Trump’s anti-globalist vision of putting ‘America first’ to ‘Make America great again’ is explicitly outdated. Such a lens is a clear error in political leadership, since even if the Trump administration successfully recreates an era of protectionism, it cannot recreate past conditions under which those policies might once have made sense.
Take demographics. Since the Cold War began, humanity’s population has doubled. Our urban population has quadrupled. Over 90% of humanity now lives within one hour of a major city. This massive, dense urbanity has done far more to open our economies to trade and investment (and amplify financial, security and pandemic risks) than global trade and investment treaties. Trade treaties are only a thin veneer of convenience that governments have laminated over top of this irreversible, tectonic shift in human geography. Cancelling them does not undo that shift. Cancelling them may, however, erode countries’ capacity to shape the consequences and mitigate the risks for their citizens. That’s my fear. (Please point me to evidence that I might be wrong, and that re-raising walls might actually raise aggregate well-being.)
Chinese President Xi’s vision of ‘economic globalization’ is likewise an attempt to re-apply outdated solutions to present-day problems, in defiance of changed circumstances. Fifteen years ago, China joined the WTO. The resulting export boom helped the Party soothe many necessary-but-painful structural adjustments—and lift a billion Chinese people out of poverty. But now it’s clear that, in many industries, China has overshot its growth potential. (I blame official corruption.) Now it is stripping overcapacity from the very same sectors that it has been subsidizing for years: automotive, energy, steel, even graphene.
’Economic globalization’ is Xi’s way of wishing for a fresh kick of free trade and investment to ease the adjustment process again. It worked 15 years ago. But this time the ‘developed world’ sees China with more skepticism. Then, gaining access to China’s vast internal market was the all-important carrot. Now, that allure has faded. The Party has proven unwilling to open many ’strategic’ industries to foreign investment; Chinese regulators are increasingly hostile to foreign businesses; and subsidized industries (think steel) have dumped production onto export markets at prices far below cost—good for propping up bloated industries at home, but a job-killer abroad.
Neither Trump nor Xi has the right vision for now. Each in his own way aims to solve urgent problems at home by simplifying away the problems of the rest of the world. When the next big shock comes (and it is coming), they will both discover their common error: mitigating the risks of the present Age is a cooperative game…