Brexit, Trump and now Le Pen. As the old, established economies turn inward and nationalist, global trade and co-operation suffer. It’s been left to the new, New World, what used to be called Emerging Markets, to carry the torch of free trade.
As Tim Harford notes: “The first and most fundamental insight is that all human civilisation is built on some sort of trade.” ALL human civilisation. Productivity and progress rely on exploiting comparative advantages with trade, to everyone’s gain.
But the old guard, turned new protectionist, seem to be blinded by populist memes, and deaf to economic commonsense. Short termism rules, if you’re chasing votes, not growth.
The new champions, China, India, Africa and Latin America are carving themselves a future based on encouraging trade and cooperative competition, even as the loss of rich-world markets shrinks the global pie. In the long run, open economies will thrive and flourish, despite the best vindictive efforts of the old masters!
It’s ironic to think that the lessons learned by China, that closing itself off from the world only leads to deprivation and decline, are lost on the ‘enlightened’ nations of America and Europe. Luckily there are hungry competitors in the Gulf states and Australasia to take up the slack. Opportunities abound for the bold!
A decade from now, the newly disenfranchised, formerly leading countries will look back and say: “How did we end up on the wrong side of history?” But in the surging tide of populism and nationalistic fervor, all that matters is the majority vote.
Those who know that walls don’t work, that ‘security’ creates barriers and isolation, will be the victors. But we could have all profited from a more open world. There lies the tragedy!