The Year of Disruption
finding the patterns
From Trump to ‘Brexit’ to fury over free trade, 2016 upended established ways of doing things – and may have changed how the world works.
Washington—Some years are bigger than others. Their numerals evoke phase shifts in the world, lurches into new forms of political and cultural order. Think of 1968 and its explosion of youth unrest, 1989 and the collapse of the wall between East and West, or 2001 and the rise of Islamist terrorism.
Will the future rate 2016 as one of these hinges?
Donald Trump is the obvious place to begin the discussion. In 2016 the United States elected the least conventional president in history. He is a businessman, the first national chief executive with no political or military experience. He ran on a platform of return – the return of manufacturing jobs, a return of US primacy, a return of order in a darkening world.
“I alone can fix it,” he said during his acceptance speech at the Republican National Convention in Cleveland.
Now he’ll get a chance to try.
But President-elect Trump may be just one data point in a trend. Voters throughout the West are revolting against their establishments. They’re tired of globalization, tired of immigration, tired of the diminution of working-class economic dreams.
“Brexit” – the shock British vote in June to exit the European Union – could be just the beginning. “Frexit” might be next. Marine Le Pen has promised a French referendum on leaving the EU if she’s elected president in 2017, and current polls show the right-wing National Front leader a top candidate.
Euroskepticism is similarly rising in Italy and even Germany. Rightist nationalism is on the march in Austria, Hungary, Poland, Norway, and Greece.
Pundits lump all this together as the rise of “populism.” That definition fits in the sense that much of it seems the anger of the many against the perceived perfidy of a few. But it’s also about race, and the anxiety of whites about their place in nations changing before their eyes. It’s about class, and how a college degree has become the deepest of social dividing lines. It’s about the speed of technological change, as app follows app unto confusion everlasting.
In sum, many voters in much of the West want to slow down and turn inward. In doing so they may be rejecting the world their grandparents created after World War II, a web of alliances cemented by ever-freer trade and migration and anchored by American military and diplomatic might.
“We appear to be entering a new age of populist nationalism, in which the dominant liberal order that has been constructed since the 1950s has come under attack from angry and energized democratic majorities,” wrote Francis Fukuyama, a senior fellow at Stanford University’s Freeman Spogli Institute for International Studies, in the Financial Times following Trump’s November triumph.
That said, this isn’t the 1930s. The darkest of ideological “isms” aren’t on the rise. Fascism is not back. Totalitarian communism survives only in North Korea. The 2016 death of Fidel Castro is emblematic of the passing away of the old-time methods of organizing human repression.
Nor is nationalistic populism a new majority religion. Trump lost the popular vote, after all. He is president by the vagaries of the Electoral College. The switch of a few tens of thousands of votes in Wisconsin, Michigan, and Pennsylvania would have produced President Hillary Clinton. His supporters turned out. A substantial number of hers did not.
In Europe the radical right wins outright in few countries. (The nationalist conservative Fidesz party in Hungary is an exception.) It draws about one-third of voters in the region overall, says Cas Mudde, a Dutch native and expert on extremism who is an associate professor at the University of Georgia School of Public and International Affairs.
In most countries the new populists aren’t the biggest party. But in multiparty parliamentary systems they can be the biggest winners, since they are vital and growing. Seeing this, competing parties may feel they, too, need to adopt populist-tinged positions.
“We fall into a bit of a trap to think they are the voice of the people,” says Mr. Mudde of France’s National Front and other similar parties.
And the uprising – if that’s what it is – isn’t global. It is the democracies of Europe and the US where the effects of globalization writ large are stirring populist emotions. There are 7 billion people on the planet, and it is only around 1 billion, the population of the Western world, for whom immigration and job losses and free trade are the political drivers of the moment.
“This notion that there is a huge backlash against globalization and trade is a bit overblown,” says Pascal Lamy, former director general of the World Trade Organization. “This is only a small part of the world.”
But it is an important part of the world. And the anger of substantial numbers of citizens against their elites is palpable. Brexit was a huge shock to the British political establishment and Europe as a whole. Now Prime Minister Theresa May must negotiate a tricky geopolitical divorce, disentangling United Kingdom and EU law while trying to retain as much access to European markets as possible.
Trump’s subsequent victory was “Brexit times three,” according to Nigel Farage, the UK Independence Party leader and a euroskeptic. (In August the very British Mr. Farage appeared, bizarrely, at a Trump rally in Jackson, Miss.) Indeed, Trump’s win seemed to surprise even Trump himself. Now he’s merrily threatening to slap tariffs on firms that ship jobs overseas. He’s blown up the Trans-Pacific Partnership trade deal. Via tweets, he’s threatening China with economic warfare.
Italy weighed in with its own populist insurrection in December. Call it Brexit with red sauce. An Italian vote essentially ousted technocrat Prime Minister Matteo Renzi. His plan to streamline the Italian political system and save its tottering big banks? Derailed.
Should Italy withdraw from Europe it may actually have larger consequences than Brexit. Britain has always been an EU outsider, reluctant to join, eager to stand by the exits. Italy was one of the original nations to adopt the common euro currency and has long seen advantage in the idea of a united Continent.
An Italian bank collapse could take the euro with it. If nothing else, Italy’s troubles starkly illustrate the widening EU split between borrower and creditor nations and Northern and Mediterranean regions. Going forward, the existing shape of the world economic system seems in question. Will the EU single market, the world’s largest, split into pieces? Can the euro survive? WWTD? (What Will Trump Do?) How will Asia’s rising economies deal with the chaos in the West?
For rising populist politicians, the answer is to reverse course. The current system serves only the few, insist National Front leader Ms. Le Pen and others. In a recent interview with Foreign Affairs magazine, the conservative French politician labeled globalization “a form of totalitarianism” and called for an end to the euro, tighter immigration controls, and more government intervention in the affairs of big corporations.
Hmm. Those last two points might be positively Trumpian.
“Globalization and digitization of the economy have polarized more [countries] in recent times,” says Mr. Lamy, who is now president emeritus of the Paris-based think tank Notre Europe – Jacques Delors Institute. “Winners win more, and losers lose more. This is what opened space for a populist discourse.”
Bucks aren’t the only things behind populism’s rise, of course. There’s also identity politics. Immigration – legal, illegal, and crisis-created – is a huge issue from the US southern border to Berlin. Writing in The New York Times, former human rights lawyer Amanda Taub calls it “the crisis of whiteness.”
Whiteness, in this case, means skin color and/or privilege, the right to belong to a group that’s in charge and dominates the majority culture.
Trump appealed to people with this grievance. Think about his famous red hats. “Make America Great Again” – what does that really mean? To many, it means bringing back the time when pressing “2” to hear a menu in Spanish wasn’t an option. It means more factory jobs, but it also means a time before the advent of Black Lives Matter. It means the days when city streets were full of white people in sober work clothes, not a polyglot of races and different faiths.
Trump didn’t invent this approach. In many ways he’s just the apotheosis of the Republican Party’s so-called Southern Strategy, which dates to the days of candidate Richard Nixon. Following the passage of civil rights legislation under President Johnson, Southern working-class whites began moving en masse to the GOP. Republican candidates up to and including Ronald Reagan pushed “states’ rights” – an issue Democrats charged was racially tinged. By the 1980s the white working-class emotional connection to the old Democratic Party, forged by F.D.R., the New Deal, and big social programs, had effectively vanished.
Nor was Trump elected solely by white men in pickups who fly Confederate flags. He received almost 63 million votes. You don’t get that many without winning some women, some college-educated voters, and even some minorities.
But in the aggregate the 2016 divide along racial and gender and education lines was striking. Trump won 57 percent of whites, as opposed to the 37 percent who voted for Mrs. Clinton, CNN exit polls showed. He won 62 percent of white men, while Clinton won 31 percent. He won 71 percent of white men without a college degree, while Clinton took only 23 percent.
That’s right – Trump took nearly 3 out of every 4 white guys who only graduated high school, meaning they’re likely working class. If you’re looking for evidence of a US populist uprising, there it is.
Across the Atlantic it’s the same thing but different. Less-educated whites in European countries have a similar feeling that something is slipping away from them, but it’s rooted in unique problems. In the US, it’s illegal immigration across the southern border that’s an issue. In the EU, it’s legal migrant workers and refugees.
In the US, Trump vows to “build the wall” and to establish some sort of controls on Muslim entry into the country. In Britain, Ms. May promises that Brexit means a free flow of goods across borders but a more controlled flow of people. Even in Germany, which has accepted more than 1 million asylum-seekers in recent years, decidedly nonpopulist Chancellor Angela Merkel now says Islamic full-face veils should be banned “wherever legally possible” and that sharia (Islamic law) will never replace German justice.
It’s the pace of societal change that may drive these positions. In Britain the foreign-born population grew 66 percent between 2004 and 2014. In Germany it grew 75 percent between 2011 and 2015. In the US it’s about doubled since 1990.
This rapid shift makes some whites feel their status is in doubt. English villagers committed to Brexit complained that in London they feel like strangers because of the many Asian tourists and Middle Easterners. In Louisiana rural whites told author Arlie Russell Hochschild that they feel as if they’re in a line climbing a hill to reach the American dream – but the line’s progress has stopped, as blacks and immigrants cut in front of them.
“People feel it is not their country anymore,” says Mudde of the University of Georgia. “To a certain extent, it is not their country anymore.”
Globalization helps drive this sense of loss. Many workers see jobs flowing overseas and read the “Made In” labels on all the foreign-sourced products in Wal-Mart and Home Depot and generally feel as if the new world of free trade may be great for some people but not for them.
They’ve had enough. Maybe they’re not directly affected by the decline in manufacturing jobs, but they’re pessimistic about the chances for the next generation. According to Pew Research figures, more than 60 percent of voters in both the US and Europe believe their children will be worse off than they are.
“It used to be generally accepted that reducing trade barriers increases prosperity and promotes peace, benefiting investing and recipient countries and promoting international cooperation in solving problems around the world,” wrote Lawrence Summers, former Treasury secretary and Charles W. Eliot University Professor at Harvard University, in a December opinion piece. “Almost all of this was called into question in 2016.”
Globalization and the disruption it brings have indeed been a huge part of the world economy in the modern era.
In 1972, when trade was dominated by a handful of industrialized countries and China was a closed economy, trade accounted for 27.1 percent of global output, according to World Bank figures. Then Nixon went to China. The Soviet Union fell. The EU morphed into the world’s largest market. China – and Vietnam and Bangladesh and India and other developing nations – ushered in a new era of rapid integration and global supply chains. In 2008 trade reached 61.1 percent of global output.
And that’s where it’s stayed, more or less. Maybe that’s peak trade. Maybe the Great Recession of 2008 created a ceiling. In any case, globalization is moving sideways. We’re not in a recession – the world economy grew 2.5 percent in 2015 – but the contribution of trade to that growth isn’t going up. In 2015 global trade’s share of output actually fell to 57.7 percent.
That’s probably an anomaly – globalization isn’t going into reverse, says Pankaj Ghemawat, who directs the Center for the Globalization of Education and Management at New York University. But “globalization is still in the doldrums,” says Mr. Ghemawat via email. “It is clearly not advancing like it was before the financial crisis, but it has not (at least not yet) collapsed.”
What’s going on? Start in Asia, the most dynamic economic region. Its largest economy, China, is moving up the value chain. China is “moving from an economy based on assembly of other people’s components to increased production of those components in China,” says Robert Lawrence, a professor of international trade at Harvard University’s Kennedy School of Government.
At the same time, China is rebalancing its economy away from exports to domestic consumption. In 2006, exports made up 35 percent of its total output, estimates Ghemawat. By 2015, that had fallen to 21 percent. That matters: China is the world’s largest exporter of manufactured goods.
Other forces have slowed globalization’s march as well. Technology and automation make it easier to produce more goods in higher-cost labor markets such as the US or EU. Digital trade is harder to measure than container ships so maybe the world is trading more goods – just not the seaborne cargoes of yesteryear. Shipping companies are going bust because there is less demand for goods to be moved across borders.
Then there’s the increased protectionism by Group of Twenty countries, from tougher regulations on where banks hold capital to buy-local measures and other restrictions on trade. And all that was before the Brexit vote and election of Trump. That has proponents of freer trade reaching for historical analogies.
In 1930, Congress passed the Smoot-Hawley Tariff Act, which imposed tariffs on more than 20,000 items. The result was to deepen and extend the Great Depression. “Globalization could absolutely go into reverse, and it would be politics not economics that would bring that about,” says Ghemawat.
Are the populist legions thus fighting a war that is already over? After all, the pace of economic integration has slowed. No new trade deals are being signed, and the shiny new deal in the offing, the Trans-Pacific Partnership, looks like a casualty of Trump 2016. So those opposed to globalization are reacting to what has already happened: global flows of capital into supply chains for manufacturing consumer goods such as phones and shoes and furniture. And there’s little evidence that tariffs slapped on China – or any other perceived globalization villain – would bring back any lost jobs. Manufacturers can always move to another low-cost country, be it Bangladesh or Ethiopia.
If Trump truly wants to boost US employment for less-educated workers, maybe he should keep a wary eye on Amazon and its experiment with unmanned stores, or the start-up Otto and its work on self-driving trucks. Automation of retail and long-haul trucking could be huge killers of jobs decades hence.
“Trade was never the dominant reason why we saw the shrinking of manufacturing, and stopping trade certainly won’t be the solution,” says Mr. Lawrence, citing the effect of automation and technology on factory productivity.
2017 will pick up where 2016 leaves off, geopolitically speaking. An inaugurated Trump may proceed with his promises to build the wall, block noncitizen Muslims, and cajole US firms to keep jobs at home. (Or not – it’s possible the unpredictable mogul will make things up as he goes along.)
May might start Brexit negotiations and find the EU less forgiving than her voters want. Italy will form a new government, its 63rd in the past 70 years. France will hold a presidential election in the spring. Right now Le Pen is poised to make the runoff of the top two contenders.
In the short run populist nationalism is likely to prosper. It is clearly sailing with the voting tide. In the long run its future depends on how it performs where it gains power. All parties have successes and failures. But today’s populists, Trump included, have made larger-than-normal claims about their ability to effect national change. That gives them, potentially, more opportunity to fall short.
In the US, demographic change is an upcoming variable. The electorate is becoming less white, meaning perhaps more trouble for the GOP. But voters are unpredictable – to say a blue tide of Democrats will result from this is to overstate the case.
The aging of voters may be more important. In many countries citizens under, say, 30 are much more accepting of diversity. In France, 77 percent of 18- to 24-year-olds think globalization is a force for good.
In the meantime the way issues are framed is crucial. Even individual words matter in today’s heated, Twitter-fueled world. Call someone a “refugee,” and they tend to get a sympathetic hearing from most Europeans, points out Mudde. Call them a “migrant,” and more hackles rise.
“In so many countries, there is overall quite a lot of tolerance, but there is a very negative discourse,” Mudde says.
Staff writers Simon Montlake in Boston and Sara Miller Llana in Paris contributed to this report.