Authoritarians Fool the World, But for How Long? - David Dapice (Yale GLobal)

Yale Global, New Haven – 27.6.2019

Authoritarians Fool the World, But for How Long?

The G20 must take bold stands on inequality, climate change and human rights – or risk encouraging authoritarianism

David Dapice

A number of trends contributed to two world wars during the last century: protectionism, delusions about national capabilities, isolationist tendencies on the part of some and expansionism from others, scapegoating ethnic groups, rejection of critical thinking and demonization of the opposition. Similar trends gather strength today as strongmen exploit resentment and fear, promising quick and cruel fixes rather than tackling root causes of real problems. The outlook is bleak for a world with a growing population if world leaders do not push back at authoritarians who emphasize divisions while failing to cooperate on trade, migration, climate change and other global challenges. “Conceivably, authoritarian leaders can cooperate with one another, but this will be an uneasy alliance,” explains economist David Dapice. “Hardliners need enemies and are not reliable allies.” So far, the authoritarians struggle to cow education, legal and media systems and a youthful opposition deeply worried about their future. Dapice concludes that the current down cycle could sow the seeds for a cycle of progressive activism. – YaleGlobal

Medford - “Things fall apart. The center cannot hold. Mere anarchy is loosed upon the world.” These lines, written in 1919 after the upheaval and carnage of World War I, still apply to many parts of the world today.

The United States, the leader of the post-World War II order, elected a president who is in a competition with Baghdad Bob, the famously delusional spokesperson for Saddam Hussein during the 2003 invasion of Iraq.  Donald Trump seems intent on destroying trade agreements and alliances with friends while praising dictators with blood on their hands. And polls suggest he has 40 to 45 percent support from voters while Republican senators dare not oppose policies antithetical to their professed ideology and contrary to the interests of their constituents. The United Kingdom, once a builder of a globe-spanning empire, is undecided on whether or how to sever ties with Europe – ignoring the cries of firms that make plans to relocate and drain the country of future tax revenues. India overwhelmingly reelected a Hindu nationalist whose leadership resulted in economic backsliding. Under his leadership as minister, hundreds of Muslims were killed in Gujarat, and as prime minister, Narendra Modi largely remained silent when innocent Muslims were lynched. China has a supreme leader who tries to fit a dynamic and complex society into a 1960s Maoist mold that had proven disastrous. In doing so, he has made many enemies at home and abroad, likely contributing to the collapse of an integrated global economy that had lifted hundreds of millions of Chinese out of poverty.

Does Xi Jinping really think that China could lead the world without giving citizens access to information with an ever-tighter great firewall? Can he believe that putting Communist Party cells in private firms increases innovation? Will Trump succeed in making America “great again” by raising walls against immigration?

Creating divisions and building walls is a theme that unites these rulers.

We have entered a post-factual world in which reality is at best a footnote. Voters support symbols who speak to their fears, not to the reality of their problems. Even Denmark, among the most egalitarian and happiest places on earth, has seen rising support for a right-wing anti-immigrant party at a time when immigration has averaged only 20,000 a year since 2010 among a population of 5.8 million. Places with more stresses like central Europe, Turkey or Egypt have turned to “elected” authoritarians who suppress the press and opposition parties and demonize minorities while corruption rises. Leaders like Germany’s Angela Merkel, a liberal internationalist who said she does not like walls is on her way out. France’s Emmanuel Macron is unpopular, and the anti-immigrant National Rally Party of Marine Le Pen took a third of contested seats in the recent European Parliament elections. No wonder the G20 meetings at which these leaders assemble accomplish so little.

If these trends continue without effective pushback, the expectations are bleak. There will be more controls on migration. But if migrants manage to enter target countries, they will form a marginalized underclass, competing for jobs with native-born workers, many less educated. Climate change, already a driving force for migration at the US-Mexico border, could displace millions more in the next decade. There could be immense pressure to stop people fleeing their destroyed or declining livelihoods, especially if they cross borders. This could go in several directions, from militarized efforts to seal borders with “big beautiful” walls, as suggested by Trump, to more constructive attempts such as giving potential migrants secure choices closer to home.

There will also be more tariffs and higher costs. Prices of goods will increase, and people will have fewer children if they anticipate economic difficulty. The US tariffs in 2018 have cost the average family $419, according to the Federal Reserve, and the 2019 tariffs could cost double that. Lower birthrates and an aging society require more migration. Otherwise, costs in the construction, health care and food processing industries climb – a dilemma for those who dislike foreigners but need them.

The foreign policy implications of an authoritarian world in which each nation strives for narrow advantages and fails to coordinate actions on trade, migration, climate change and other cross-border concerns are not promising. With young people becoming more politically active, their “green” positions may check politicians who try to argue that the “burden” of adjustment should not fall on their nation. Since many localities and major companies already confront climate-related issues, there may even be reason for optimism that cooperation on curtailing fossil fuels will be realized – though probably not fast enough to prevent substantial deterioration of the climate. Still, the advance of cheaper renewable technologies, energy storage and the electrification of vehicles will help immensely. Conceivably, authoritarian leaders can cooperate with one another, but this will be an uneasy alliance. Hardliners need enemies and are not reliable allies.

The outlook for trade is harder to predict. Agriculture remains a politically potent force even though the share of full-time farmers is falling and is already low in most rich countries, usually registering in the low single digits. If farming became less export-oriented, it could evolve into something more like factory farms for many crops, grown closer to final markets. Climate change could also lead to more controlled growing environments. Trump’s tariff policies have trashed foreign markets for US farmers, perhaps leading to long-term displacement as nations retaliate and switch to other sources. Yet his political support holds. If senators from farm states like Iowa, Nebraska and Texas reflected the interests of their constituents, waging trade wars would be more difficult. Temporary fixes such as price supports only lead to larger surpluses, budget deficits and more anger directed against government.

Meanwhile, increasing use of smart robots and lower-cost 3D manufacturing may make clothing and shoe production or electronics assembly more economical, returning such factory work to where the purchasing power is.  If so, this will displace millions of workers in the developing world – again spurring migration – but also lower the volume of trade. Perhaps the world will devolve into trading blocs – the EU and North America are obvious examples, but China and India could form their own regions, too. Some regional groupings, such as Association of Southeast Asian Nations have not managed to increase their intra-group trade shares. How these groups manage relations with the various blocs will determine how open the world system remains. But trade and investment also create rules. A fractured set of rules would make trade more costly and difficult – less than anarchy, but much worse than what had been negotiated over a half century.

Then there is the possibility that the embrace of authoritarian leaders is more a passing fever than chronic condition. “You can fool all of the people some of the time and some of the people all of the time, but you cannot fool all of the people all of the time,” former US President Abraham Lincoln purportedly observed.  Younger people accustomed to diversity will become more dominant, many rejecting the populists and parties who claim to defend against minorities. Healthy societies and economies respond to stimuli and change. This down cycle may sow the seeds for the next upcycle – at least if the world learns how to deal with fake news and those who use it for cynical reasons and personal gain.

David Dapice is the economist of the Vietnam and Myanmar Program at Harvard University’s Kennedy School of Government.