There is a limit to how long the ruling class can ignore what voters feel deep in their bones. Or, as we saw in the EU referendum, how effective is a strategy that simply tries to rebut with dry statistics and economic analyses of dubious credibility that which people intuitively know.
So here is what people feel in their bones. Globalisation is running out of steam as an effective way of lifting living standards for the vast majority in the developed world. In many people’s minds globalisation is now largely associated with shifting employment to lower cost countries without any clear way of replacing the jobs lost in the developed world, increasing corporate power at the expense of the citizenry, falling living standards, and an undermining of the welfare state. No amount of rear-view mirror economic statistics on the past benefits of globalisation will likely convince many that those same benefits are still to be had going forward. As a result, CETA is most likely a dead duck and TTIP is heavily winged and possibly can no longer fly.
Other concerns are scuppering global deals. Proposed takeovers of Syngenta in Switzerland, Aixtron in Germany and San Diego’s Hotel del Coronado by Chinese investors have stalled – some of over 11 major acquisitions by Chinese investors that have been dropped since July over security concerns (in case anyone is wondering, the Hotel del Coronado sits just next to a major US naval base).
Open internationalism has morphed in people’s minds from being an integral component of aspirations to peace and prosperity to being seen as a threat to security and prosperity.
In this environment, how will politics respond?
One (successful) approach is the Trump/UKIP/Le Pen route of playing on such fears, fomenting them and holding them up as clear evidence of an incompetent and uncaring Establishment. This is an approach that has resonance with a huge swathe of the public and, as we have seen, it has altered the political landscape dramatically even in the absence of much direct electoral success.
Another is the UKIP Lite (actually not quite so lite) approach being taken by Nicholas Sarkozy and the current U.K. government. By taking the same line but attempting to maintain greater credibility than the insurgents, these current or previous incumbents hope to deflect some of the insurgents’ attractiveness to voters. Yet there is little evidence that such a campaigning stance is backed by much depth in terms of policy response. The current seemingly chaotic state (though it is impossible to know what is going on behind the scenes) of how the government plans to position itself for Brexit negotiations does not bode well. It is also challenging for these parties to find a coherent framework that matches the anti-EU, anti-globalisation rhetoric with more calls for free trade agreements with all and sundry – when it is exactly such free trade agreements that are perceived to be at the root of the problem.
Then there is the steady as she goes option. Pretending that everyone knows what they’re doing, it’s all been a great success and we should carry on on the same path because success is surely just around the corner. This is the response that gains most support from technocratic bodies such as the IMF and others.
These are all political campaigning responses. But we have, so far seen very little in terms of actual policy initiatives that might mitigate some of the disadvantages of globalisation without throwing the whole process of open trade into reverse. In our recently published book, we suggest that one of the components of a way forward should be the active encouragement and nurturing of ultra-local economies. There are various ways in which this can be done. It is an approach that can successfully stand alongside a free trade world while offering people alternative routes to local prosperity.
Such an approach is not “the answer”. But it could be an important component of an overall comprehensive approach. Could it ever happen I wonder?