Ill-wind blowing across the globe

18 June, 2016
As appeared in TheStar.com.my

asean

“Mussolini made the trains run on time.”

“Hitler saved Germany from communism.”

Many – actually most of the world’s young population today – might not remember the sentiments above which facilitated the rise to power of fascism, in the 1930s and 40s, that brought so much suffering, death and destruction and the last world war.

Now we are seeing dangerous signs of a repeat of history which we must recognise and act against.

Donald Trump in America is a threat not just to his country but also to the global order.

His appeal reflects a disenchantment with the established system. The main cause for this is the huge disparity in incomes (not only in America but in many parts of the world), with high levels of unemployment, particularly in the advanced countries, exacerbating the trend.

The one plus one equals to two answers that Trump gives to complex political, economic and social issues resonate with much of the electorate tired of serious politicians less inclined to rouse them to final solutions.

That was how Mussolini and Hitler rose. People did not care who they were and how they ruled as long as the trains ran on time and they took those caricatured as the cause of their misery to their end, out of their lives, in the final solution.

American political psychologists offer an explanation for the Donald Trump phenomenon by dividing politicians into two categories. The System 1 politician – like Trump – offers simple solutions to difficult matters and gives hope in hopeless situations.

The System 2 type, for example Hillary Clinton, is more measured and complicated: inviting the electorate to find the multiple of 317 times 569.

Excuse for helplessness

However, while there is merit in this typification, the more profound question is why people are increasingly susceptible to the appeal of the demagogue. Primarily it is because they seek salvation, not solution. They are giving up on reason, which they see as an excuse for helplessness. They clutch at the screaming voice that offers hope.

As shown in the result of the presidential elections in the Philippines last month, the anger arising from unconscionable income inequality (and the rise in crime) is not something confined to the advanced countries, but it is what is happening in the West that holds the greatest danger to the world as a whole.

How an American president runs his country and deals with the rest of the world have profound implications across the globe. The rise of Asia – China particularly – portends an adjustment for the United States which a personality like Trump would not be able to negotiate. He may very well use blunt instruments that could cause economic and military conflict.

America lost five million manufacturing jobs between 2000 and 2015, leading to higher levels of unemployment, stagnating incomes and inequality. After China joined the World Trade Organisation in 2001, its manufacturing workforce grew from 162 million to a peak of 234 million in 2012, although it is now shrinking, as China too has to make its own adjustments.

The World Bank expects China to have 200 million college graduates by 2030 – more than the entire US workforce. With brainpower also from India, South-East Asia and Latin America, some significant fields traditionally dominated by America, like finance, medicine and IT will come under threat. From blue-collar losses, the US and the West would next come under the white-collar threat to their economies.

With losses in manufacturing jobs, the erstwhile champions of free trade – the West – are now cringing from losing in competition in that liberal system. The cause of the Western financial crisis and Great Recession in 2008, from which advanced countries have not recovered, is attributed to the surplus countries in the world trading order and to their high savings rate, rather than to the need for the advanced countries to be more efficient, lower consumption and increase savings.

There is an expectation of a high standard of living in the West, not just from personal income but also public expenditure. When this cannot be sustained by a falling level of production, it is rather blithely assumed that personal and governmental borrowing will do the trick.

This inability to adjust to a strategic economic shift is at the heart of the budgetary, employment, social and political problems in America and the advanced countries, exacerbated by headline and explosive immediate issues like terrorism, refugees and immigration.

Is Donald Trump, indeed any of the extremist right wing as well as some leftist parties in the advanced world, able to grasp the depth of the issues which require a refashioning of their economy if their societies are not to atrophy?

America is best placed to address these challenges with its dynamism, innovation and creativity, but Donald Trump is the last person to offer the lead. Instead he would rather kick other countries in the butt and blame them for beating America at its own game, particularly in manufacturing.

The economic conflict he will generate, especially with China, can very quickly spread to other political security issues, of which there are plenty, like in the South China Sea.

Populist appeal

Meanwhile, in his own country, Trump misrepresents and caricatures the villains for America’s troubles – like illegal Mexicans within its borders and, of course, the Muslims who are all not to be trusted and waiting to blow up the country. The Orlando night club attack last weekend is a godsend which makes him so believable.

This kind of populist appeal – blame other countries and people instead of correcting your own inadequacies – has taken hold in America, evidenced by the billionaire who is the presumptive Republican presidential candidate with huge support from ordinary and penniless Americans.

It is true Trump represents America’s isolationist predisposition, but the nasty streak he brings to it is a reflection of the times.

This kind of working class and blue-collar support for the bigot is sweeping across many countries in the West.

What will happen when white collar jobs – and technological dominance – are threatened? That will be the next stage in the loss of direction and discipline that ails the West.

America has the capacity for regeneration, better than most in the West, but short-term actions against immediate threat could deflect attention from medium-term planning to improve both soft and hard infrastructure.

With the adversarial and polarised situation in American politics and Government, there is no effective leadership to make the country great again. Unless the broken politics is mended America – especially if people like Trump are at the helm – will be in decline, but shooting wildly in all directions as it goes out.

Just consider this. Thinking Americans like Fareed Zakaria describe Trump as an unscrupulous and vulgar narcissist, a pathological liar, a bigot and xenophobe. And this is the man who could become the next President of the United States!

In Europe, inability to solve problems caused by living beyond their means has caused much fiscal pain and unemployment to the people, although at its worst the levels of unemployment in Greece and Spain were still far short of what Indonesia suffered at the height of the 1997-98 Asian financial crisis.

This just shows different thresholds of pain and expectation of relief. In other words, different standards for rich countries from those in poor countries.

But the problems refuse to go away without adjustment and restructuring. Instead of seriously addressing this, the overwhelming tendency is to blame others.

And there are plenty of short-term issues that offer themselves. Terrorist acts by extremist Muslims give rise to levels of Islamophobia never before seen in Europe – despite little beacons of hope like Sadiq Khan’s election as mayor of London (which is an event unique to the great cosmopolitan city).

Immigration has also become a juicy target for the far right, whether the hordes of refugees from war-torn Middle East, or the free flow of people across the European Union (EU) under the Schengen Agreement. The creaking European economies – which are as far from being mended as in the pre-2008 situation – cannot take the pressure on social services and there is thus an anti-foreigner outburst.

The far right are on the march in France, in central and southern Europe. In Germany, where there has been a strong post-Nazi sanitisation process, there are also disturbing far right, racist signs.

Even in Britain, which has perhaps done best in Europe in clawing its way out of the 2008 crisis, xenophobic tendencies are on the rise. Brexit is a clear expression of this. Its fundamentally emotional appeal denies clear economic cost in a very “Little Englander We Can Overcome Anything” spirit.

What happens if Britain gets out of the EU and the economy goes down while unemployment shoots up? Whom will British rightists blame for taking jobs, homes and incomes away? Themselves? Like Trump, not likely.

It is not a pretty prospect that one sees in Europe. There are too many similarities with the 1930s. In America, dangerous outcomes threaten which, because of America’s power, could sweep the world with it.

Liberal values

There is great threat to the liberal values of the West – which I daresay will lead those beyond its remit to quickly pronounce those are values they should not embrace.

Free trade and open markets – also hitherto championed by the West – which have generated tremendous global economic growth and lifted hundreds of millions out of poverty in Asia, could be reversed by protectionist wars and mutual recrimination and accusation, driven primarily by the fact the West is losing out in open competition. Wars have been caused by economic lockout before.

With Trump particularly, were he to become US President, one shudders to think what kind of knee-jerk America first actions he would take in any number of conflicted situations – Middle East, Korea, Russia, East China Sea, South China Sea – that could cause military conflagration.

The portends are not good. Can thinking politicians and thinking people rise and reverse what could be inevitable?

Tan Sri Dr Munir Majid, chairman of Bank Muamalat and visiting senior fellow at LSE Ideas (Centre for International Affairs, Diplomacy and Strategy), is also chairman of CIMB Asean Research Institute.