The battle between Globalisation and Nationalism continues in 2017 and in fact, it moves to the next level. Last year saw Brexit, with a majority of UK voters opting to leave the European Union, followed by the election of Donald Trump as US voters rallied behind his clarion call of “America First”. Then Italian voters backed populist, anti-immigration parties to roundly defeat a referendum on constitutional reform, raising fears that they too would opt to leave the EU if given the chance.
The only break in this seemingly relentless rise of nationalism came in an Austrian presidential election in which a pro-European candidate defeated a far-right, anti-immigration party, which had had high hopes of victory. Now globalists and specifically the EU anxiously wait to see what impact nationalist parties will have in elections in France, Germany and the Netherlands this year.
As voters left polling stations, many of them were unable to articulate why they voted the way they did, and many analysts have struggled to get their heads around the way the world is changing, but clearly much of this rise in nationalism is being driven by fear.
People fear losing their lives in terrorist attacks in a world where borders are porous and people can move with relative ease from one country to another. There is the fear of losing your job to an influx of immigrants or the export of your job to a foreign country; the fear of losing your historical identity as people with different cultures, languages and religious beliefs move in next door.
Globalisation is seen as the cause of these changes, and it is fanning anger. Voters are angry because they feel that globalisation benefits big corporates and enriches the few. There is anger that huge companies like Apple, Google, Facebook and Starbucks pay single digit taxes through transfer pricing their money to lower-cost jurisdictions.
People are angry too at losing manufacturing jobs to China and service industry jobs to India, leaving millions of working class people unemployed, factories closed down and countries with huge trade imbalances as they import more than they export and then buy back finished products, only to see profits transferred out again by the multinationals. Most voters don’t understand all of this but they certainly feel angered and frustrated.
The obvious reaction to this is nationalism, fuelled by populism as politicians feed on the fear and anger. It has happened before many times in history and will happen again.
People want low tariffs so they can buy goods, but they want companies to pay tax in their country. The playing field also needs to be levelled. US companies pay 35%, SA companies 28%, UK companies 21%, Mauritian companies 15%. Governments need to agree on the same taxation rates.
Voters also want to see all citizens treated fairly. The fallout from the 2008 financial crisis is still with us, but few bankers are in prison for their role in it. Taxpayers globally have suffered to protect the few.
People want ease of movement between countries, but, more importantly, they want to be safe and secure. The complex challenge faced by governments is to enable people to go in search of opportunities worldwide, but to ensure that everyone is secure in the process.
A rethink is needed, but it puts everyone in a dangerous place. Politicians need to lead the way in establishing an equilibrium in the hope that economies will start to grow again, that people will get jobs and be paid more, and that the fear and anger will subside. Sadly, this process can take up to 10 years and that is a long time in politics.