Call it the Washington consensus. It was ushered in with the demise of Soviet Marxism. By 1995 the US turned inward creating NAFTA and other multinational trade relations upon the orthodox belief that international trade mattered. We forget the backdrop that accompanied this wild revelation that decrepit, autocratic and ethnically based polities would shed provincialism and produce for the global commons. It all worked, then two hinge movements sundered it.
The first was the 2008 depression, the second revolution was digitization and its consequent with the arrival of social media. Having harnessed the new reigns of autonomy, apps delivered an inverted pyramid that solidified an ascendant ideal of personalism.
The Washington consensus really signified an initial movement toward digitization, but that could never be foreseen. Having opened ones borders to globalization, even fragile nation states in Asia lowered real wage costs with soaring productivity gains. Global trade took off and crashed with the Asian monetary crisis of parity. Having tied their currencies to king dollar, Asian polities eschewed consumption, refashioning their economies toward large export platforms. This global ocean of excess savings found its way to the US in grotesquely favorable credit for housing. The whole damned enterprise fell in late 2008. The US, having a lost decade under team Obama has now come full circle.
What team Trump openly acknowledges is less well recognized or even accepted; namely that globalization was never about political liberalization or transparency. The foundation of the world’s rules based order was actually fragile nation states gaming the system. South Korea has a name for this: chaebol.
The hide bound backside of multinational capitalist companies must now reckon with nationalism. Just as govmint became a brutal competitor destroying hedge funds with quantitative easing, an unleashed burgeoning nation state will wreck foreign competitors. Just ask Xi Jinping.
Not everyone will make the cut as foreign competitors grapple with the ground moving underneath them; look at Germany after Brexit. Berlin feared that with England out of the E.U. it would remain permanently isolated. This is why it befriends Putin. Having never settled its own history, Germany now fights off a weakened, wounded mercantilist Brussels. These free market technocrats from hybrid socialist regimes are easy to tame. Witness the frontal assault perfected by the Don.
Because China and other mercantilist regimes throughout the world have no constitutive relation to market demands; because their overt political foundation obscures, eliminates market signals. They’re doomed to grapple with falling demand.
The global order is over. Witness the return of the nation state.
William Holland
William Holland 