writer: Anshu N. Chatterjee
President Trump’s campaign promise of bringing back jobs to America, blocking the rise of China, putting a hold on H1B visas, and very recently, plans on taxing imports from Mexico is a rallying cry against globalization and free markets. Teresa May’s Brexit attempts also mirror the same resistance. An interesting new twist as these two leaders are from countries that promoted/pushed for and arm-twisted globalization upon the rest of the world in the 1980s. Now, in a reversal, they seek to contain the expansion of free markets. In this turn of events, those who pushed for open markets (i.,e Republicans) are trying to stop it and those who protested NAFTA, worry about moves against it. Apparently, the neo-somethings have lost control of the forces they unleashed in order to gain access to the so-called emerging markets.
Neither President Trump nor PM May, and their backers approve of how globalization has shaped up for their countries. Yet, America remains one of the richest economies in the world, with highest incomes, moderately-low unemployment and a stock market that hasn’t quit in couple of years. In fact, of the 8 richest men in the world announced by Oxfam, six of them are Americans. So what’s the problem for President Trump, his backers, and his patriarchal constituencies? Where is the carnage?
The answer to this question lies in the examination of the alliances that backed Trump. First the obvious: clearly there are American states that are not doing well. The downturn that started in 1998 saw a loss of over 5 million manufacturing jobs by 2013. These jobs left the country for areas where labor was much cheaper. Take Pennsylvania’s economy for example, the state that surprised the Democrats during elections, saw high rates of unemployment until 2014 as did several other states. It actually saw some recovery in 2015, but then in 2016, a small downturn enhanced anger and fears. Hence, the focus on manufacturing during the campaign. California and New York did not see such reversals in employment. Can states like Pennsylvania alone explain the gain in votes for Trump? No. But such economies did provide fodder for mobilization for those who deeply disliked the Obama administration.
An important concept to keep in mind is the notion of relative deprivation and pure opportunism. Being left behind by their peers enrages the wealthy quite a bit usually. Some of the men that backed Trump’s campaign come under this category. Jane Mayer’s Dark Money follows the wealth behind Donald Trumps’ campaign. They were not on the list of the 8 richest men in the world, yet they do come into the category of the richest in the world. Some famous ones on the list are: Ed and David Koch (the kingpins of oil, minerals, and fracking) and Robert Mercer (who faced Congressional scrutiny in 2014 for dodging taxes) reflecting anti-Obama faces. Some others joined in order to make more money from Trump’s promises of deregulation and ending the scrutiny that had followed the banking/lending crisis. Schwarzman of Blackstone Group, invested highly in real estate, stands out. He made a killing during the early 2000s and continues to do so. He is now is poised for the next run if his birthday bash is anything to go by. If you believe Mayer, these men produced candidate Trump and used their money to link him to the poor in sectors who lost out due to the reduction in manufacturing and natural resources industries. Meanwhile, they don’t come under the category of the successful in high tech/information/service sectors that have thrived in the global setting: six of the richest, i.e., Gates, Bezos, Ellison, Zuckerberg, Bloomberg, and Buffet, appear to be doing well. So Trump promises to contain Pandora’s box of globalization by taxing American corporations that manufacture externally and to undo trade agreements.
And what has this got to do with Asia, the focus of this blog?
Pre-1980s, India, China, and other such markets were full of people who wanted access to 501 jeans, Abba cassettes, Sony TVs, refrigerators, watches, and of course, Disney movies. After WWII and the end of state-led colonialism, such consumers were contained by their governments in order to grow their exploited and underdeveloped industrial sectors through protected markets. Initially some countries did well in these settings. Open markets as the best solution became a dominant idea in the 1970s, after the oil shock that led to a severe global debt crisis, primarily due to the Israel/Palestinian conflict. Following, the Reagan-Thatcher partnership, IMF, and the World Bank all pressed structural adjustments onto the world.
Several countries opened their doors starting from the mid-1980s, ushering in an era of globalization. As a consequence, a new global elite emerged in these countries as the field of play was, as Friedman writes, increasingly leveled. Evidence of this lies in the cost of living in the global-cities of Asia, which are equivalent to global-cities in the West. Supply and demand etc., if it works, shows that some Asian elite, poised in their markets, made extreme amounts of money,. Globalization worked for them as it did for some in the United States. Some significant changes occurred in the USA as manufacturing shifted from the West and moved to countries with cheaper labor and commodities, which now Trump and his backers promise to bring back.
It is unclear whether the President can reverse the trend as globalization’s drivers appear to be quite dispersed. They represent governments, corporations, and in some countries, entire classes of people. Candidate Trump’s threat to China, followed by the President-elect’s meeting with Jack Ma of Alibaba soon after, is evidence of this. Mr. Ma proposed setting up something in America; to give American businesses access to the Chinese consumers and by doing this, help create American jobs. Jack Ma would then have access to American labor. So it appears that it is not only the Apples and Nikes of the world, who go to other parts of the world, Asian companies want to come to America too and in a significant way.
However, what President Trump is missing is that globalizing corporations aren’t doing this without the backing of their states. Apple, Nike et. al. did well because their state pursued deregulated markets for them. And Mr. Ma is not alone is his business endeavors either. In an interview with Charlie Rose, he stated his partnership with the Chinese state in creating more jobs for China. And in return, they said they would make a memorial for him. In 2016, he helped his government understand how they can use big data to catch bad guys raising the question of what his company was willing to do to help the Chinese state. This is not a sign of a company that is de-linked from its state; more like a cozy love nest; a marriage of state with private corporations, etc. Not a new story.
How the Trump administration will use its market is no doubt critical for the health and shape of international trade as the USA remains the largest consumer market in the world. However, there are other engines of global trade that may not be as easy to tame; such as corporations, governments, allies, social media, etc. For instance, China in Mexico, Ma in the USA, Saudis in Arizona, Indian start-ups in Chile…such drivers of globalization are many.
