If history gods have a sense of humor, then they were on full display last Friday with the explicitly nationalist presidency of Donald J. Trump (DJT) starting on the same day that Davos was ending. This apocalyptic convergence of ideological opposites lead to endless reports of a nationalist miasma impacting the distinctly and explicitly pro-globalization Davos attendees. Its distressing to know that some of the attendees were so worried that it reduced their enjoyment of the conference, but these are indeed unusual and difficult times.
But how difficult are these times for the globalization project, and what can be expected to happen to globalization? Firstly, there is the matter of the reasons behind the project. Dick Cheney was decidedly pro-globalization, though that’s one supporter that Klaus Schwab may wish to forget, said that globalization can help many of the world’s poorest lift themselves from poverty while hurting very few people.
The problem is this isn’t quite true: it’s probably more accyrate to say that the benefits of globalization are concentrated and felt quickly while the costs of globalization are more diffuse and become apparent over the long-term. Although my experience is getting ever more seasoned, academia moves slowly, and the fields of economics and political economics don’t have a great track record of accounting for diffuse and long-term costs.
Moreover, some well-known economists were reduced to mere emotional political cheering rather than rational policy analysis during the Trump-Davos convergence. Reading the tweets of Nouriel Roubini of NYU, Dan Drezner of Tufts, Ian Bremmer of the Eurasia Group, and Paul Krugman of the New York Times definitely let me to wonder if perhaps their partisanship couldn’t be—uhm—somewhat better camouflaged. Also, please note that these were not the most egregious examples but merely those who most readily came to mind.
However, rather than casting stones seeing as how your poor correspondent (YPC) lives in a partisan glass house, let us instead consider how the economic analytic lacuna of long-term costs might be better addressed. What the Davos attendees call “populism” and what DJT and YPC call “nationalism” is fundamentally a group of political actors who have every right to organize and articulate their interests, even if that does upset the Davos attendees. Political economists Jeff Frieden and David Lake would recognize this split immediately as the traditional ideological separation of Nationalism, Marxism, and Liberalism has been augmented with the analytic tensions of elites and populations and institutions and economics. That is, with DJT and Davos, we see the classic tensions of elite institutions and the welfare of populations made manifest.
Recognizing this tension however begs the question of how the politics will play out over time. The Davos attendees fretted that the institutions of the post-war liberal international economic order (LIEO) such as the IMF, WTO, UN, and the World Bank will wither and die under the assault of populism and nationalism. To this YPC responds “perhaps,” but rather than worrying about the future of these institutions, perhaps it would be better to consider what motivates these critics, consider why their criticisms were not heard, and then develop analytic methods and tools to address these issues. Just a suggestion.