What is Trump Globalization

Trump's specter of globalization

Donald Trump was also able to win the fight for the White House because he was able to win over the frustrated middle class - the so-called "angry white man". Many of his speeches were marked by sharp anti-globalization rhetoric. He questions economic cooperation with other countries. He wants to renegotiate free trade agreements like NAFTA and not allow TTIP to come about in the first place. But that's not all: he wants to bring back jobs that have been relocated to China.

Such slogans are particularly popular with the white middle class. While the rich got richer and richer, also because of global interdependence, it did not bring the middle class any improvement in prosperity. Factory workers from the so-called "Rust Belt" - a once thriving industrial region in the northeastern United States - are finding it increasingly difficult to make a living, despite sometimes having several, but poorly paid, jobs. Trump blames globalization and free trade for these abuses.

Anti-Globalization: A Pillar of Populism Today

Enemy images are one of the most important tools in a populist's repertoire. They create identity, togetherness and distract from their own failure. Jews, Muslims, Bolsheviks, Zionists, Americans, Social Democrats: there have always been enemy images that a populist could use. Now a new enemy is very popular: globalization. More and more often, a multifaceted phenomenon is broken down into a vague threat.

Trump's neo-protectionism is not a precedent. Opponents of globalization who are considering protectionist measures are now everywhere. Brexit was not only anti-European, but also a departure from globalization and mass immigration. The Front National, which is currently very popular in France, also advertises with strict economic protectionism. Less populist, but all the more determined, there is strong resistance to free trade agreements such as TTIP or CETA in Germany as well.

Rolf Langhammer - former director of the Institute for the World Economy - explains this trend by the fact that global growth rates have weakened in recent years. This has exacerbated the distribution conflicts. Right-wing populists put these distribution problems on globalization. Technical progress is more of a source of evil.

Heightened distribution conflicts: Rolf Langhammer, former director of the Institute for the World Economy

The end of an era?

So does the beginning of Donald Trump's presidency mark the beginning of the end of economic globalization? The beginning of a downward spiral that is gradually leading the world economy back to small economic states? At least that is what figures from the globalization index of the logistics group Deutsche Post DHL suggest. The index shows that foreign investments as well as trade and money flows have steadily declined since the beginning of the financial crisis in 2007.

Gustav Horn - Director of the Institute for Macroeconomics - believes that China is primarily responsible for this. The engine of world trade has not been running smoothly for a long time. According to Horn, protectionist measures à la Trump could paralyze world trade even further.

The sudden "globalization lull" was considered impossible a few years ago. For decades it has been agreed that globalization will solve the world's problems, benefit the poor, and increase prosperity. International trade and capital flows had increased steadily, especially since the opening of China and the fall of the Iron Curtain. The successful integration of an EU internal market and the development of a financially strong middle class in India, Russia and China have only confirmed the credibility of a "benevolent" globalization.

Globalization: the driving force behind prosperity

This almost euphoric attitude towards globalization has temporarily ebbed away. Global world trade is stalling. An opponent of globalization as the president of the largest economy in the world. Populists all over the world who rail against globalization and free trade. Will globalization - a development that has grown since industrialization - now be given the fatal blow?

It is undeniable that globalization has also had positive effects. Rolf Langhammer points out that both industrialized and emerging countries have benefited equally from globalization. Hundreds of millions of people in emerging and developing countries have been lifted out of poverty by opening up national markets. Gustav Horn also confirms that both rich and poor countries have benefited equally from globalization. China, Mexico, Brazil and South Africa in particular have seen rapid development through world trade. Nevertheless, Horn warns that the prosperity that has been achieved through globalization must be better distributed.

European single market: a stabilizer

Free trade also had a positive effect in Europe. Thanks to the European internal market, countries in southern and eastern Europe have significantly increased their prosperity. From Spain to Romanians - after joining the European Union and thus the common internal market - the standard of living has improved in a very short time. Not only that. In Europe, free trade across national borders was a catalyst for peace and international understanding. The economic interdependence makes wars almost impossible. All over the world, globalization has brought people from a wide variety of cultures together. So if you position yourself against economic globalization, you support national solo efforts.

The engine of world trade is no longer running smoothly: Gustav Horn, Director of the Institute for Macroeconomics

Protectionism doesn't solve problems

Trump wants to seal off the US and restrict global trade. The plan to put free trade agreements to the test would not help the frustrated American middle class. Gustav Horn says Trump's economic policy would damage the real economy and financial markets in the US in the long term. But even more important: it is of absolutely no use to the middle class. The lowering of the tax on the wealthy will exacerbate inequality and drive redistribution from the bottom up.

Both economists agree: an economic policy that curtails free trade agreements will not solve the problems of the American middle class. Langhammer says that it is not globalization but technical progress that is decisive. There are many top universities in America, but fundamentally an unequal educational system. In a country characterized by high technology and not by industry, it would be easier for a well-trained workforce. In addition, industrial locations such as the "Rust Belt" have failed to carry out a structural change.

Globalization helped to economic growth, prosperity and international understanding. Through the scare tactics of populists and do-gooders, globalization is associated with risks rather than opportunities. A lack of redistribution in both emerging and industrialized countries has more complex causes in many cases: structural change, corruption, a paralyzing global economy. The list could go on forever. Turning back the wheel of globalization is not only ineffective, but ultimately promotes economic and social isolation. As things stand, such a development does not represent more prosperity.