strategy+business: Corporate Strategies and News Articles on Global Business, Management, Competition and Marketing

Living in a World of Walls: The Backlash to Globalization

A conversation with Ian Bremmer about nationalism and populism, which will remain potent political forces — at least until some fundamental issues are addressed.

The rise of politicians such as France’s Emmanuel Macron has made it seem as though the populist wave of 2016 has run its course. But geopolitical expert and author Ian Bremmer disagrees. He argues that the upheavals of 2016–17 were just the beginning, because the implicit promise of globalization — that it would lead to widespread economic growth — is impossible for established leaders to keep.

This is the second in a series of conversations between Bremmer and strategy+business editor-in-chief Art Kleiner. They spoke by phone this spring, just before the launch of Bremmer’s new book, Us vs. Them: The Failure of Globalism (Penguin, 2018).

KLEINER: Some of us who work for large multinational organizations have assumed that the populist political movement will cool. In Us vs. Them, you say that’s not going to happen.
BREMMER:
There’s no reason to believe it will wane. The strong antiestablishment sentiment underlying the 2016 elections will continue. By establishment, I mean the same three groups that the Five Star Movement in Italy has defined as the establishment: political leaders, business leaders, and the media. Along with the military, these are the institutions that people have turned to most in the past for values and leadership.

And for the last several decades, on pretty much every front, these institutions have not delivered on issues that matter to the average person in the U.S., Europe, or a number of emerging markets, including Brazil and Mexico.

KLEINER: You mean that if political and business leaders had acted differently…
BREMMER:
…the populist wave in elections, in the U.S. and Europe, would not have taken place.

But we’re talking about fundamental factors in which it took years for the effects to become apparent. For example, the United States did not have to spend trillions of dollars and waste thousands of lives in wars in Vietnam, Afghanistan, and Iraq. In addition to the unspeakable tragedy of the lives lost among people who lived in those countries, consider the Americans who died or were severely wounded there, and their families. After the draft ended in 1972, and the U.S. shifted to a largely volunteer military, the toll fell most heavily on working-class people, because they were more likely to sign up. They gave the ultimate sacrifice, and those who came back were often broken, physically or psychologically. They weren’t treated like heroes.

The strategy behind those wars was essentially to promote advancement for the U.S. in the global sphere. The people who sacrificed the most for those wars didn’t see themselves as benefiting from that strategy. Ultimately, that’s one reason they — and people who identified with them — didn’t want to vote for the establishment anymore.

KLEINER: What are the other reasons?
BREMMER:
Well, the most important other reason is open borders. Personally, I’ve benefited from open borders. You have, too.

KLEINER: Just about every organization I’ve ever worked for or with, starting with the Whole Earth Catalog, took for granted that open borders were beneficial.
BREMMER:
Historically, the U.S. was founded on this concept. Europe has similarly strong values for openness and tolerance that go back to World War II. But over the course of the last few decades, many people have come to see open borders as a serious weakness.

 
Get the strategy+business newsletter delivered to your inbox

(sample)

 

Part of it is the security issue. In Europe, in particular, the wave of Syrian, Afghan, and Iraqi refugees, and the rise of terrorism, were impossible to ignore. But even without that, the trend is toward more restriction of immigration. When potentially millions of people move into your country, you don’t feel you share an identity with them, the country itself becomes segregated, your own financial and educational situation is not improving, and your infrastructure’s falling apart, then you’re naturally going to vote for a government that promises to take care of its own people first.

And if you’re labeled deplorable or racist, you’ll think, “Wait a minute. We can take care of everybody else when they fall into misfortune, but not me? That’s not OK.” The establishment didn’t appreciate how strong this reaction would be.

You could say that racism played a role, but why was racial identity so important? Why did it emerge as a factor in the 2016 election, after years of people working and going to school with people from other ethnic backgrounds? It wasn’t just because some politicians promoted it. People now feel they have reason to be afraid of open borders. And when you’re afraid, you’re more likely to regard people on the other side as “them”: not deserving of basic rights or good treatment. You’ll adopt an “us-versus-them” mentality.

During the primaries, Donald Trump said, “If you think walls don’t work, all you have to do is ask Israel.” He was right. Their walls have managed to keep the Palestinians out. And if you can ignore the Palestinians, Israel has the best-functioning government in the Middle East, including for Arabs who are living in Israel. It’s safe, it has a vibrant democracy and a free press, and it’s relatively free of corruption. It’s transparent, patriotic, and wealthy. Its citizens believe in it.

We will see more situations like that, where walls — or virtual walls, using sensors, infrared cameras, and biometrics — are used to keep people out or push them out. This state of affairs will last a long time…

KLEINER: …as long as people don’t care about “them” on the other side.
BREMMER:
Or as long as they feel that the responsibility for “them” belongs to the government on the other side.

Backlash against Open Borders

KLEINER: There remains a reasonable argument that open borders are better for the whole economy.
BREMMER:
But that argument has not been proven correct, especially for the future. The lower-cost labor associated with immigration is not as important when you have better robotics and when 3D printing can create a house foundation in a matter of hours.

KLEINER: What about free trade?
BREMMER:
That’s the third factor that created this backlash. Free trade is good for overall economic growth, and it brings down the price of goods. But the lost manufacturing jobs add to the pressure on the working class. And the money made through free trade stays with the top 10 percent of the economy. Most of this imbalance could and should have been prevented years ago by those in power: politicians on all sides, CEOs and bankers, the media on the left and the right, and the public intellectuals.

KLEINER: Are there any other factors at play?
BREMMER:
Technology. Not only are jobs being lost, but digital communication is facilitating the segregation of the populations in Europe and North America. Businesses make more money when they can market to narrower groups and allow them to communicate only with those within the same group.

KLEINER: Do you think the next industrial revolution, like previous ones, will create more jobs than it destroys?
BREMMER:
Even if it does, that doesn’t mean that those jobs will be available to the people who need them. I worry about the term “fourth industrial revolution.” It’s often used by people who have a stake in the prevailing attitudes about economic growth. It’s much more likely that we’ll have a “post-industrial revolution” in which many people are rendered irrelevant to economic growth. They won’t have anything to provide or produce, and therefore, they too will be regarded as “others.”

KLEINER: It’s as if we’re having a showdown between two basic views of humanity. In one view, nobody is truly innocent, everybody’s out for advantage, and you should regard anyone you don’t know with suspicion. That’s why you want closed borders. On the other side, most people are basically innocent, but stifled by poor conditions around them. When people escape those conditions, bringing their potential with them, the places that accept them ultimately benefit. That’s why you want open borders.

Sooner or later, government and business leaders have to decide which view to favor.

BREMMER: It’s pretty clear that the closed-border view is winning. When Angela Merkel kept German borders open during the height of the immigration crisis in 2015, much of the country turned against her. Despite the fact that the German economy’s doing very well for its middle and working classes, the anti-immigration Alternative fur Deutschland party is now polling at at least 16 percent in popularity, which is extraordinary. It’s higher than the Social Democrats. No one would have predicted that five or 10 years ago. In addition, the Chinese economic model is the most generally successful model, and it too follows the closed-border view.

India as a Bellwether

KLEINER: It’s still not clear how far the world will travel in the direction of your “us-versus-them” mentality. If you had to pick one country as an early indicator, which would that be?
BREMMER:
India. For decades, it was seen to be the emerging giant along with the Chinese. Then China moved farther ahead economically, but Western commentators still bet on India, because it was more liberal and democratic. There was also a view that as China’s people prospered, they would force its government to be more open and admit more democracy.

If ever there was a time when globalist arguments should be convincing, you’d think it would be now. If there’s a recession, the backlash will become even fiercer.

India is now growing faster economically under Narendra Modi, but it’s still decades behind China in technological prowess and economic development. India’s leaders have to decide whether to stay with the liberal democratic model or to embrace the Chinese model of authoritarian governance and rapid economic growth. You can see them leaning toward authoritarianism in the way Prime Minister Modi is treating the media and NGOs, and in the way people associated with him embrace Hindu and Indian nationalism.

One thing that makes me pessimistic is that in the early 1990s, technology was seen as a force empowering individuals. Now it is seen as a tool for surveillance and data control, wielded by large organizations. We’ll be living in a world of walls for some time, but not all the walls will be made of steel and concrete. Some will be managed by AI.

KLEINER: At the end of your book you say that things will have to get worse for the globalists before they get better for everyone else. What do you mean?
BREMMER:
Well, as disturbing as our political conflicts may be — and they’re getting worse — they’re taking place in the best possible economic environment. The International Monetary Fund expects 3.9 percent growth globally for 2018 and 2019. That’s better than at any time in the past 10 years. If ever there was a moment when globalist arguments should be convincing, you’d think it would be now. If there’s a recession, the backlash will become even fiercer. And we’ll probably have to go through a recession before the establishment leaders are willing to change in any meaningful way.

KLEINER: What should a reasonable-minded business leader be thinking about to stay ahead of the crisis, if there is one?
BREMMER:
There aren’t really complete answers to that question yet. Some businesses and governments are just beginning to experiment with new ways of ensuring that the needs of the public are met, even if government itself is only part of the solution.

It’s not really clear what people expect from government, beyond secure protection. A job? A better life for their children than they had? Good roads, bridges, trains, and ports? Safe drinking water? A safe Internet and protection from cyber-threats? Medical care? Or a say in how government is elected? We’ll see a lot of countries providing different answers, and for many people, it won’t be possible to pick up and move to the government whose answer they prefer.

KLEINER: When you say “experiment,” what kinds of things do you mean?
BREMMER:
I picked out just a few examples from the thousands out there to mention in my book. One of them is the Revolution “Rise of the Rest” investment fund, started by AOL cofounder Steve Case and Hillbilly Elegy author J.D. Vance, which focuses on businesses in communities hard-hit by globalization. Another is the Rumie Initiative, a nonprofit that provides interactive learning devices for kids in refugee camps. There are job creation programs, projects that safeguard elections, and new services like M-Pesa, the payment system that people in Kenya depend on. The best of these experiments foster their own innovation. They don’t just solve problems for individual people. They find ways to push back against the immense blocks that the globalists, mostly unintentionally, have placed in everyone’s path — including, ultimately, their own.

Author Profile:

  • Art Kleiner is editor-in-chief of strategy+business.

Comments

 
Living in a World of Walls: The Backlash to Globalization