Italian Prime Minister Matteo Renzi became the latest victim, when he lost his constitutional vote. He’ll resign as a result, and he can now stand in line with David Cameron, who also lost his referendum. In France, Francois Hollande threw in the towel before the presidential duels had even begun, and in USA, the voters chose a significantly different path, than the one Barack Obama showed.
A study by the British survey company Ipsos MORI this summer asked, if people felt that their country was on the right track. The study found that 88% of the French thought their country was on the wrong track, 83% of Italians felt the same way.
Even in Germany, 71% felt they’re going the wrong way and their main worry was poverty and social inequality. Angela Merkel faces a big challenge in keeping her seat in the upcoming elections. The rise of Alternative für Deutchland spells danger for The Iron Chancellor, and the right-wing party is just one of many in Europe that feast on people’s dissatisfaction with globalisation and the elite. Their main supporters are the losers of globalisation, who now try to turn things around.
The elephant in the chart
Earlier this year, Branko Milanovic, one of the world’s leading economists of inequality, published the book “Global Inequality: A New Approach for the Age of Globalisation” in which he investigates the coalition between inequality and globalisation. Milanovic presents the elephant-graph – later hailed as the graph of the century – to show, who wins and loses the game of globalisation.
The graph shows change in real income in various percentiles of world population, and it’s clear to see, that a big group of people have had a major rise in income in the period. Those who benefit most, are the global middle class – mainly based in developing countries – and the richest five percent of the world. The losers are the western lower class.
According to Milanovic, this is down to a rich part of the population who can influence policies through their wealth and by that gain even more. Also, due to globalisation, a lot of factories have moved low-income countries to lower the cost of production. This means a loss of jobs for a lot of unskilled workers in the western working class. Thirdly, globalisation has given the option for workers to move to high income countries, which means more competition for jobs. All worsening the situation for a pressured lower class.
As a result of this, inequality in the west has been rising since the 80s.
The elite have ignored the people
The people who voted ‘Leave’ in the British referendum or Trump in the American elections shouldn’t be condemned. They’re a big group, who are losing in the globalisation game. A game that tends to hand out the best cards to those who’re already winning. The house always wins. But we should pay attention to the working class’ concerns like inequality, loss of jobs, immigration and so on, Danish MEP for European United Left/Nordic Green Left Rina Ronja Kari thinks.
“A lot of people have seen their work leave the country or workers entering their country and working on poorer conditions and outcompete them. There is a big group, who have lost or are afraid of losing because of globalisation,” Kari says.
“When they express their frustration, the political and economical elite have pushed them aside. Many experience that the political elite don’t care,” Kari says.
She mentions the European Commission as an example on how the peoples’ worries are ignored. The Commission insists that free-trade and globalisation are good because it creates jobs, but these jobs aren’t necessarily for the people who lost their jobs to globalisation. According to Kari, this is not an urgent issue to solve for the Commission. A recipe for disaster, she calls it.
“There are some, who earn through globalisation, and they’re of course interested in keeping a focus on globalisation is a good thing. They’re good at getting their key issues through. They win in a political game over those at the bottom of the ladder, who have just experienced, losing their job.”
In the effort to seduce voters, Donald Trump promised to win the ‘trade war’ by renegotiating trade agreements, setting up trade barriers, punishing business that move abroad and bring back old industries. But instead of a drawbridge-up approach, globalisation can be utilized, believes Anders Ladefoged, Director European Affairs for the Confederation of Danish Industry (DI).
“Our approach is to see the opportunities in globalisation – the past won’t come back. As a country, you can become a winner in globalisation, if you adapt and make the necessary structural reforms,” Ladefoged says.
A lot of countries haven’t been good at distributing the gains from globalisation though, Ladefoged points out. He describes Denmark as a good example of how the benefits of globalization can be utilized and at the same time shared.
“In Denmark we have one of the richest and most equal societies. Our economy is an example that trade and globalisation aren’t a bad thing, and that it’s not necessary to go back to the national trenches to achieve a good income distribution.”
DI is a part of Business Europe, which represents businesses across Europe. Ladefoged doesn’t hide the fact, that DI’s approach is also self-interest. Less trade will hurt businesses and workers in Denmark and in Europe.
“More than half of our (Denmark’s) GDP is generated through trade. We are one of the countries, that benefits most from globalisation, but also one of the countries that really have something at stake. If the USA opts out of globalisation and buries itself behind tariff walls, it’ll have consequences for Denmark,” Ladefoged fears.
Not only economic woes
Different NGOs have long opposed globalisation and countries as Brazil, Russia and India chosen a protectionist approach to trade for years. But the confrontation is different now.
“It’s a more fundamental, national approach to economy and problem-solving, which I find worrying. It’s striking when former pioneers on trade and liberal democracy as USA and UK make a turn-around on their home turf,” Ladefoged says.
The trend is something that can be seen all around Europe, and is not only down to economic concerns at the lower levels of society.
“I believe the nationalism you see in Denmark is more down to identification and identity. Some find it difficult to recognize their country and think the country is on the wrong track and that is a worry one should not ignore. You can’t just tell worried citizens, that free-trade is good, and it is them, who have misunderstood something. You have to listen to their worries,” Ladefoged says.
The left has failed
To get to a point where a person such as Donald Trump can be elected President, the whole political spectrum has failed, Rina Ronja Kari believes. The same thing goes for right-wing party Front National and their leader Marine Le Pen in France, who has a serious shot at becoming President next year. It’s not Front National that have succeeded, it’s the system that has failed, she argues.
“The whole political spectrum has failed. The classic right-wing have been surpassed, and the left-wing have failed massively. It should be the left-wing, that set the agenda on how to deal with inequality,” Kari says.
The mistrust towards the EU is understandable, because it has been a part of the problem. EU’s stability and growth pact for instance forces some countries to make cuts in their budgets.
“The last couple of years it has gone the wrong way with inequality. Some of this is a direct result of the EU’s economic policy that has been forced through in almost all member states, which the left-wing has helped writing into the treaties. That’s an almost unbearable betrayal and we see the consequences of it today.”
She urges the left-wing parties to have courage to stand up to the economic elite. She believes it’s time to revive the class struggle. The right-wing aims the peoples’ frustration towards immigrants, but it’s not immigrants, unemployed or people on social benefits who hide millions in tax havens in Panama.
“Every time we bring up class struggle, it is bringing up a lot of negative connotation. But the essence of class struggle is where we should go. The class struggle is not dead,” Kari says.
Branko Milanovic ends his book by asking “Will inequality disappear as globalisation continues?” to which he answers: “No. The gains from globalisation will not be evenly distributed”. We only have to wait and see which Western leader will be next to fall due to the people’s revolt against globalisation.