Stephen King Economic strength relies on more co-operation, not a winner-takes-all approach
In a bid to “explain” what has gone wrong in the West, it has become all too easy to forget about the benefits of mutual economic interdependence. Instead, the search has begun fo r scapegoats. Economic difficulties at home must rest with unfair competition abroad. Low wage growth must be caused by an influx of immigrants. Straitened times for the majority must result from the mysterious machinations of the minority. Protection of American auto production must now be a matter of national security thanks to the threat posed by — of all countries — Canada. And, most b i z a r r e l y, the UK Government’s Brexit ambitions — supposedly to achieve a better economic future — are being thwarted not by unions, nor by a cabal of socialist revolutionaries, but by bolshie businesses up and down the country who are threatening to up sticks.
“Them and us” narratives are now commonplace across much of Europe. Even Angela Merkel is no longer safe, vulnerable to Bavarian-led antiimmigrant sentiments that threaten her political future. The new political divisions are no longer so much about Right and Left but, instead, between those who crave openness and those who demand closure.
As trade barriers rise, as tit-for-tat protectionism takes hold, as capital flees and as the international rules of the game are increasingly violated in the pursuit of national “self-interest”, we may be about to discover that we’re engaged in neither a positive-sum game nor a “winner takes all” competition but instead a “race to the bottom”. In doing so, we’re in danger of sailing away from Love Island to the islands of hate.
⬤ Stephen King (@kingeconomist) is HSBC’s senior economic adviser and the author of Grave New World: The End of Globalization, the Return of History (Yale University Press, £20)