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Supporters of U.S. Republican presidential candidate Donald Trump cheer during a campaign event at Grumman Studios in Bethpage, New York April 6, 2016. REUTERS/Shannon Stapleton - RTSDX7G
Reuters/Shannon Stapleton
There are economic factors at work here.
FEELING PRETTY PSYCHED?

It’s the end of globalization as we know it

By Matt Phillips

At first, it seems like a small thing. Reuters reports this morning that the European Union is weighing whether to start requiring visas from Canadian and US visitors to the region.

This would be an incredibly shortsighted thing to do, given the lucrative tourist trade based on North Americans traveling to the continent. And it likely won’t happen.

But its mere discussion—a response to the US visa requirements for visitors from poorer parts of the EU such as Romania, Poland, and Bulgaria—underscores the very real backlash against pro-globalization economic ideology of the last 25 years.

As the Wall Street Journal recently pointed out, the key forces of globalization—rising international trade and capital flows—have stalled out. In many senses, they’re foundering on a particularly tricky bit of globalization that is now a snag between the EU and the US: The flow of people.

The movements of people in recent decades has pushed the political limits of globalization in the rich world. The evidence is everywhere. It’s in Donald J. Trump’s ugly comments about Mexican immigrants and his promises to build an impregnable wall between the US and its southern neighbor. It’s manifest in the complaints about an influx of eastern Europeans in the the UK, now fueling the push for Brexit.

The neofascist Golden Dawn party has held Nuremberg-style rallies in Greece, amid ongoing economic strain and the more recent migration crisis. In Germany, Frau Merkel’s determinate promise—”we’ll manage it”—to deal with an influx of immigrants collided headlong with real anxiety among the electorate. Her party suffered major losses in recent state elections, including to the anti-immigrant AfD party.

It’s legitimate and natural for people to be concerned about the free flow of people in light of a string of attacks (see San Bernardino, Paris, Brussels) tied to terrorists who either came from other countries or crossed borders in order to train or plan with terrorist groups. And studies have long found that when it comes to the formation of anti-immigrant sentiment, noneconomic concerns are more influential than pocketbook worries such as the effect of immigration on wages.

There are still economic factors at work, though. And the failure of globalization to generate real gains for a majority of the population in rich nations comes alongside the anxiety that’s now being expressed in opposition to both immigration and other elements of free-trade focused ideology.

In his excellent recent book Global Inequality, former World Bank economist Branko Milanovic points out that while globalization has provided huge benefits, the vast majority of those benefits have accrued to people at the bottom of global income distribution—effectively those who’ve been lifted out of poverty in Asia—and the world’s super rich. Meanwhile, those who would count among the middle-classes in the world’s affluent nations have seen remarkably little improvement in their standards of living in decades.

People often point to the data suggesting that the recent boom in immigration has receded. In the US, for example, illegal immigration from Mexico to the US has slowed since end of the housing boom that preceded the Great Recession. Overall, immigration to the affluent nations that make up the membership of the Organisation for Economic Cooperation and Development, while trending up, remains below its recent peak.

It’s only now, in the aftermath of all that globalization and its failure to produce the benefits sold to voters in relatively affluent nations, that we’re seeing the backlash. That doesn’t mean a Trump presidency is a foregone conclusion. But unless globalization starts delivering real, recognizable benefits for voters in rich nations, the next generation will likely inherit a world with many more walls.