Does Globalisation Account For The Trump And Leave Victories In 2016?

Fears of Globalisation, according to US President Barrack Obama, and its disruptive effect caused the UK to vote to leave the European Union and the election of Donald Trump. But, does that really stack up?
Chris Radburn/PA Wire

Fears of Globalisation, according to US President Barrack Obama, and its disruptive effect caused the UK to vote to leave the European Union and the election of Donald Trump.

But, does that really stack up?

Firstly, what do we mean by the term?

Globalisation can be defined as:

•The increase in interdependence between states and economic actors

•The increase in speed of transactions and decisions

•An increase in knowledge and ideas sharing

Secondly, it is not a 'new' phenomenon, and can be traced back hundreds of years, and has utilised and been facilitated by a variety of media, including print, telecommunications, and now the Internet. In recent years it has become associated with capitalism (in particular, the US model of capitalism), and the associated rise in corporate influence, hence it is very often described as a malign force that needs to be 'challenged'. This is despite all the non-economic benefits that it has brought.

The transfer of knowledge has helped great advances in education and healthcare, information sharing has spread notions of human rights and increased the social welfare of many millions across the globe, and the interdependence and co-operation has generated a whole slew on international efforts to protect the environment. Yet, as the late Milton Friedman said "there is no thing as a free lunch," and all of this has come at a cost.

The opening up of markets and resulting expansion of globalisation since the fall of communism in the late eighties and the nineties combined with market reforms in China generated a global boom in commercial activity, with the WTO reporting a threefold increase in the volume in traded goods in the period 1990-2010.

The chief beneficiary of this period has been, of course, China, which now accounts for:

•90% of computer production

•71% of mobile phone manufacture

•63% of shoe making

•61% of steel production

•60% of cement making

•48% of global coal production

•45% of shipbuilding

One of the major losers in this transfer has been the United States which this month reported that its Industrial Production fell year-over-year for the 14th straight month - the longest period of contraction without a recession in 96 years. So, it perhaps not surprising that Trump fought the election on a platform of closing America to foreign competition; in particular competition in the labour market from Mexican immigrants and protecting US manufacturing from Chinese imports. To ensure these policies worked he famously spoke about building a wall along the Mexican border, and beefing up the American military in the South China Sea. Introspective, Keynesian policies supported by a strong military.

In this regard President Obama is right, the Trump victory was influenced by the fears of Globalisation.

However, I believe that the Brexit campaign was different. While I acknowledge that some of the Leave rhetoric concerned the wage compression arising from the arrival of migrant workers from the European Union, most support, acknowledged by the Lord Ashcroft super-poll, for Brexit came from a desire to restore sovereignty to the United Kingdom ("The principle that decisions about the UK should be made in the UK").

The Referendum was 'won' by a desire to restore the principles of the Westphalian model and sovereign equality, namely "the principle of international law that each nation state has sovereignty over its territory and domestic affairs, to the exclusion of all external powers, on the principle of non-interference in another country's domestic affairs, and that each state (no matter how large or small) is equal in international law."

Alongside the desire for a return to the Westphalian model was a wish for the UK to cut its own free trade deals unshackled by EU regulations. Most of the figureheads of the Leave camp stressed the desire to get out into the world and trade; they wanted a continuation of trade with EU members but not on an exclusive or prioritised basis. Much of the rhetoric was based upon restoring the UK as a global trading nation and the Leave camp called for deals with new and emerging markets, and it is no surprise that Theresa May's first trip as Prime Minister was to India to talk about trade, and one of her first commercial decisions was to confirm Chinese investment in Hinkley Point C.

So it seems that on Brexit, the President was wrong, it could be said that the aims of the Leave campaign and that of Trump were polar opposites. The Leave campaign wanted greater global interaction while the Republicans wanted less, that fear of Globalisation affected the American outcome, but its opportunities spurred the Leavers.


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