Our movers and shakers are in denial about the affects of globalization. Jim Stanford writes:
The architects of globalization are worried, quite rightly, by both the rhetoric and the reality of recent trade developments. On the rhetorical front, the rise of nationalistic populism -- exemplified by Donald Trump, Brexit, and ascendant hard-right politicians everywhere -- is hammering more nails into the coffin of a trade liberalization agenda that was already moribund.
In real economics, meanwhile, the dynamism of world trade was already fading fast, even before the populists came on the scene. In recent decades, trade has grown twice as fast as global GDP; these days, however, it isn't even keeping pace. Canada's exports, for example, equal barely 30 per cent of GDP today, way down from 45 per cent in 2001. The old idea that trade is the engine of growth is taking a beating, from politicians and empirical data alike.
The powers that be oversold golobalization. -- and they tried hard to ignore its downside:
We must remember that the economic theory underpinning free trade assumes that all resources (including all workers) will be productively employed, that trade flows will be balanced and mutually beneficial, and that the efficiency gains from trade will be shared throughout society. In the quantitative economic models routinely trotted out to "sell" each new trade deal, these assumptions are embodied in mathematical equations imposing full employment, balanced trade, and the existence of a "representative household" (portraying each country as one big family, happily sharing all its wealth). None of these assumptions have any connection to reality; they are all imposed for the mathematical (and ideological) convenience of the economists.
In the real world, entire industries and communities have been dislocated by the unbalanced investment and trade flows which the theory denies. Enormous trade imbalances (from China and Germany's huge surpluses, to chronic deficits in the U.S., the U.K., and Canada) correspond to the migration of capital, work and income in favour of free trade's "winners." And these costs are not temporary or transitional. Large swaths of societies have been effectively cast aside under modern free trade -- left to face lasting unemployment, non-participation, or low-productivity service jobs.
After thirty-five years of "free trade" those who have been left behind have figured out that they have been played for suckers. Something to think about in the wake of Brexit and the rise of Donald Trump. The movers and shakers are getting shook.