Us vs. Them, page 2
And winners and losers there will be. It’s too late to assuage the anger of people whose needs have been neglected for years, too late to stop the technological advances that will exacerbate the inequality and nativism stirred up by globalism. What remains to be seen is who will win—and who will be the scapegoat. In some countries, us vs. them will manifest as the citizens versus the government. In other countries, the division will be between the rich and the poor. In some cases, disgruntled citizens will blame immigrants for their problems, punishing “them.” And in other cases, an ethnic majority will turn on an internal ethnic minority, blaming them for the problems.
“Us vs. them” is a message that will be adopted by both the left and the right. Antiglobalists on the left use “them” to refer to the governing elite, “big corporations,” and bankers who enable financial elites to exploit the individual worker or investor. These are the messages we hear from Senator Bernie Sanders and Greek Prime Minister Alexis Tsipras. Antiglobalists on the right use “them” to describe governments that cheat citizens by offering preferential treatment to minorities, immigrants, or any other group that receives explicit protection under the law.
How will governments choose to react? The weakest will fall away, leaving us with more failed states, like Syria and Somalia. Those still hoping to build open societies will adapt to survive, attempting to rewrite social contracts to create new ways to meet the needs of citizens in a changing world. And many governments that have a stronger grip on power will build walls—both actual and virtual—that separate people from one another and government from citizens.
We can no more avoid these choices than the world can avoid climate change, and the time is now to begin preparing for a world of higher tides. This is the coming crisis. This is the conflict that will unravel many societies from within.
HOW DID WE GET HERE?
In Europe and the United States, the battle of nationalism vs. globalism has deep historical roots, but recent history has given it a new intensity. First, there was the earthquake. The financial crisis of 2008–2009 drove anti-EU fury in response to bailouts and austerity in Europe and resentment of Wall Street and its political enablers in the United States. In the United States, the right dismissed the Occupy Wall Street movement as a vapid left-wing fringe group without significance. The left waved off the Tea Party movement as a motley assortment of angry, aging racists intent on “making America white again” and well-heeled Republican Party activists disguised as grassroots patriots. Other Americans ignored both sides as if nothing important was shifting in American politics. The migrant crisis and a series of terrorist attacks then boosted a more xenophobic set of politicians and political parties in Europe. A number of EU member states established temporary border controls, and some openly defied EU rules. Britons voted to take back control of their laws and borders in 2016, and Trump was elected president as a battering ram against globalist elites and the media in the United States.
Then the anger seemed to abate, and we experienced an illusion of moderation. Barricades in the Balkans and a deal between the EU and Turkey to sharply slow the flow of migrants into Europe eased the refugee crisis and pressure across the continent for another round of border controls.5 Anti-Muslim firebrand Geert Wilders finished second in Dutch elections in March 2017. Two months later, pro-EU newcomer Emmanuel Macron overcame the challenge from Le Pen to become France’s president, though the broader election story was the sound defeat of traditional parties of the center-right and center-left that had dominated French politics for decades in favor of a candidate who, like Trump, had never before run for office.
The center-left showed renewed strength in Britain, though it relied on large numbers of working-class Brexit voters for its revival. Germany’s Angela Merkel, defender of European unity, won a fourth term as chancellor. In the United States, the Trump backlash went into high gear. The new president’s approval rating settled into a narrow range between the mid-30s and low 40s, and his legislative agenda stalled. Courts blocked some of his plans, and various scandal investigations kept him distracted, though Democrats found no credible message of their own for U.S. voters.
The next chapter is now being written, and it will not be a better one. That’s because globalism contains the seeds of its own destruction: Even as it makes the world better, it breeds economic and cultural insecurity, and when people act out of fear, bad things happen.
ECONOMIC INSECURITY
Globalization creates new economic efficiency by moving production and supply chains to parts of the world where resources—raw materials and workers—are cheapest. In the developing world, the influx of capital from wealthier nations has created the first truly global middle class. In the developed world, this process bolsters the purchasing power of everyday consumers by putting affordable products on store shelves, but it also disrupts lives by killing livelihoods as corporations gain access to workers in poorer countries who will work for lower wages.
Trade has not become as toxic a political issue in Europe as in the United States. In part, that’s because the European Union includes so many small countries that depend on trade for economic growth, and exports are a crucial growth engine for Germany, the EU’s largest economy and de facto political leader. In fact, its current account surplus, a measure of the flow of goods, services, and investment into and out of a country, topped China’s to become the world’s largest in 2016.6
In addition, social safety net protections in many European countries cushion the blow to workers when they’re displaced by trade-related change. In exchange for the higher taxes they pay, Europeans enjoy more generous and longer-lasting jobless benefits than Americans, have broader access to health insurance, and pay lower tuition fees for both first-time and older students. Those who champion trade in the U.S. try to make up for these differences with promises that government will provide those who lose when trade moves jobs overseas with so-called trade adjustment assistance—money, retraining, and other forms of support. But these benefits are easier to promise before deals are approved than to deliver after they’re signed and politicians no longer need to keep their word.7
Beyond trade, globalization boosts technological change by exposing businesses of all kinds to international competition, forcing them to become ever more efficient, which leads to greater investment in game-changing innovations. Advances in automation and artificial intelligence are remaking the workplace for the benefit of efficiency, making the companies that use them more profitable, but workers who lose their jobs and can’t be retrained for new ones won’t share in the gains. Technological change then disrupts the ways in which globalization creates opportunity and shifts wealth.
As a result, large numbers of U.S. factory jobs have been lost not to Chinese or Mexican factory workers but to robots. A 2015 study conducted by Ball State University found that automation and related factors, not trade, accounted for 88 percent of lost U.S. manufacturing jobs between 2006 and 2013.8
Broadening the effect, the introduction into the workplace of artificial intelligence is also reducing the number of—and changing the skill sets needed for—a fast-growing number of service sector jobs. The consulting firm McKinsey & Company has estimated that 73 percent of work in the food service and accommodations industries could be automated in coming years. More than half of jobs in the retail sector could be lost, and two-thirds of jobs in the finance and insurance sectors are likely to disappear once computers can understand speech as well as humans do.9 What does that mean for the future of work? What does it mean for the middle class? It means that jobs are eliminated, and the middle class continues to shrink. Though technological change may eventually create more jobs than it kills, there’s not much reason for confidence that fired workers will get the education and training they need for tomorrow’s more technically sophisticated jobs.
In the world’s wealthiest countries, particularly the United States, wealth inequality has steadily widened as globalism has advanced. According to a study published by Pew Research in December 2015, “After more than four decades of serving as the nation’s economic majority, the American middle class is now matched in number by those in the economic tiers above and below it.” In 1970, middle-income households earned 62 percent of aggregate income in the United States. By 2014, their share had fallen to just 43 percent. The median wealth (assets minus debts) of these households fell by 28 percent from 2001 to 2013.10 Crime and drug addiction have spiked. Nearly 40 percent of U.S. factory jobs have disappeared since 1979.11 In 2018, U.S. stock markets hit historic highs as U.S. companies drew record profits, but the American middle class is in real trouble.
In an essay for the magazine Commentary published in February 2017, Nicholas Eberstadt painted a vivid portrait of the dire state of America’s manufacturing class. Between 1948 and 2000, he noted, the U.S. economy grew at about 2.3 percent a year per capita. Since 2000, growth has slowed to less than 1 percent. From 1985 to 2000, the number of hours of paid work in the U.S. rose by 35 percent, but between 2000 and 2015 the increase fell to just 4 percent. Many American workers have fallen out of the labor force completely and have no plans to return. “For every unemployed American man between the ages of 25 and 55,” Eberstadt wrote, “there are three who are neither working nor looking for work.” Some 57 percent of white men who have left the labor force receive a government disability check. About half of U.S. men who stopped looking for a job take pain medication every day.12
President Trump brags that unemployment will hit historic lows in early 2018, but as Trump himself pointed out during his run for president, we must look closely at how the U.S. calculates its jobless rate. According to the U.S. Bureau of Labor Statistics, unemployment fell to 5 percent in September 2015 and has moved steadily lower since, but there’s a very good reason why so many Americans are cynical about this number.13 If you earn less than $10 per hour and work two or three low-wage jobs to pay your bills, you are considered “employed,” even if you still can’t make your rent. If you’re a construction worker who went unpaid last week because bad weather shut down your work site, you are considered fully employed. If you have a temporary job or part-time job, you count as employed during the weeks you work. Even if you have no benefits or a roof over your head, the U.S. Bureau of Labor Statistics’ headline unemployment number treats you the same as a person earning $10 million a year. And if you’ve stopped looking for work after years of failed attempts to get a job, you’re not considered “unemployed.” You aren’t considered at all. No matter your age or how badly you need work, if you’re not actively looking for work, you don’t exist in this measure of the nation’s economic strength.
Globalization’s champions continue to sound the trumpets, and many political officials and business leaders still insist that trade creates jobs without admitting that it can kill jobs as well. In his final days as secretary of state in January 2017, John Kerry used a visit to Vietnam to reassure his audience that Americans still believe in cross-border commerce. “Protectionist trade policies won’t work,” he told the audience in this state-dominated communist country. A few days later and half a world away, Chinese President Xi Jinping pledged his commitment to promoting “global free trade” during a speech at the World Economic Forum in Davos. “Pursuing protectionism,” he warned, “is like locking oneself in a dark room. While wind and rain may be kept outside, that dark room will also block light and air.”
Yet a new chorus of angry voices in the United States counters that while globalization has been very good to China—and to American corporations and shareholders—it hasn’t done much for the American worker. From both left and right, we now hear that trade ships jobs overseas, leaving workers with no future. “Globalization,” says Le Pen, is “manufacturing by slaves for selling to the unemployed.” U.S. trade policies, warned U.S. presidential candidate Bernie Sanders in 2016, “have enabled large corporations to shut down in this country, throw American workers out on the street, and move to low-wage nations.” Yes, a surge of imports brings lower prices for local consumers, but it becomes harder to afford even the cheapest of products when those consumers have lost their jobs.
In the United States, these tensions began building well before the political earthquakes of 2016, during the financial crisis of 2008–2009, when bankers got bailouts and workers got pink slips. Public outrage extended beyond politicians to the media and to failed CEOs who were offered huge piles of cash just to quit. Anger followed everyone who seemed to live above and beyond the damaging effects of these trends. Trade became a contentious issue long before Donald Trump used it to become president, but his ability to speak plainly and forcefully to voters angry about lost jobs helped him capture the 80,000 extra votes he needed to win Pennsylvania, Wisconsin, Michigan—and the U.S. presidential election.14 Trump also capitalized on growing fear of both Mexican migrants and Muslim militants to argue for a fortress approach to government, to build a border wall, and to try to close the door on as many Muslim refugees as he could. His “America First” rallying cry was crafted to build confidence that he, unlike his opponents, put their interests above the wealthy and well-connected who built fortunes off global trade and investment.
In Europe, the 2010 debt crisis plunged the eurozone into turmoil. Emergency austerity in some countries, economic stagnation in others, and declining demographics throughout have produced pain and frustration. Citizens of some European countries were told their taxes would be used to bail out workers in other European countries that have free-spending governments. Citizens in the countries that received those bailouts were told that their rescue depended on a willingness to work longer for less generous pensions and services.
People who are afraid for their livelihoods lash out as they look for others to blame for their troubles. And economic fears generally breed a second kind of fear.
CULTURAL ANXIETY
The second way in which globalism creates fear centers on identity. Globalization doesn’t just move factory-built products. It also moves people, feeding public anxiety by shifting the racial, ethnic, linguistic, and religious makeup of communities, sometimes abruptly. Many Americans believe that some illegal immigrants, willing to work for less, take the low-wage jobs that working-class Americans are trained to do while others live off public assistance paid for by U.S. taxpayers. And as political scientist Dani Rodrik points out, immigrants to Europe, whether from inside other EU countries or other parts of the world, add to anxiety among the unemployed that there will be more competition for jobs and fewer social services to go around.15 This was a particularly controversial issue during the Brexit campaign, as exit advocates like the Conservative Party’s Boris Johnson argued that “uncontrolled immigration is politically very damaging, particularly when politicians promise that they can control it,” because it creates “huge unfunded pressures” on the National Health Service and other public services.16 In other words, the foreigners are coming for both your job and your health insurance.
In the United States, as in many European countries, there’s an especially strong sense of national identity based on racial, ethnic, and religious affinity. Two June 2017 reports published by the Voter Study Group, a nonprofit research firm, offer interesting conclusions. The first, authored by political scientist John Sides, found that “nearly two-thirds of Trump’s primary supporters believe that being Christian is important to being American. This . . . finding implies a continuing divide over whether members of minority religious faiths, and especially Muslims, can be fully American.”17
Fears of diluted identity mix with economic anxieties. Despite the Republican Party’s traditional aversion to entitlement programs, political scientist Lee Drutman has found interesting data on the movement of a surprising number of Barack Obama voters toward Donald Trump. From a survey of 8,000 Americans conducted in December 2016, Drutman identified a group of voters he classified as “populist” because they were “liberal on economic issues [and] conservative on identity issues.” About 28 percent of Obama 2012 voters who qualified as “populist” then chose Trump in 2016. Most of these crossover voters agreed with the statement that “people like me are in decline,” expressed strong support for protecting safety net programs like Social Security and Medicare, but also held negative views of racial, ethnic, and religious minorities.
According to Drutman, “We can see that Trump’s biggest enthusiasts within the party are Republicans who hold the most anti-immigration and anti-Muslim views, demonstrate the most racial resentment, and are most likely to view Social Security and Medicare as important.”18 And while it may seem strange that voters motivated by racial resentment would have voted for Obama, they apparently believed that the first black U.S. president would protect their pensions and health insurance while Mitt Romney, his 2012 Republican opponent, would roll them back. It is this economic insecurity that explains growing opposition to existing free-trade deals like the North American Free Trade Agreement (NAFTA) and proposed plans like the Trans-Pacific Partnership (TPP).
In Europe, this fear of lost identity and economic insecurity come together with the cross-border flow of human beings. First, the free movement of EU citizens across the EU’s internal borders, a central principle of the European Union, brings people with foreign names who speak different languages into the labor force in countries across the union.
The percentage of UK residents born outside Britain more than doubled between 1993 and 2015, from 3.8 million to about 8.7 million of 65 million people in total.19 That’s a direct result of EU rules on free movement of people within the union, particularly from poorer countries of the east to wealthier countries of the west. “What did Brexit play on?” asked the newly elected pro-EU French President Emmanuel Macron in 2017. “On workers from Eastern Europe who came to take British jobs. The defenders of the European Union lost because the British lower middle classes said, ‘Stop!’” Macron told a British newspaper.20
