Many people wonder why right-wing populism and autocracy have become so successful in the developed world, from Trump’s shock election in 2016 and Brexit in the same year, to Orban’s and Meloni’s victories in Hungary and Italy.
Financial Times and CNN journalist Rana Foroohar’s third book, Homecoming: The Path to Prosperity in a Post-Global World, provides a compelling answer, showing how globalisation has concentrated wealth largely “at the very top, among financial and managerial elites who own the most assets, and to a certain extent at the very bottom ... huge areas in many nations have been hollowed out economically, or environmentally degraded or left behind politically by globalisation.”
It’s no wonder then, that American rural communities voted for Trump and his false promises when “globalised, very fragile, highly ‘efficient’ supply chains are enriching Wall Street but starving Main Street and driving small farmers out of business”. Notably, Joe Biden carried the election in 2020 by convincing enough working-class men and women in the midwest that he would reverse the forces of unlimited globalisation.
Globalisation emerged from neoliberalism, a vague term that encompasses the efforts to create multilateral institutions such as the International Monetary Fund (IMF) and World Bank to govern global finance and trade. The so-called neoliberal order received global impetus with the election of Ronald Reagan in 1980 and Margaret Thatcher in 1979, resulting in privatisation, deregulation, free trade, trickle-down economics and austerity.
Foroohar is not arguing for an end to all offshore manufacturing, but for a rebalancing: away from the intense globalisation of the past 40 years and towards the interests of local communities
While Ireland has undoubtedly benefited from globalisation and the massive manufacturing investment designed to exploit our membership of the EU market, not to speak of our tax advantages, we have also suffered from the severe effects of austerity imposed by the IMF and EU from 2010 to 2013 following the global financial crisis, aka the bank bust. The neoliberal or “Washington Consensus” formula to address financial crises around the world is to cut benefits and increase taxes even if it causes widespread unemployment and economic distress, as it did in Ireland and elsewhere. It has been well argued that Ireland’s subsequent economic recovery owed less to austerity than to the export performance of multinational firms, ironically part of the same global system that insists on austerity punishments.
The Institute for New Economic Thinking (INET) was founded by George Soros in 2009 to encourage those economists prepared to take on the orthodoxies of neoliberalism, advocating post-Keynesian theory. Foroohar, whose previous books exposed the threats of unregulated big tech and the undue financialisation of our societies, draws on many of these economists including Michael Sandel, offering a new form of political economy. For example, her chapter on Companies versus Countries states that “it’s a question of values, really,” arguing that the United States and EU should co-operate on digital privacy, creating a “digital bill of rights, and principles for regulating artificial intelligence and genomic research”.
When the economic and social shocks following the Russian invasion of Ukraine, Covid and intensified competition with China and Russia are fully priced, deglobalisation makes economic sense. However, Foroohar is not arguing for an end to all offshore manufacturing, but for a rebalancing: away from the intense globalisation of the past 40 years and towards the interests of local communities. US president Joe Biden’s treasury secretary, Janet Yellen, has proposed “friend-shoring” as a means to insulate global supply chains from external disruption or economic coercion. Such a policy would benefit Indo-Pacific countries such as Malaysia and Vietnam which are considered trustworthy by the US and its allies. It would also benefit Ireland, which continued to be a trusted supplier of healthcare products to the US during the Covid-19 pandemic.
Indeed, the chapter Chip Wars shows that multilateralism is still required to tackle “seemingly disparate issues (climate change, supply chain disruption, inflation, financial stability, inequality and nationalism) which are in fact intricately linked”.
In a journalistic tour de force, Foroohar takes the reader on a fascinating journey through America, showing how entrepreneurs are using innovation and local skills to create new jobs and prosperity. My favourite is Jason Ballard, the founder of the Austin-based 3D printing company ICON. Ballard’s goal is to make housing more affordable by using a new form of concrete to pour into a custom design that creates not only the frame and wall structure of a home, but space for other components, such as insulation, plumbing etc. Instead of a single home taking months to build and costing a small fortune, an ICON home can be printed in eight days at a fraction of the time, cost and emissions of building a regular home.
Foroohar’s concluding words are optimistic in the pursuit of bottom-up, locally driven growth
Foroohar also visits vertical and modular farms which require only 5 per cent of the water and 1 per cent of the land needed by conventional farms, a major opportunity for the water-starved world. Her book shows how the Biden administration is contributing enormously to localisation by “using the purchasing power of the Federal government to drive private sector investment into four key areas: semiconductors, large capacity batteries, rare earth minerals and key pharmaceutical ingredients”.
Having read Foroohar’s hopeful and very readable book about complex economic and political issues, the question arises: will the innovative economic policies survive if Trump and Maga Republicans take back the Congress and the White House in 2024, opposing federal spending to combat climate change and supporting their financial allies in those businesses that benefit from unfettered global casino capitalism, a capitalism never envisioned by Adam Smith? The recent midterm elections suggest, however, that Democrats may be rewarded by voters as inflation eases and Biden’s economic policies begin to show tangible benefits for the middle-class.
Foroohar’s concluding words are optimistic in the pursuit of bottom-up, locally driven growth: “If we’re lucky, the result may be a world that is fairer, stabler, more varied and a lot more interesting than what came before.”
Amen to that.