By: Edwin Fuller
Founder and President of Laguna Strategic Advisors
In early April, I posted a blog sharing some thoughts about the wave of Nationalism now gaining momentum throughout the world. Since then, a hard-line extreme right party has won seats in the Cyprus parliament; Austria’s Freedom Party presidential candidate, although narrowly defeated, gained 49.7% of the vote; France’s National Front is newly energized and is promoting a principle of “national priority;” Italy’s anti-establishment Five Star movement candidate, Virginia Raggi, has become Rome’s mayor with 2/3 of the vote in a run-off contest; and just this past weekend, the UK has voted to exit the European Union (EU), thus roiling global financial markets and causing everyone to wonder what’s next for the economy and will other European nations follow suit.
The long-term consequences of Britain’s “Brexit” vote on the world’s economy and political cooperation have yet to be determined. Only time will tell. But the potential isolationist/nationalist forces that seem to be gaining momentum in other countries, including the US, may be even more concerning in the long run. Consequently, I’ve taken this opportunity to re-post my original blog. There is no right or wrong answer here. My hope is that as the world absorbs the enormity of Britain’s decision, the negatives and positives of Nationalism will be carefully considered. In today’s high tech environment, isolation is not practical or viable. Our world today needs safe, thoughtful economic solutions to its challenges.
Nationalism: Back Again Like a Bad Dream (previous blog)
More than a century ago, philosopher George Santayana reminded us that “those who cannot remember the past are condemned to repeat it.”
His words ring true today. As I’ve traveled the world for the past three decades, the growing rise of Nationalism on virtually every continent has given me cause for concern. Following World War II, the global goal was to create political and economic structures and forge alliances like the UN, EU, IMF, WTO, NAFTA and the recently signed Trans-Pacific Trade Partnership to bring peace and prosperity to the world.
In many ways, these efforts succeeded. More people than ever now have the means to travel outside their native countries. Global investments have given rise to vastly improved living conditions in poorer countries. Political structures like the EU have led to the creation of powerful new markets for global commerce. Modern communications now transcend borders in nano-seconds, bringing the world ever closer together.
But, achievements like these have come with a price: the re-emergence of Nationalism throughout the world caused by the disruptions brought about by globalization.
Nationalism is a powerful force. It’s the glue that holds folks together especially in challenging times. It celebrates a country’s culture, history and religion. It instills national pride and a sense of strength while also, at times, creating scapegoats, real or imagined. For example, the common US belief today that China has claimed the bulk of jobs lost in this country since 2000 is not true. According to the McKinsey Global Institute, roughly 700,000 of the six million US manufacturing jobs lost in the first decade of this century went to China. The rest disappeared because of decreased consumer demand after the 2008 global financial crisis and technological advances that made many jobs obsolete.
Job losses aside, perhaps the biggest impact of the 2008 global financial crisis is that it intensified a worldwide backlash against globalization that had been festering for decades, further bolstering the steady global tilt toward Nationalism.
The fall of the Berlin Wall did not result in hoped-for democracy in Russia and many parts of Eastern Europe and Central Asia. Today, in Asia, new leaders in China, Japan, South Korea, and India are mostly political nationalists faced with balancing local historical grievances with needed internal structural reforms. What is there to say about the Middle East? With few exceptions, it is a region where economic failure and lack of opportunity continue to fuel political and religious extremism, resentment of the rest of the world and terrorism. And here in the US, polarized political and social discourse and uneven economic policies have ignored wide segments of the citizenry, leading to distrust in our institutions and, in some cases, a lack of goodwill and respect for each other.
Everywhere we look global institutions and frameworks are under attack. In the EU, we find that no continent-wide identity has emerged—people still are more likely to think of themselves as Czechs, Poles or Italians rather than Europeans. In June, the UK will vote on exiting the EU, perhaps opening the floodgates of other member exits. In Russia, even though most Russians tend to approve the shift to a free market economy, many still miss the Soviet era and believe it is OK for their country to project power beyond its borders. In 2009, even before the recent epic migration into Europe, the Pew Research Center reported support for strong immigration controls throughout Europe with majorities in 13 of 14 nations agreeing that immigration should be restricted. Recent events have only exacerbated the situation. In Asia, China’s growing power has other Asian countries worried about their well-being fostering fear and mistrust.
All this brings me back to Santayana’s admonition to remember the past or be condemned to repeat it.
As I think about global events over the past 30 years, I feel a sense of déjàvu. We’ve been down this road before. The economic collapse and political instability caused by the onerous armistice terms of the First World War led to the rise of Fascism in Europe 20 years later. Fascism was an ideology that glorified the military, denounced international organizations and cooperation and considered war an acceptable means for achieving national goals. Ultimately, these beliefs led to World War II. Another contributor was the Great Depression that decimated the economies of Europe and the US, thus paving the way for the emergence of the Nazi Fascists in Germany and a military clique to take power in Japan. Contributing to the Great Depression was the Smoot-Hawley Tariff of 1930. It was enacted to protect American companies. Instead of helping, it hurt business. The tariff charged a high tax for foreign imports with the unintended consequence of less trade taking place and some countries retaliating economically against the US. And so it goes.
There are those who argue that Nationalism is necessary to have a well-functioning democracy. They point to Nationalism’s objective of having all citizens of the nation identify with the same culture, among other criteria. This is accomplished by standardizing the language, education, legal codes, media and so on. They say that only within such a community is it possible for a modern democracy to function; that without such a national community, it’s impossible to have democratic debate.
What they say may well have some merit. But I can’t help but think about the political excesses of the 1930′s, the protectionism and the xenophobic zeal that were all part of the Nationalistic wave that swept the world following the First World War. It ultimately resulted in Japan’s invasion of Manchuria, Nazi Germany’s invasion of Poland and Japan’s bombing of Pearl Harbor and ended with Hiroshima.
Something to think about as we grapple with the challenges facing our world today.