The British Decided They Should Go It Alone
In truth, the subject of globalization is made up of many threads interwoven in a complex way. The discussion often extends into several issues and is not limited to free trade. Other social concerns also feed into the mix, things like immigration, human rights, global warming, nationalism, inequality, even population growth. The political impact on all these issues, in the end, affect how countries view the world and their foreign policy. This can be seen by the vote in the UK to exit the European Union. It is also apparent in the separatist movements gaining strength in areas such as Catalonia and Italy. With a voter turnout of over 73% in Italy's recent elections, voters opted for anti-establishment parties.

The reason the movement has gained support and is growing stronger in developed countries across the world is partly as the result of the "stop globalization" forces becoming a magnet pulling blame for many of the problems we see across the planet together under one label. In the same way, our views on where the economy is headed and monetary policy have divided us into two very separate camps it seems globalization has done the same. Often those against globalization are painted with a broad brush as  "backward" or against progress it goes deeper than this and adds to the polarization that has swept both the nation and the world. This polarization has created some rather strange bedfellows and alliances which muddy further the issues involved.

We have been sold the idea by politicians and those who benefit from such things that you need a trade deal in order to trade when in effect you can trade without one as long as trade is voluntary and both trading partners benefit. The popular message that a trade deal is necessary has been promoted by the media which often speaks more for those in power and the establishment than the common man. It is simply wrong-headed to think free trade is the silver bullet and that it creates as many jobs as we are often told. As we have gone down the road of increased free trade we have discovered it is often "not fair" and can come with negative side-effects. Jobs that would be created anyway are merely shifted from one area of the economy to another by many trade agreements and the real beneficiary is usually big business.

Footnote;  This is part one of a two-part series. Part 2, titled; The "Stop Globalization" Or Populist Movement Part 2, will be published on Tuesday, March 13, 2018.

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