Ferguson, Trade and Income

The historian-economist Niall Ferguson believes that global trading has cause disruption in the West as some jobs naturally move to Third World countries and sees a lot of the disruption in the West as the result of that trade-off. But shouldn't Americans be happy? The improvement in world income status and the flattening of income distribution is what we want, right? Wouldn't Americans be emotionally rewarded by the improvement of Third World living standards at the cost of stagnation of their own?

 

Source: Harvard Business Review

 

Apparently not.

A 2017 study from the Brookings Institution found that there is a high correlation between jobs losses which occurred as a result of the financial crisis, and increased support for anti-establishment political parties in Europe. This populist backlash shouldn’t come as a surprise to us. During a recent discussion, Niall pointed out that: “If one looks at all the elections back to 1870, financial crises lead to backlashes against globalization that erode to the political center.”

 

The Western world has reacted, he says:

Austria elected a 31-year-old, anti-immigration candidate as Chancellor.

Italy’s populist Five-Star movement is leading in the polls for the general election, which takes place March 4.
The Visegrad group, which consists of the governments of Poland, Hungary, Czech Republic, and Slovakia, have strongly opposed the resettlement of refugees and are battling with the EU over the issue.
Angela Merkel did win the German elections, but four months later, she hasn’t been able to form a government because of the strong showing by the populist Alternative for Germany party.


But, according to him, globalization is in decline--a long time before Trump. Since peaking in 2007 and 2008, respectively, trade and foreign direct investment as a percentage of world GDP have fallen sharply. McKinsey Global Institute found that global flows of goods, finances, and services have declined by 15% since peaking in 2007.

So, since that was under Obama, was Obama an anti-globalist? And is Trump just continuing Obama's policies?