The corporate grandees of economic globalization (otherwise known as the masters of the universe) and their governmental retainers, huddling at the World Economic Forum in Davos, Switzerland, for their 46th annual conclave, are in a funk over the chronically lackluster performance of the world economy. More than that, they’re in varying degrees of shock due to the recent political upheavals generated as a result — the rise of Donald Trump in the US and Marine Le Pen in France, the successful Brexit campaign in Great Britain, the fall of Matteo Renzi in Italy and (potentially) Angela Merkel in Germany, and the growing proliferation of right-wing “populist” parties throughout Europe.
After interminable years of waiting, the promise of globalization has gone largely unfulfilled. By nearly all measures, inequality has increased, and the developed world’s middle classes have shrunk, while growth rates have slowed dramatically in the face of increasing debt levels. A study of advanced economies produced under the auspices of the Davos forum has revealed a combined decline in median income of 2.4% between 2008 and 2013.
Statistically, America’s economy was close to the worst. Among the top 30 developed countries, the US ranked 23rd economically — 25th in productive investments (R&D, infrastructure), 25th in social protections, and dead last in wage and nonwage compensation. Unsurprisingly, the 2016 Credit Suisse Global Wealth report showed America’s richest 1% controlling 42% of our total national wealth.
In light of such discouraging data — and the subjective observations of the man or woman in the street — the integrated world economic order championed by the multinational corporations and the servile political establishments catering to them has begun to seem a bad joke. The obvious problem is capitalism as we know it, the “winner-take-all” capitalism that has evolved during the era of economic globalization.
Economist Joseph E. Stiglitz puts a finer point on it. “The stark reality,” he told the New York Times, “is that globalization has reduced the bargaining power of workers, and corporations have taken advantage of it. ... You have to recognize that the way we have managed globalization has contributed significantly to inequality.”
Stiglitz offers as a solution the transfer of wealth and power from people like the Davos attendees to ordinary workers through more progressive taxation, increased labor protections, and greater bargaining rights for unions. Christine Lagarde, director of the International Monetary Fund (IMF), who shares Stiglitz’s perspective, sums up the needs of the struggling international middle class in one word: “redistribution.”
The masters of the universe won’t have it, of course. One CEO in attendance at Davos, Ray Dalio, billionaire founder of the investment firm Bridgewater Associates, told a forum session the key to eradicating inequality and raising the middle class was simply to “create a favorable environment for making money” by, among other things, ending government regulations on business. And his guy, not someone sympathetic to Stiglitz and Lagarde, will be the occupant of the White House for the next four years.
The triumph of the One Percent worldwide did not happen in a vacuum. To its everlasting shame, the so-called Left meekly acquiesced in the globalization project, even after the financial crash of 2008 and the ensuing recession exposed its emptiness for all to see. Once vital social-democratic parties in Western Europe (Labour in the UK, the Socialists in France, the SPD in Germany) got along with the multinationals by going along, thinking they could control and shape their behavior; in the process, they sold out their working-class and middle-class constituents. On this side of the Atlantic, America’s Democrats, Canada’s Liberals, and Mexico’s PRI did much the same thing.
Finally, in 2016, the chickens of global capital came home to roost. Weary and disgusted voters, despairing of any meaningful leadership from the Western world’s tired and compromised center-left parties, took the only apparent route of protest against the status quo and cast their ballots for the worse alternative, the crazy and extremist Right. As the European Union struggles to hold itself together, it appears the Continent’s liberal democracies, having tried to ride the tiger of corporate globalization, have instead been eaten by the tiger.
In Donald Trump’s America, things are a little different. Trump’s protectionist foreign-trade approach has always put him somewhat at odds with the globalizers, but only to a degree. He remains a committed capitalist of the old laissez-faire school, and so his answer to globalization’s chaotic dislocations is not to blame America’s multinationals, but to redirect criticism of their cruel dysfunctionality toward external threats while embracing their fundamental creed. Trump and the Republicans are, in effect, going to double down on exploitive capitalism. The big will figuratively eat the small, the strong will literally crush the weak, and everyone will be unashamedly in it for himself.
If all goes according to plan, we can expect the following: In health care, there will be a push for replacing government-administered Obamacare, Medicare, and Medicaid with individualized shopping in the private-insurance market, using tax credits, health savings accounts, and medical vouchers; this will guarantee “universal access,” but not universal coverage, providing health consumers with only the coverage they can afford.
In education, there will be public vouchers to send children to private or religious schools, high-interest corporate financing for student loans, and the replacement of public schools with privately owned, for-profit charter schools.
In energy, there will be a policy attuned to whatever Exxon Mobil wants, including the use of public lands for private oil and gas development, large-scale coal mining, and logging.
In banking, there will be a return to the pre-2010 status quo ante, with less government oversight on lending, little financial disclosure, and minimal liquidity requirements, along with an end to the Volcker Rule’s ban on speculation using customer deposits.
At home, all solutions will be market solutions, the One Percent will rule, and profit will be the name of the game. Abroad, the villains will not be the duplicitous, offshoring multinationals, presumed to be innocent bystanders, but rather “other countries” — China, Mexico, Germany — which (as the president said in his inaugural address) are out to “ravage” us, stealing our products, our companies, our jobs, and our prosperity. A xenophobic Trump will put them in their places and put America’s (corporate) interests first.
After an extended hiatus, the Ugly American is back. Enjoy!
Wayne O’Leary is a writer in Orono, Maine, specializing in political economy. He holds a doctorate in American history and is the author of two prizewinning books.
From The Progressive Populist, March 1, 2017
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