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Populism's Hatred Of Diversity Will Kill Prosperity

17/11/2016 10:34
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In the days since the US election result, much has been made of the 'whitelash' that appears to have propelled Donald Trump to the highest office in the land.

We've seen the figures showing how white voters, who make up 69% of the total, voted 58% for Trump and 37% for Clinton. By contrast, non-white voters, who make up 31% of the electorate, voted 74% for Clinton and 21% for Trump.

This laser-like focus on the ethnic majority not only confounded the pundits (who believed demographic shifts had made such an outcome impossible) but has echoes of our own Brexit vote, where Lord Ashcroft's polling has shown that those identifying as 'English' rather than 'British' were much more likely to vote leave.

There's no doubt that many white Americans - particularly in the declining Rust Belt states that were critical to Mr Trump's victory - feel a justifiable sense of pain about the loss of industries that used to provide whole communities with secure employment and prosperity. Their grievances can't simply be dismissed as racism or misogyny - there are significant economic imbalances in the US that need to be addressed.

But the simplistic responses offered by Trump on the campaign trail don't offer real solutions and if followed through risk impoverishing further the parts of the country he now claims to speak for. His protectionist impulses could precipitate a full-scale global trade war that would destroy jobs rather than create them.

And his focus on excluding migrants is a classic example of deliberate 'othering' of out-groups to distract people from the real problems and their root causes.

The fact that a nation built on successive waves of immigration should adopt this kind of drawbridge approach strikes many outside observers as odd. This is especially so when we look across the world for examples of highly prosperous nations, which often have higher, rather than lower levels of diversity.

Ethnic homogeneity, it turns out, is a poor predictor of prosperity. If we turn to the Legatum Institute's latest prosperity index, famously monoethnic Japan comes 22nd in the rankings, dragged down by its poor social capital - borne of a lack of interpersonal trust in society outside the family unit, and low levels of volunteering and democratic participation.

By contrast, many of the world's most prosperous countries are ones that not only embrace diversity such as Canada, New Zealand and Australia, but - crucially - also invest in other determinants of wellbeing such as affordable healthcare and education, providing a firm foundation for both economic performance and social cohesion.

The Index places multicultural New Zealand in pole position, noting that "free and open markets, free people, and strong society play a significant role in is ability to turn wealth into prosperity".

Despite only average GDP per capita, New Zealand comes top due to a multitude of other factors that enrich its citizens lives, from ease of doing bussiness to big strides in its NHS-style health service. Its high 'social capital' is evidenced by the fact that 99% of Kiwis can rely on friends and neighbours in times of need.

Canada, meanwhile, wears its diversity as a badge of pride. Its foreign-born population, at 20.6%, is the highest among G8 countries and significantly higher than the US. The country's PM, Justin Trudeau, has stated his belief that Canada's "extraordinary diversity" and high prosperity are "not a coincidence".

Canada and the US also pursue widely diverging policies when it comes to health, education and social protection, with Canada having a much lower Gini score for income inequality than the US, and with 60% of 25-34 year olds having completed tertiary education compared to the US's 46.5%. These factors seem to contribute to a society that's more at ease with itself and more accepting of outsiders.

The US is way down Legatum's list at 17th, despite scoring very highly on some factors including the business environment and having one of the highest GDPs per capita globally (albeit heavily distorted by income inequality). It's let down by poor access to healthcare, high levels of violence and threats to its cherished personal freedoms from the response to global terrorism.

So while populists like Trump and his Brexit brethren may be effective at exploiting grievance and fear to achieve their electoral objectives, they have shown themselves to be sorely lacking when it comes to developing an evidence-based strategy for what comes afterwards.

The great fear of many Americans and their friends around the world is that they choose a superficially attractive but ultimately counterproductive solution to their economic and social malaise that attacks the causes of prosperity instead of tackling the deep-rooted inequalities that have left US society do deeply fractured.

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