An article in the latest edition of The Economist, titled “The new political divide,” correctly points out that what we saw in the recently-concluded Democratic National Convention and the Republican counterpart a week before is “a new political faultline: not between left and right, but between open and closed” — nationalist vs. globalist.
That same faultline is also found across Europe:
“Across Europe, the politicians with momentum are those who argue that the world is a nasty, threatening place, and that wise nations should build walls to keep it out. Such arguments have helped elect an ultranationalist government in Hungary and a Polish one that offers a Trumpian mix of xenophobia and disregard for constitutional norms. Populist, authoritarian European parties of the right or left now enjoy nearly twice as much support as they did in 2000, and are in government or in a ruling coalition in nine countries. So far, Britain’s decision to leave the European Union has been the anti-globalists’ biggest prize: the vote in June to abandon the world’s most successful free-trade club was won by cynically pandering to voters’ insular instincts, splitting mainstream parties down the middle.”
The article does not identify its author, which means it is an Economist editorial. From the editor’s choice of words — “open” vs. “closed” — you should have detected the magazine’s bias in favor of globalism, made more evident by the unnamed author calling Donald Trump’s Americanism “xenophobic” “anti-trade tirades,” and European political parties that champion national interests “ultranationalist” — a term used for fascist and Nazi movements.
Indeed, the article’s unnamed author makes clear his bias in favor of globalization, condescendingly lecturing to the readers that they must “Start by remembering what is at stake” — that globalization “has underpinned global prosperity for seven decades” and that “A world of wall-builders would be poorer and more dangerous.”
But is it really true that globalization — NAFTA, North American Union, open immigration, welcoming of refugees — has resulted in prosperity?
A recent report from McKensey Global Institute, the business and economics research arm of McKinsey & Company, says otherwise.
The report, “Poorer than their parents? A new perspective on income inequality,” by Richard Dobbs, et al., July 2016, found that instead of prosperity, the real incomes of most (65-70%) households in advanced economies like the United States had actually fallen or, at best, stayed flat in the years 2005 to 2014 — a decided contrast from the preceding period 1993-2005, when 98% of households in 25 advanced economies had seen real incomes rise.
As the bar-graph below shows, the situation in the U.S. is even worse. A whopping 81% of U.S. households’ real incomes fell or remained flat from 2005 to 2014.
Here are the report’s other findings about those 25 advanced economies:
- Between 2005 and 2014, the real incomes of more than 540 million people in 25 advanced economies were flat or declined.
- The hardest hit are young, less-educated workers, which raises “the specter of a generation growing up poorer than their parents.”
- “While the recession and slow recovery after the 2008 global financial crisis were a significant contributor to this lack of income advancement, other long-run factors played a role—and will continue to do so,” including demographic trends of aging and shrinking household sizes.
The report warns that “Without action, this phenomenon could have corrosive economic and social consequences.” A survey conducted as part of the McKinsey Global Institute research found that a “significant number” of those whose incomes have not been advancing are losing faith in aspects of the global economic system. Nearly one-third of these people said they think their children will also advance more slowly in the future, and they expressed negative opinions about free trade and immigration.
Even worse, the report expects the situation to worsen, instead of improve:
“If the low economic growth of the past decade continues, the proportion of households in income segments with flat or falling incomes could rise as high as 70 to 80 percent over the next decade.“
The report warns that even if the advanced economies see accelerated growth, leading to a 10-20% reduction in the number of low-income households, “the issue will not go away” because of robots — “a rapid uptake of workplace automation.”
The McKinsey Global Initiative report puts the lie to The Economist‘s crowing that globalization leads to prosperity. Globalization has benefited less-developed countries and multinational corporations at the expense of the middle and lower classes of the developed economies of the U.S. and Europe.
Lastly, if you’re a blue-collar worker or ex-worker, Hillary Clinton is the last person you should support, notwithstanding the labor unions’ fealty to her. Not only is she a Goldman Sachs whore, the just-concluded Democratic National Convention was dominated by big corporate lobbyists. In the words of Politico‘s Ben White:
Hordes of industry executives will descend on the city to celebrate Hillary Clinton’s nomination for president and renew close associations….
Goldman Sachs, which paid Clinton millions for private speeches, will be well represented in Philadelphia with executives Jake Siewert, a former Bill Clinton press secretary, making the trip along with Steven Barg, Michael Paese, Joyce Brayboy and Jennifer Scully, who was a major fundraiser for Bill Clinton in New York in 1992.
Blackstone, one of the nation’s largest private equity firms, will hold an official reception in Philadelphia on Thursday featuring its president, Tony James, sometimes mentioned as a possible Treasury secretary in a Clinton administration.
Hedge fund managers and top Democratic donors including Avenue Capital’s Marc Lasry and Boston Provident’s Orin Kramer will also be on the scene, as will Morgan Stanley executive and former top Clinton aide Tom Nides. Executives from Citigroup, JPMorgan Chase and other large banks will also prowl the streets and barrooms of Philadelphia….
Republicans with ties to the financial industry will also be there, a sharp contrast to Donald Trump’s convention in Cleveland, which Wall Street largely shunned over fears of the GOP nominee’s populist agenda on trade, immigration and Wall Street reform.
See also:
- Wall Street owns Clintons; Goldman Sachs biggest donor
- An appeal to Democrats: Hillary Clinton is a Wall St. warmonger
- Bernie sells out; endorses one-percenter Hillary Clinton
- Ted Cruz’s undisclosed $1M loan from Goldman Sachs
- Home ownership increasingly out of reach for U.S. middle class
- Decline of America’s middle class threatens U.S. global power
H/t FOTM’s josephbc69
~Eowyn
