Are Large Multinationals in Retreat? I Doubt it.

from the Economist

AMONG the many things that Donald Trump dislikes are big global firms. Faceless and rootless, they stand accused of unleashing “carnage” on ordinary Americans by shipping jobs and factories abroad. His answer is to domesticate these marauding multinationals. Lower taxes will draw their cash home, border charges will hobble their cross-border supply chains and the trade deals that help them do business will be rewritten. To avoid punitive treatment, “all you have to do is stay,” he told American bosses this week.

Mr Trump is unusual in his aggressively protectionist tone. But in many ways he is behind the times. Multinational companies, the agents behind global integration, were already in retreat well before the populist revolts of 2016. Their financial performance has slipped so that they are no longer outstripping local firms. Many seem to have exhausted their ability to cut costs and taxes and to out-think their local competitors. Mr Trump’s broadsides are aimed at companies that are surprisingly vulnerable and, in many cases, are already heading home. The impact on global commerce will be profound.

The end of the arbitrage

Multinational firms (those that do a large chunk of their business outside their home region) employ only one in 50 of the world’s workers. But they matter. A few thousand firms influence what billions of people watch, wear and eat. The likes of IBM, McDonald’s, Ford, H&M, Infosys, Lenovo and Honda have been the benchmark for managers. They co-ordinate the supply chains that account for over 50% of all trade. They account for a third of the value of the world’s stockmarkets and they own the lion’s share of its intellectual property—from lingerie designs to virtual-reality software and diabetes drugs.

They boomed in the early 1990s, as China and the former Soviet bloc opened and Europe integrated. Investors liked global firms’ economies of scale and efficiency. Rather than running themselves as national fiefs, firms unbundled their functions. A Chinese factory might use tools from Germany, have owners in the United States, pay taxes in Luxembourg and sell to Japan. Governments in the rich world dreamed of their national champions becoming world-beaters. Governments in the emerging world welcomed the jobs, exports and technology that global firms brought. It was a golden age.

Central to the rise of the global firm was its claim to be a superior moneymaking machine. That claim lies in tatters (see Briefing). In the past five years the profits of multinationals have dropped by 25%. Returns on capital have slipped to their lowest in two decades. A strong dollar and a low oil price explain part of the decline. Technology superstars and consumer firms with strong brands are still thriving. But the pain is too widespread and prolonged to be dismissed as a blip. About 40% of all multinationals make a return on equity of less than 10%, a yardstick for underperformance. In a majority of industries they are growing more slowly and are less profitable than local firms that stayed in their backyard. The share of global profits accounted for by multinationals has fallen from 35% a decade ago to 30% now. For many industrial, manufacturing, financial, natural-resources, media and telecoms companies, global reach has become a burden, not an advantage.

That is because a 30-year window of arbitrage is closing. Firms’ tax bills have been massaged down as low as they can go; in China factory workers’ wages are rising. Local firms have become more sophisticated. They can steal, copy or displace global firms’ innovations without building costly offices and factories abroad. From America’s shale industry to Brazilian banking, from Chinese e-commerce to Indian telecoms, the companies at the cutting edge are local, not global.

The changing political landscape is making things even harder for the giants. Mr Trump is the latest and most strident manifestation of a worldwide shift to grab more of the value that multinationals capture. China wants global firms to place not just their supply chains there, but also their brainiest activities such as research and development. Last year Europe and America battled over who gets the $13bn of tax that Apple and Pfizer pay annually. From Germany to Indonesia rules on takeovers, antitrust and data are tightening.

Mr Trump’s arrival will only accelerate a gory process of restructuring. Many firms are simply too big: they will have to shrink their empires. Others are putting down deeper roots in the markets where they operate. General Electric and Siemens are “localising” supply chains, production, jobs and tax into regional or national units. Another strategy is to become “intangible”. Silicon Valley’s stars, from Uber to Google, are still expanding abroad. Fast-food firms and hotel chains are shifting from flipping burgers and making beds to selling branding rights. But such virtual multinationals are also vulnerable to populism because they create few direct jobs, pay little tax and are not protected by trade rules designed for physical goods.

Taking back control

The retreat of global firms will give politicians a feeling of greater control as companies promise to do their bidding. But not every country can get a bigger share of the same firms’ production, jobs and tax. And a rapid unwinding of the dominant form of business of the past 20 years could be chaotic. Many countries with trade deficits (including “global Britain”) rely on the flow of capital that multinationals bring. If firms’ profits drop further, the value of stockmarkets will probably fall.

What of consumers and voters? They touch screens, wear clothes and are kept healthy by the products of firms that they dislike as immoral, exploitative and aloof. The golden age of global firms has also been a golden age for consumer choice and efficiency. Its demise may make the world seem fairer. But the retreat of the multinational cannot bring back all the jobs that the likes of Mr Trump promise. And it will mean rising prices, diminishing competition and slowing innovation. In time, millions of small firms trading across borders could replace big firms as transmitters of ideas and capital. But their weight is tiny. People may yet look back on the era when global firms ruled the business world, and regret its passing.

Kronyism's Cloak of Gyges - The MSM

from Pat Caddell in 2012
...and who was Gyges?

According to a 1987 profile of Pat Caddell in the Washington Monthly:

"Caddell believes the key to winning contemporary elections is appealing to 'alienated' voters—that ever-growing group of mostly younger voters who are not easily identified as liberal or conservative and don't trust government, politicians, or the parties. You can't lure these voters with programs and stands on specific issues, so the theory goes. Rather, you must remain as uncommitted as they are. You lure them by attacking that which caused their alienation: the Establishment. Even if he were inclined to help his candidate address the nation's substantive problems and articulate a coherent package of solutions, he'd have trouble."

The Vrag Naroda of the American People: Corporate Journalism. Why is this? The inherent biases extant in Neoliberal (aka-Cultural) Capitalism has begun to serve as a corrupting influence upon the political process.

Harford County's Virtual Town Hall

Fake News Hits the Culture

When the Adults Abandon the Building...

...the Youth Will Worship the Lord of the Flies

The Death of the Democratic Party?

The most depressing aspect of the post-electoral period in the US is not the measures announced by the President-elect but the way the bulk of the Democratic Party is reacting to its historic defeat. Notably, its supporters oscillate between two extremes: the horror at the Big Bad Wolf called Trump and the obverse of this panic and fascination — the renormalization of the situation, the idea that nothing extraordinary happened, that it is just another reversal in the normal exchange of Republican and Democratic presidents: Reagan, Bush, Trump… Along these lines, Nancy Pelosi “repeatedly brings up the events of a decade ago. For her, the lesson is clear — past is prologue. What worked before will work again. Trump and the Republicans will overreach, and Democrats have to be ready to jump at the opportunity when they do.” Such a stance totally ignores the real meaning of Trump’s victory, the weaknesses of the Democratic Party that rendered it possible, and the radical restructuring of the entire political space this victory announces.

The restructuring I am pointing to is made clear by yet another version of Trump’s inconsistency which concerns his stance towards Russia: while hardline Republicans were continuously attacking Obama for his all too soft approach to Putin, tolerating Russian military aggressions (Georgia, Crimea…) and thereby endangering Western allies in Eastern Europe, the Trump supporters now advocate a much more lenient take on Russia. The underlying problem is, precisely, here. How are we to unite the two ideological oppositions — the opposition of traditionalism versus secular relativism and the other big ideological opposition, on which the entire legitimacy of the West and its “war on terror” relies, namely the opposition between liberal-democratic individual rights and religious fundamentalism embodied primarily in “Islamo-Fascism”? Therein resides the symptomatic inconsistency of the US neoconservatives: whereas, in domestic politics, they privilege the fight against liberal secularism (abortion, gay marriages, etc.) — i.e., their struggle is the one of the so-called “culture of life” against the “culture of death” — , in foreign politics, they privilege the very opposite values. i.e. the liberal “culture of death.”

One way to resolve this dilemma is the hardline Christian fundamentalist approach, articulated in the works of Tim LaHaye et consortes: to unambiguously subordinate the second opposition to the first. Thus, at some deep and often obfuscated level, the US neocons perceive the European Union as the enemy. This perception, kept under control in public political discourse, explodes in its underground obscene double, the extreme Right Christian fundamentalist political vision with its obsessive fear of the New World Order. According to such a view, Obama is in secret collusion with the United Nations; international forces will intervene in the US and put all true American patriots in concentration camps. A couple of years ago, there were already rumors that Latin American troops were in the Midwest planes, building concentration camps…

The title of one of LaHaye’s novels points in the same direction: The Europa Conspiracy. The true enemy of the US is not Muslim terrorists; they are merely puppets secretly manipulated by European secularists, the true forces of the anti-Christ who want to weaken the US and establish the New World Order under the domination of the United Nations. In a way, they are right in this perception: Europe is not just another geopolitical power block, but a global vision which is ultimately incompatible with nation-states. This dimension of the EU provides the key to the so-called European “weakness,” for there is a surprising correlation between European unification and its loss of global military-political power. If, however, the European Union is more and more an impotent trans-state confederacy in need of US protection, why then is the US financially ill at ease with it? Recall the indications that the US financially supported those forces in Ireland that organized the campaign for the NO to the new European treaty… Opposed to this minority opinion is the predominant liberal-democratic view, which sees the principal enemy in all kinds of fundamentalisms, and perceives the US Christian fundamentalism as a deplorable homegrown version of “Islamo-Fascism.” Nonetheless, this predominance is now threatened. What was till now a marginal stance limited to conspiracy theories that thrived underground is becoming the hegemonic stance of our public space.

How did we end up here? One has to repeat again and again that Clinton’s defeat was the price she had to pay for neutralizing Bernie Sanders. She did not lose because she moved too much to the Left but precisely because she was too centrist and in this way failed to capture the anti-establishment revolt that sustained both Trump and Sanders. Trump reminded some of his voters of the half-forgotten reality of class struggle, although, of course, he did it in a distorted populist way. Trump’s anti-establishment rage was a kind of return of what was repressed in the moderate liberal Left’s politics focusing on cultural and PC issues. This Left got from Trump its own message in its inverted true form. That’s why the only way to reply to Trump would have been to fully appropriate the anti-establishment rage, not to dismiss it as white trash primitivism.

Remember how many times liberal media announced that Trump was caught with his pants down and committed a public suicide (mocking the parents of a dead war hero, boasting about pussy grabbing, etc.). Arrogant liberal commentators were shocked at how their continuous acerbic attacks on Trump’s vulgar racist and sexist outbursts, factual inaccuracies, economic nonsense, etc., did not hurt him at all but maybe even enhanced his popular appeal. They missed how identification works: we as a rule identify with the other’s weaknesses, not only or even not principally with the strengths, so the more Trump’s limitations were mocked, the more ordinary people identified with him and perceived attacks on him as condescending attacks on themselves. The subliminal message of Trump’s vulgarities to ordinary people was: “I am one of you!”, while ordinary Trump supporters felt constantly humiliated by the liberal elite’s patronizing attitude towards them. As Alenka Zupančič put it succinctly, “the extremely poor do the fighting for the extremely rich, as it was clear in the election of Trump. And the Left does little else than scold and insult them.” Or, we should add, the Left does what is even worse: it patronizingly “understands” the confusion and blindness of the poor… This Left-liberal arrogance explodes at its purest in the new genre of political-comment-comedy talk shows (Jon Stewart, John Oliver…) that mostly enact the pure arrogance of the liberal intellectual elite:

“Parodying Trump is at best a distraction from his real politics; at worst it converts the whole of politics into a gag. The process has nothing to do with the performers or the writers or their choices. Trump built his candidacy on performing as a comic heel—that has been his pop culture persona for decades. It is simply not possible to parody effectively a man who is a conscious self-parody, and who has become president of the United States on the basis of that performance.”

Populism and PC are thus the two complementary forms of lying that follow the classic distinction between hysteria and obsessional neurosis: a hysteric tells the truth in the guise of a lie (what it says is literally not true, but the lie expresses in a false form an authentic complaint), and what an obsessional neurotic claims is literally true, but it is a truth which serves a lie. In a homologous way, PC is “like lying with truth. It says the right things, but it somehow comes across as wrong nevertheless. Populism, on the other hand, is somewhat like telling the truth in the form of a lie. It says all the wrong things, yet we feel that something about it is nevertheless right.” The populist protest displaces onto the external enemy the authentic frustration and sense of loss, while the PC Left uses its true points (detecting sexism and racism in language, etc.) to re-assert its moral superiority and thus prevent true social-economic change.

And the story of Donald and Hillary goes on: in the second installment, the couple’s names are changed to Marine Le Pen and François Fillon. Now that Fillon was elected to be the Right’s candidate in the forthcoming French presidential elections, and with the (almost full) certainty that, in the second round of the elections, the choice will be between Fillon and Marine Le Pen, our democracy has reached its (till now) lowest point. Natalie Nougayrède wrote in her Guardian column “François Fillon is as big a threat to liberal values as Marine Le Pen”:

“It is no coincidence that Fillon was publicly lauded by Putin. This wasn’t just because the Kremlin hopes to find a French presidential ally on foreign policy. It’s also because Putin detects in Fillon streaks of his own ultra-conservative ideology. Witness how Russian propaganda has dubbed Europe ‘Gayropa’.”[5]

If the difference between Clinton and Trump was one between liberal establishment and Rightist populist rage, this difference has shrunk to a minimum in the case of le Pen versus Fillon. Although both are cultural conservatives, in matters of economy Fillon is a pure neoliberal, while Le Pen is much more oriented towards protecting workers’ interests. In short, since Fillon stands for the worst combination around today – economic neoliberalism and social conservativism -, one is seriously tempted to prefer Le Pen. The only argument for Fillon is a purely formal one: he formally stands for a united Europe and a minimal distance from the populist Right, even though, with regard to content, he seems to be worse than Le Pen. So he represents the immanent decadence of the establishment itself, which is where we ended up after a long process of defeats and withdrawals.

First, the radical Left had to be sacrificed as out of touch with our new postmodern times and its new “paradigms.” Then, the moderate Social-Democratic Left was sacrificed as also out of touch with the necessities of the new global capitalism. Now, in the last epoch of this sad tale, the moderate liberal Right itself (Juppé) was sacrificed as out of touch with conservative values which have to be enlisted if we, the civilized world, want to beat Le Pen. Any resemblance with the old anti-Nazi story of how we first passively observed when the Nazis in power took away the Communists, then the Jews, then the moderate Left, then the liberal center, then even honest conservatives… is purely accidental. The Saramago reaction – to abstain from voting – is here obviously the ONLY appropriate thing to do. The situation of today’s Poland provides a further example in this regard, serving as a strong empirical rebuttal to the predominant Left-liberal dismissal of authoritarian populism as a contradictory politics doomed to fail. While this is in principle true – in the long term, we are all dead, as J.M. Keynes put it –, there can be many surprises in the (not so) short term:

“The conventional view of what awaits the US (and possibly France and the Netherlands) in 2017 is an erratic ruler who enacts contradictory policies that primarily benefit the rich. The poor will lose, because populists have no hope of restoring manufacturing jobs, despite their promises. And massive inflows of migrants and refugees will continue, because populists have no plan to address the problem’s root causes. In the end, populist governments, incapable of effective rule, will crumble and their leaders will either face impeachment or fail to win re-election. But the liberals were wrong. PiS (Law and Justice, the ruling Rightist-populist party) has transformed itself from an ideological nullity into a party that has managed to introduce shocking changes with record speed and efficiency. /…/ it has enacted the largest social transfers in Poland’s contemporary history. Parents receive a 500 złoty ($120) monthly benefit for every child after their first, or for all children in poorer families (the average net monthly income is about 2,900 złoty, though more than two-thirds of Poles earn less). As a result, the poverty rate has declined by 20-40%, and by 70-90% among children. The list goes on: In 2016, the government introduced free medication for people over the age of 75. The minimum-wage now exceeds what trade unions had sought. The retirement age has been reduced from 67 for both men and women to 60 for women and 65 for men. The government also plans tax relief for low-income taxpayers.”[6]

PiS does what Marine Le Pen also promises to do in France: a combination of anti-austerity measures – social transfers no Leftist party dares to consider plus the assurance of order and security that asserts national identity and promises to deal with the immigrant threat. Who can beat this combination, which directly addresses the two big worries of ordinary people? We can thus discern on the horizon a perverted situation in which the official “Left” is enforcing austerity politics (even as it advocates for multicultural and other rights) at the same time that the populist Right is pursuing anti-austerity measures to help the poor (even as it advances a xenophobic nationalist agenda). That is the latest figure of what Hegel described as die verkehrte Welt, the topsy-turvy world.

And what if Trump moves in the same direction? What if his project of moderate protectionism and large public works, combined with anti-immigrant security measures and a new perverted peace with Russia, would somehow work?

The French language uses the so-called ne explétif after certain verbs and conjunctions; it is also called a “non-negative ne” because it has no negative value in and of itself but is used in situations where the main clause has a negative (either negative-bad or negative-negated) meaning, such as expressions of fear, warning, doubt, and negation.[7] For example: Elle a peur qu’il ne soit malade. (She’s afraid that he is sick.) Lacan noted how this superfluous negation renders perfectly the gap that separates our true unconscious desire from our conscious wish: when a wife is afraid that her husband is sick, she may well worry that he is not sick (desiring him to be sick). And could we not say exactly the same about the Left liberals horrified by Trump? Ils ont peur qu’il ne soit une catastrophe. What they really fear is that he will not be a catastrophe.

One should get rid of the false panic, fearing the Trump victory as the ultimate horror, which made us support Hillary in spite of all her obvious shortcomings. Trump’s victory created a totally new political situation with chances for a more radical Left. Today’s liberal Left and populist Right are both caught in the politics of fear: fear of the immigrants, of feminists, etc., or the fear of fundamentalist populists, etc. The first thing to do here is to accomplish the move from fear to Angst: fear is the fear of an external object that is perceived as posing a threat to our identity, whereas anxiety emerges when we become aware that there is something wrong with our identity itself, with what we want to protect from the feared external threat. Fear pushes us to annihilate the external object; the way to confront anxiety is to transform ourselves.

The 2016 elections were the final defeat of liberal democracy, or, more precisely, of what we could call the Left-Fukuyamaist dream, and the only way to really defeat Trump and to redeem what is worth saving in liberal democracy is to perform a sectarian split from liberal democracy’s main corpse – in short, to shift the weight from Clinton to Sanders. The next elections should be between Trump and Sanders. Elements of the program for this new Left are relatively easy to imagine. Trump promises the cancellation of big free trade agreements supported by Clinton, and the Left alternative to both should be a project of new and different international agreements — agreements that would establish control of the banks, agreements about ecological standards, about workers’ rights, healthcare, protection of sexual and ethnic minorities, etc. The big lesson of global capitalism is that nation-states alone cannot do the job, and only a new political International can maybe bridle global capital.

An old anti-Communist Leftist once told me the only good thing about Stalin was that he really scared the big Western powers. And one could say the same about Trump: the good thing about him is that he really scares liberals. After World War II, Western powers learned the lesson and focused also on their own shortcomings, which led them to develop the welfare state. Will our Left liberals be able to do something similar?

- Slavoj Zizek, ""Donald Trump's Topsy-Turvy World"

A Lack of Civil Rights/Social Justice Turns from Tragedy to Farce

Davos Meets its' New Leader

Xi Jinping will become the first Chinese president to attend the World Economic Forum when he gives a speech expected to extol Beijing's efforts to negotiate new types of regional trade deals shorn of US influence (AFP Photo/)
from Yahoo News

China's president will preach the advent of a new world order in Davos next week before the high priests of globalisation, who are facing an uprising from voters against their orthodoxy of open markets and borders. 

The annual conclave of the World Economic Forum in the Swiss Alps, grouping 3,000 delegates from the worlds of government, business, science and the arts, has created the caricature of "Davos Man", a rich, rootless globetrotter who worships with fellow disciples in the church of free trade. 

But populists are singing from a radically different hymn sheet. Their hostility towards both unfettered trade and immigration has already yielded Britain's vote to leave the European Union and the rise of once-fringe parties across Europe, including in France and Germany. 

The ultimate rebuke to "Davos Man" will come on Friday, the last day of the week-long forum, when Donald Trump is inaugurated as the 45th president of the United States. 

And the consensus of a rules-based global order led by Washington is threatened by communist China's inexorable rise.

In that context, it is noteworthy that Xi Jinping will become the first Chinese president to attend the forum when he gives a keynote speech on Tuesday that is expected to extol Beijing's efforts to negotiate new types of regional trade deals shorn of US influence.  

This year's Davos "may be the start of China's new role as a leader in promoting globalisation and a speedy recovery of the global economy", as Western countries turn to "isolationist self-centredness", commentator Sun Ding wrote for China's official Xinhua news service. 

IHS Markit chief economist Nariman Behravesh stressed China is in no position yet to replace the United States as a global hegemon, but told AFP: "In Davos, Xi will likely articulate China's vision for the world economic and political order." 

- Don't blame us - 

Heading into the World Economic Forum's 47th edition, organisers reject the charge of complacency. 

Founder and executive chairman Klaus Schwab, 78, told AFP that the discussions will aim to address "the root causes" of the widespread anxiety felt among Western voters.

But he insists that globalised trade alone is not to blame for the rise of identity politics, pointing to advances in technology that have rendered millions of workers' jobs obsolete along with fraying social bonds for the "emotional turmoil" afflicting so many.

The answer, Schwab said, lies not in retreating behind isolationist walls but in properly educating and training people to face up to what he calls the "Fourth Industrial Revolution". 

One theme of Davos this year is how white-collar workers could be next in the firing line, after their factory brethren, given the rapid evolution of artificial intelligence. 

If Xi is the star turn, Chinese business leaders will also be out in force in Davos. 

Vice President Joe Biden and Secretary of State John Kerry will be on hand from the outgoing US administration, along with new UN chief Antonio Guterres and ministers representing 70 countries. 

Oscar-winning actors Matt Damon and Forest Whitaker will be present to promote development initiatives they are leading in poorer nations.

- Beware false prophets - 

But in the short term, Friday's inauguration of Trump will be the elephant in the Alps as Davos debates where the property tycoon -- newly buffeted by incendiary allegations linked to Russia -- intends to take his country. 

If he is indeed bent on isolationism, "China is going to be there to try to fill the void", commented Luis Garicano, professor of economics and strategy at the London School of Economics. 

But he also pointed to the fact that in some of his cabinet picks, such as secretary of state and defence, Trump is surrounded by strong figures with top-level backgrounds in business or the military who are used to working across borders.

"These people are pretty committed to the world order, one could say the Davos order. 

He would seem to stand alone in his rejection of 'Davos Man'." 

The new US administration will be represented in Davos by Anthony Scaramucci, a flamboyant hedge-fund investor who is part of Trump's transition team. 

Scaramucci will be the object of wary curiosity from many in the Davos crowd. They no doubt share the view of Trump espoused by former Mexican president Vicente Fox that the Republican is a "false prophet" who bodes ill for the world, elites and poor alike.

America's Real Economic Challenge...

The Neoliberal Era Is Over... or is it?

from Reason

Donald Trump’s pro-tariff action yesterday underlines a reality long in the making: The post-Cold War neoliberal triumphalism is dead in the West.
Yesterday brought three bits of trade-related news from President-elect Donald Trump. The first was that he has nominated as the next United States Trade Representative Robert Lighthizer, who has long railed against what he calls "the utopian dreams of free traders." The second was, obviously, a tweet:
And third was the announcement from Ford Motor Co. that it is cancelling a $1.6 billion plant in Mexico while launching a $700 million factory in Michigan, which Ford Chairman Bill Ford Jr. told Trump himself in a phone call.

We've already seen this cycle play out before—five weeks ago, over the span of a few days, the president-elect vowed to enact a 35 percent border tax, slammed an Indiana ball-bearings plant for moving its factory to Mexico, then declared victory after intervening in another manufacturer's siting decision. But coupled with recent political and societal developments in the increasingly morose continent of Europe, this latest bout of Trumpism spray-paints an exclamation point on a 2017 reality many are still slow to acknowledge: The post-Cold War age of ever-increasing trade, immigration, multilateral integration, and technocratic celebrations thereof, is in the rearview mirror. Once-dominant neoliberalism—I'm using the term here as it is deployed these days by its critics, rather than how it was used by its more domestically inclined originators—is on life support in the democratic West. And this deterioration long predates Donald Trump.

Start with trade. After the destruction of World War II and the post-war European incursions by the Soviet Union, tariff reductions and free-trade zones have been understood in Paris, Bonn, London, and Washington as the best available tool to cement peace and stave off authoritarianism. American presidents from both major political parties—sporadic rhetorical spasms notwithstanding—have without exception assumed their role as the world's lead trade negotiator. Dwight Eisenhower, in the teeth of the Cold War, bucked nearly a century of Republican protectionism. Bill Clinton and Al Gore, after the collapse of communism, shouted down giant sucking sounds from all over the political spectrum. Even Barack Obama, who campaigned more vociferously against trade pacts than any postwar president, predictably reneged on his promise to renegotiate the North American Free Trade Agreement (NAFTA), and appointed as his second-term Trade Representative a guy whose resume—Council on Foreign Relations, Citigroup, chief of staff in Robert Rubin's Treasury Department—couldn't be more neoliberal if it was cooked up in a laboratory.

Compare that to the mercantilist economic views of Trump's pick, as expressed in a 2008 New York Times op-ed headlined "Grand Old Protectionists":

Modern free traders […] embrace their ideal with a passion that makes Robespierre seem prudent. They allow no room for practicality, nuance or flexibility. They embrace unbridled free trade, even as it helps China become a superpower. They see only bright lines, even when it means bowing to the whims of anti-American bureaucrats at the World Trade Organization. They oppose any trade limitations, even if we must depend on foreign countries to feed ourselves or equip our military. They see nothing but dogma—no matter how many jobs are lost, how high the trade deficit rises or how low the dollar falls.

While the Trump administration's pivot on trade will feel abrupt, the politics behind it have been percolating for more than a decade. Free-trade Democrats, once a common sight on Capitol Hill, became all but extinct after the party re-took Congress in 2006 on a more economically populist platform. Hillary Clinton twice ran for president by campaigning against her husband's trade deals (even while bragging on his economic successes), yet in both instances found herself yanked sharply to the left by competitors who successfully questioned her sincerity. Bernie Sanders, a democratic socialist and longtime independent, received more than 13 million votes in the Democratic presidential primary, in part by claiming—ludicrously!—that international trade is a "global race to the bottom."

Meanwhile, Republicans haven't been as pro-trade as you might think. Two of the GOP's top four presidential finishers in both 2008 and 2012 campaigned against free-trade agreements—Ron Paul over issues of sovereignty and crony capitalism, Mike Huckabee and Rick Santorum for reasons that would soon be echoed by Trump. The president-elect may be jerking public opinion toward his P.O.V., but even before Inauguration Day, 70 percent of conservatives support "imposing stiff tariffs or other taxes on U.S. companies that relocate jobs." Free trade right now just ain't popular.

The same is true in Europe, as pro-trade Euroskeptics such as Daniel Hannan are coming to find out in a post-Brexit universe. While Brits have surely reclaimed sovereignty by swapping Eurocrats for homegrown busybodies, it may take as long as a decade to negotiate a new trade deal just with the European Union, let alone stitch together scores of other new bilateral pacts. And there's no indication that voters who rejected Brussels will turn around and support reductions in tariffs with other foreign capitals. As Johan Norberg pointed out in these pages back in July, the pro-Brexit leadership sounded some downright Trumpian notes about state intervention into markets:

[L]eading free-market Tories Boris Johnson and Michael Gove drove around in a campaign bus emblazoned with the message that government health care will get another £350 million a week outside of the E.U. The Leave campaign also promised more tax money to universities, scientists, and distressed regions.

When a steel plant in Wales foundered, Boris Johnson abandoned all free-market pretense and explained that the problem is that the E.U. stops the British government from introducing tariffs: "When we want to change tack on tariffs, we can't—because we have given up control." Gove complained that the E.U. has "rules that prevent us providing that emergency support and assistance" and that after Brexit "we would be able to support industries that were going through difficult times."

Railing against the sovereignty-busting whims of overseas elites isn't just effective politics, it's also often right. The E.U. project has been liberating when it comes to free trade, privatization, and the movement of humans within its borders, but planners weren't content to stop there. They insisted on eradicating monetary sovereignty as well, implausibly lashing together the central banks of Germany and Greece, a system that leaves all participants perpetually (and rightfully) disgruntled. And the downside to pooling and outsourcing immigration policy has been all too clear these past few years, as locals have found some of their cities swollen with hard-to-assimilate migrants and refugees from war-torn Muslim regions of the Middle East and North Africa, without feeling like they had any say in the matter. Throw in what has become almost monthly acts of deadly Islamic terrorism on the continent, and the nationalist political reactions write themselves.

There is zero juice left in the West for Bill Clinton or Tony Blair-style Third Way politics, nor much for the managerial conservatism of Jacques Chirac and George W. Bush. And yes, the military interventionism that each in their way championed contributed to the discrediting of their ideological brands. As former New Republic owner and editor Marty Peretz reminisced in the Wall Street Journal a few years back, "We were for the Contras in Nicaragua; wary of affirmative action….For military intervention in Bosnia, Rwanda and Darfur; alarmed about the decline of the family. The New Republic was also an early proponent of gay rights. We were neoliberals."

In the post-neoliberal era, parties of the left are going hard democrat-socialist (think Bernie Sanders and Jeremy Corbyn), while parties of the right increasingly adopt the welfare-state nationalism of Donald Trump, Viktor Orban, and France's ever-advancing Le Pen family. The areas around the center are as dead as the political careers of, well, Hillary Clinton and Jeb Bush. Voters everywhere are drifting toward candidates and parties whose incorrectness (as perceived by elites) in manner, policy ideas, and rhetoric offer hope that they, at long last, won't be like all the others. I was struck during a Christmas visit to France at how genuinely intrigued people I spoke to were about Donald Trump, often in a hopeful way. I almost never heard such generous assessments of the likes of George W. Bush.

The potential magnitude of this Transatlantic political realignment is one of the reasons Team Trump has such a spring in its step. For those who are more anxious about the rise in mercantilism and decline of multilateralism, it will do no real good to merely point at the highlight reel of the recent past. That place was more flawed and corrupted than its managers were willing to admit, and in any event is no longer the reality we live in.

The author doesn't know it yet, but the "welfare state" model is as dead as "mercantilism". The State has got to step back and ensure that free market principles rule the domestic economy, and that foreign trade is only need to supply necessary goods not available at in within the United States

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