What the hell is going on? Globalization plus austerity.

It does feel like events in Europe, with the decision to Leave and the rise of nationalist, right-wing movements, are similar to what is happening in the US with the almost inconceivable rise of Trump.  What is happening?

Lots of media response to that question.  Here is something I think we need to consider.

Globalization is a “net” benefit

Globalization may be a net benefit for modern industrialized societies.  We are usually told that open markets around the globe add one or two percent to the net wealth of people in America.  That is a good thing.

But note that that is “net” wealth.  Some of us benefit a lot, and many of us bear the burden of those benefits.  To see more on this argument, check out my posting on “Thinking carefully about free trade.”  If many people make scads of money, that might outweigh the widespread problems that globalization causes, when everything gets added up.  But just because there is a positive sum doesn’t mean that there isn’t a lot of pain happening.  Here is that discussion:

http://danswartzman.blogspot.com/2015/07/thinking-carefully-about-free-trade.html

The elusive “good living”

So, the last three or four decades of globalization have made fortunes for the wealthy and a good return for the upper-middle class.  But middle and working class people in the US whose jobs were imported are suffering from their losses.  The “good living” that could be had with skills, hard work and a high school diploma is not remotely as available as it was 50 years ago.

No wonder that people paying this price for other folks’ increase in wealth are angry, frustrated, scared, susceptible to demagoguery, following a huckster with no credibility, but who offers them promise and hope.  Less educated white men are demonstrating their despair in the most flagrant way possible, by killing themselves, by drinking themselves to death, by succumbing to drug overdoses. 

A “rising tide” does not appear to lift all boats; it seems to be swamping too many of our neighbors.  If the country is going to continue to promote globalization because it makes us, as a whole, more wealthy, we have to share that wealth with those who know only the pain.

But, I have heard pundits say, what can we do about this?  Retraining?  Maybe, but not the easiest prescription for 50-something laborers with little education.  Increasing programs like the Earned Income Credit, paying for it with taxes on those who benefit from more trade?  Might work, but difficult to pass in today’s political climate.

The obvious answer, to me, is government works programs.  Fifty years of Republican efforts to “starve the beast” have resulted in a crumbling infrastructure in need of trillions of dollars of maintenance, repair and rebuilding.  Just the sort of thing that skilled laborers and craftspeople could do to earn a living, doing something useful for their communities.

Folie de beaucoup

Ah, but we can’t do that because the entire community of industrialized countries is suffering from a “folie de beaucoup” called Austerity.  We have to limit government spending, we are told by “serious people,” because we have to keep down the national debt.  This is a largely unchallenged shibboleth held sacredly among the right, the center-right, the center-left, and the mainstream media. 

Pick at random any column by Paul Krugman, our most consistent and erudite spokesperson for modern Keynesianism, and you are likely to read a thorough refutation of this position.  At a time when the US government can sell bonds at virtually no interest, this must be the moment to start a program to rebuild our infrastructure and to promise work to those who are paying the price of globalization. 

Hillary has proposed a $275 billion program, but that is too timid and insufficient.  Sanders proposed $1 trillion over the next five years.  Still not thinking big enough.

The American Society of Civil Engineers, in their 2013 report card on American infrastructure, estimated the need at $3.6 trillion by 2020.  No wonder they rated the US infrastructure gap at a D+. 

How much and how soon?

OK, I don’t know how much we can afford and over what time period.  But I believe that as long as we ignore the real pain and hopelessness caused by globalization, and as long as we continue to pay homage to the gods of Austerity, we are not going to address the growing anger and disaffection of tens of millions of Americans and hundreds of millions of Europeans. 

If we want the millions of people who voted for Leave and who are promising to vote for Trump to rejoin the rest of us in working towards common and reasonable goals, if we want to keep them alive, we have to promise them hope, a way forward, a job and a way to make a respectable contribution to the good of the whole. 

Globalization, but no more Austerity.  Let’s make global plans, but let’s also make sure that everyone benefits by making big plans that stir faith and trust.   And let’s keep our bridges from falling down on our heads.