It was interesting to read that Christine Lagarde, the head of the International Monetary Fund, has (finally!) woken up to the fact that our increasingly globalized economy has led to more and more political and economic turmoil around the world. She has, of course, been a leader in facilitating this problem for many years—historians will certainly, for example, condemn her role in strong arming Greece to repay loans that international banks should never have made in the first place—so it is reasonable to question her judgment regarding most anything having to do with the world’s economy. However, she makes three points regarding the negative outcomes of globalization that are worthy of our consideration—and praise.
“…financial institutions are being seen as unaccountable to society. Tax systems allow multinational companies and wealthy individuals not to pay what many would consider a fair share. Corruption remains endemic.”
These issues are certainly affecting a great many countries and have led to the rise of a generation of politicians all over the world who are riding voter anger into office by attacking entrenched elites and promising to pursue policies that focus on improving the well-being and security of their own citizens—ideas that are, depending on one’s political beliefs, dubbed either xenophobic and anti-business or reasonable and fair.
However, at least as regards the populist discontent in the United States that has embodied itself in the presidential candidacy of Donald Trump, there is another factor worth considering: the dire economic consequences of our fifty year experiment with state control of the economy. This has created an enormously costly, highly intrusive, and largely ineffective regulatory structure that somehow manages the neat trick of micromanaging the most mundane aspects of our daily lives while still—infuriatingly enough—abandoning all responsibility for our general well-being.
Think about what most of us would want in our daily lives to improve our personal security and life satisfaction:
- Affordable housing
- Excellent public schools
- Safe neighborhoods
- Reasonably-priced quality healthcare
- Reliable infrastructure
Now ask yourself whether the gazillion rules, regulations, and laws passed by local, state, and federal governments have provided all—or any—of these for you.
Simply paying a mortgage or rent is still a monthly nightmare for a large part of our population. Public schools consume a huge percentage of our taxes—yet produce hordes of students who are unprepared for either college or career. Violent crime is spiking across the country. Despite the many, many promises made by the Affordable Care Act, millions of Americans are still being driven into poverty or bankruptcy by medical expenses—or dying early because they cannot afford to go to the doctor. Our disintegrating road, tunnel, bridge, gas, electrical, and water systems are approaching third world standards in many parts of our nation. It would, therefore, be difficult to credit the many stupendously-staffed government agencies across the United States with any benefit beyond creating more and more well-paying jobs at our expense—for themselves.
However, one truly terrifying aspect of the regulatory state in the U.S. that is not often discussed is that our regulators work daily with other regulators worldwide to pursue the creation of a super-regulatory global state that is unaccountable to voters because their actions are governed by global treaties and government agreements that cannot be rescinded—or even voted upon in the first place—by those whose lives will be most impacted.
Americans who are, for example, suspicious of the Trans-Pacific Partnership now being considered are perfectly correct to question whether we need to sign away our national sovereignty to unelected bureaucrats who will have absolute power over all aspects of the trade—and trade disputes—covered by this treaty. This is yet another effort to create a globalized system of finance and trade that will—getting back to Ms. Lagarde’s comments—eliminate more accountability, help more wealthy individuals and corporations to avoid paying taxes, and facilitate yet more corruption by insiders who know how to game the system.
Who will win in such a globalized business environment? It will be those multinational corporations that know how to use a combination of lawyers and strategic cash drops into politicians’ pockets to gain maximum market advantage for themselves while they also work to crush any locally-based industries foolhardy enough to attempt to provide a high quality product or service at a competitive price. Imagine the difficulties inherent in growing your local business while simultaneously battling faceless, foreign-based bureaucrats who keep their cushy jobs by defending the unresponsive and corrupt status quo. Doesn’t seem quite fair, does it?
Even worse, imagine convincing your local or state government to ban a particular chemical or restrict the use of an industrial process because it increases pollution or puts worker safety at risk—only to find yourself dragged before an international tribunal because your actions violated a treaty provision that you knew nothing about. Does this even vaguely sound like a world you would like to inhabit?
There is nothing wrong with two sovereign nations sitting down to negotiate tariffs or import-export procedures. However, handing over yet more of the power of our elected governments to international bureaucrats accountable only themselves is wrong; the globalized regulatory state has already punished enough average, hardworking Americans. One need only remember, for example, all the rosy promises made around the passage of NAFTA in 1994—and add up the catastrophic damage we now know was done to our manufacturing economy and our sovereignty by this treaty—before asking whether we have spent many decades being played for fools by global political and financial elites who are interested only in enriching themselves.
It seems that more and more Americans agree that globalization—and the enormous regulatory state that enables its growth—produces few winners and many losers. The growing citizen resistance to yet more strangulation of our economic futures is driving the global financial elite and their political lackeys to despair as they deal with the anger of those who are anxious to use their votes to overturn the status quo. Is now the time when we finally decide we’ve had enough of having our lives run this way? Only time will tell if our frustrations have finally reached the boiling point.