At the G7, U.S. President Donald Trump turned a polite closed-door meeting of the world's elite into a reality show styled insult fest. It appears that a world trade war is unavoidable.
Most of the business press, along with various elites, have condemned Trump's moves. John Ibbitson of The Globe and Mail has gone so far as to say that this is the end of the whole western order, of Bretton woods, the World Trade Organization, of American-inspired liberal free trade all over the world.
As early critics of the western liberal order, those who challenged it at the Seattle WTO talks in 1999 or at the Summit of the Americas in Quebec City two years later, and who opposed NAFTA and a host of other acronyms, should we progressives be jumping for joy?
We have long criticized free trade agreements for liberalizing markets at the expense of the broader well-being. We have argued that the drive to privatize everything and open everything to free markets endangers the common good and our environment. We have maintained that an international free market without protection brings us all to the lowest common denominator. In this situation, our public interest regulations, our wages and our control over our economy and the environment get lost in the global economic shuffle.
And we have been proven right: since the fall of the Berlin Wall, the global economic order has shifted towards neoliberal policies that are moving us towards levels of inequality not seen in generations, bringing our societies, as French economist Thomas Picketty has said, to a time as unequal as before French Revolution. Internationally, the power of labour unions and workers has plummeted. There is an upsurge in "the losers" from rampant globalization, living in hollowed-out industrial belts, clamouring for change wherever they can find it, whether it be Donald Trump or his recently-elected imitator Doug Ford, or the Jeremy Corbyns and Bernie Sanderses of the world.
So what do we say about tariffs? While economist David Ricardo two centuries ago and his modern-day ilk have decried tariffs as a mortal sin, this does not necessarily mean they are naturally good. They can be an element of a national industrial strategy and an arm of public policy. But this should not make them objects either of fetish or of scorn.
In the current context, it is obvious that Trump is using tariffs as a crude weapon in his "America first" crusade. The U.S., having led the establishment of the postwar liberal economic system, will be the one to explode it on its own terms, using the power of its economy to inflict pain on its trade partners, China in particular. This is nothing more than an extension of U.S. power in the world, as if it did not have enough already. Naturally, countries retaliating with their own tariffs can be seen as justified in standing up to these aggressive bullying actions.
But in the economic chaos that lies ahead, will workers recover the higher wages they earned prior to the expansion of trade? Will protectionism restore prosperity to the steel belt and to other industrial sectors? With unions having lost ground, particularly in the manufacturing sector, probably not. Other policies have reinforced the decline in wages.
Lost in the debate is what will happen to the rest of us. What do we get out of NAFTA? Though the global trading system has reduced our power, getting rid of it will not necessarily restore our rights. Enhanced communications and transportation have brought us together, and the world we live in is undeniably global. Furthermore, we are all linked by pressing concerns such as the environment, where it is urgent that we come together. And with more migrants ever since the Second World War- fleeing climate change, war, and persecution, we need global solutions more than ever.
This is the fundamental difference between populists and progressives. Populists view the world as better before globalization and yearn to return to the past not only on world trade but also to a time of white picket fences, with women staying at home and strange people kept far away. For progressives, the way forward is a new world where global standards on labour, the environment, tax shelters and much more are enforced worldwide, where we can take back the global space from giant corporations and their various enablers.
Populists make a lot of noise about defending the little guy. But in cutting corporate taxes, social programs and workers' rights, they are doing just the opposite. On trade, populists do their part to stand up for corporate interests, or at least the ones they like. They have little to say about enforcing environmental or labour rules. But they are big on change. Or rather chaos.
They seem to not have died in the 1930s. Recent elections in Italy, Turkey and Austria, show that strong men are back in fashion.
So while the whole economic system is being thrown a curveball, the spotlight is being focused yet again on debate between populists and neoliberals. A third vision, one that would curtail corporate rights and enshrine human rights and the environment in development agreements, is being hidden from view.
Photo: Whitehouse, Flickr Media Commons