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The Bookshelf: Ian Bremmer on Us vs. Them

Ian Bremmer's latest book, Us vs.Them: The Failure of Globalism, explores the disconnection from the global economy that some around America and the world experience.

Article by William McKenzie May 2, 2018 //   13 minute read

Ian Bremmer, a Time Magazine columnist and founder of the Eurasia Group, predicts the populism this disconnection has given rise to will increase until public and private institutions, as well as individual citizens, can together find solutions.

As part of the Bush Institute's focus on challenges to democracy and free markets, Bush Institute Editorial Director William McKenzie spoke with Bremmer about the forces driving populism, the challenges China presents to the global economic order, and the growing "era of walls" the author foresees. Bremmer does see hope, though, including in promising changes in local communities and the private sector.

Your book comes through loud and clear about the opportunity costs in the rise of the global economy. But surely you’re not suggesting an unraveling of that economy in its flow of goods, services, and information?

No, but I am worried about fragmentation in a couple of ways.

First, China soon will be the world’s largest economy. They will be state capitalists and authoritarians. They will be creating alternative standards in the field of technology and other places that promote their own state-owned enterprises and partly-owned national companies.

This will undermine a U.S.-led order in the global economy. There’s no more global free market when your largest economy is a hybrid, state-capitalist economy.

The second piece I am worried about is that, for the last 30 or 40 years, globalization has been about big global companies going to where labor is most abundant and inexpensive. They can produce for increasingly global supply chains for an increasingly global consumer base.

But labor costs in China have gone way up and the importance of labor to capital has decreased significantly given automation and artificial intelligence trends. This will expand faster and faster in the coming years, which implies there will be a lot of in-sourcing, not out-sourcing. People will be increasingly producing where their consumers are. 

This is a bit of an unwinding of what had been an increasingly global system. These structural changes happened before the more protectionist impulses that we see emanating from the new populist political forces in United States, Europe, and emerging markets around the world.

Whether we’re having a trade war now or not, we are seeing an uneasiness that arises when nations start turning inward economically. Isn’t that a good warning sign about not going too far down the path of attempting to unwind globalization?

It is a warning. Now, when Steve Bannon was the chief global strategist for [President] Trump, he argued that if we are going to have a fight with China, and they are going to be the largest economy, it’s much better to fight them now and early. Do it when they’re weaker than wait until we are in a position where anything we do is really going to hurt us.

You could make the argument, which Trump is making, that the palpitations of the markets and the threats from China are warning shots. We need to power through them because ultimately we are still a lot bigger than China. They are going to back down and give us a better deal.

China does have a lot of unfair trade practices. We don’t have reciprocity in terms of market access. They are stealing our information technology and they don’t have rule of law. This is all a serious problem for us. 

The rejoinder is that, if you’re going to hit the Chinese wouldn’t it be better if you do it together with our allies? Wouldn’t you want to have the Trans-Pacific Partnership? And wouldn’t you want greater inducements for the Chinese to join that partnership, if they behave well?

But America First is not doing much of that. We are not very strategic. We are much more transactional and unilateral. This is a danger.

Couldn’t you make the case that globalization is actually a tool for the U.S. against Russia? That Putin’s Russia cannot survive economically if it does not make it in a globalized, inter-connected economy?

Absolutely, you can and should make that argument. What’s missing in the arguments people are making about Putin being a brilliant strategist is the fundamental story about Russia, and that is its economy is not doing well. It’s now smaller than Canada. They’re not able to attract investments in any of the new sectors that are developing. Putin himself says that whoever dominates artificial intelligence will dominate the world. That’s going to be China or the United States, but the Russians are not even close. They have not been investing in STEM education.

A lot of Russians with money want to get their money out of the country. Hence, their oligarch issues. They do have an enormous amount of natural resources and a lot of military capability, including military they’re willing to sell. But American and European sanctions against Russia have hurt them. Their taking over a small piece of Ukraine has been a greater economic stress on their country. And Syria has not been very popular for them.

The biggest thing Putin hasn’t done is modernize the economy. Corruption and kleptocracy define the Russian state better than almost any other major emerging market.

You talk about an “era of walls,” where leaders and others try to wall off information through limiting the internet, restrict the flow of people across borders, or make trading relationships more difficult. What impact is this era likely to have?

It’s like what we are seeing in the dramatic tensions between the Israelis and Palestinians. People are getting enormously frustrated and it doesn’t matter who they vote for because their situation will not get better.

That is what led to the Trump election and to [Bernie] Sanders doing as well as he did. It’s what led to Brexit. It’s what led to the elections in Italy, Germany, and France. These are not coincidental. These are structural problems.

If you have increasingly large percentages of the world’s liberal democracies saying that the social safety net does not work for us, and that our legitimate political leaders aren’t legitimate, they are going to increasingly engage in protest behavior and protest voting.

They will either drag their political parties farther to the extremes, right or left, or they will support complete outsiders that reject the political establishment. Either way, the ability of central governments to maintain the idea that there is only one polity and nation, and we are all rowing in the same direction, has increasingly evaporated. That’s why the book is called Us vs. Them.

Your overriding point is that the “us versus them” trend will continue no matter who is in office. So what do we do to avoid a calamitous conflict?

The reason this is such a challenging problem is that it is not a crisis. If it were a crisis, you would have people saying we have to address this and leaders from both parties would be coming up with proposals and betting their careers on them. No one’s willing to do that. 

This book is a recognition that this situation is going to get worse. We are increasingly going to live in a country that doesn’t reflect the unified values of the Statute of Liberty. They don't reflect the United States as a beacon of democracy or the architect of global trade. 

Since the central government will not respond effectively to problems like the opioid addiction or crumbling infrastructure, you will see a lot of sub-national players try to make a difference. San Francisco recently announced that everyone in the city who wants free community college education will have access to it. My understanding is that there is a similar program in Dallas County for students in 31 area high schools. 

You will see CEOs talking about paying for life-time training, if employees will do it on their own time. You will see private equity firms starting to funnel money into other areas than the top-tier cities to incubate great ideas from people that otherwise aren’t getting capital. 

Some of these ideas won’t be scalable but when you put the minds of smart, committed individuals from all over the world on these sorts of issues, you will eventually see transformation. That's what happened with climate change when governments weren’t paying attention. We will eventually innovate ourselves out of this problem. 

Now the danger is, what happens if this thing blows up before then? If we were to have a global depression in the next 10 or 20 years, the impact of “us versus them” would be much more damaging. The room for mistakes is becoming narrower.

Let's shift to robots in the workplace. Artificial intelligence (AI) is not going away so isn’t the answer to train people, especially young students, to have those skills where they can manage the robots, so to speak? Or so they can move into a line of work that pays better?

That’s a big part of the solution. You can give them a universal basic income, but experimental universal basic income historically has not led to more democratization.

Two questions need to be raised in response to what you’re saying. First, the people that are losing jobs to automation are the farthest away from having the skillsets to be productive in the new jobs that advanced technologies are being produced. You have an entire generation or two where the gap between where we want them to be feels hard to bridge.

And there is a presumption that there will be enough jobs. It is worth testing that presumption. Every time we have had an industrial revolution, it’s been better for human beings. But it is plausible that in the next generation or two, AI will advance sufficiently that there simply won’t be enough work for the billions of people on the planet.

If that’s the case, we need to think differently about a productive, satisfying life-cycle for a citizen. And what obligations come from the state for your citizen, when there’s more than enough money and productivity but it is much more unequally distributed. 

We need to address that early or dystopian futures become much more likely.

You write about the role of “identity.” Have we reached the point where gut reflexes of identity have taken over and perhaps policies and programs are either ineffective or secondary? Is the only way out to have some huge debate about these questions of social and cultural identity?

Having not effectively addressed them over the past decade, there were a lot of people who thought the United States was in a kind of post-identity politics, or at least moving in that direction. The election of Barack Obama made a lot of people hope that that was the case.

But the reality is far from that. If the sweet-spot for political affiliation 30 years ago was progressive on social policy and conservative on economic policy, the sweet-spot today increasingly feels the opposite way. It is conservative on social identity policies and it is left-of-center on economic nationalism and economic policies.

Technology facilitates this because it is not facilitating diversity or inclusion. You can follow, read, and be informed by people that already agree with what you think. In fact, they will even make you a little more extreme. Consumerism around social media pushes you in that direction. It is what they want you to click on. It is becoming increasingly difficult for the citizenry to push back on the algorithms that are pushing us towards identity politics. It hard to actively reach out to people that we don’t agree with. 

This real problem exacerbates the fraught identity cleavages that exist in the United States. When President Trump goes after black millionaire athletes for not kneeling at the national anthem, he is digging into something that is extremely powerful still. To pretend that is not so will not allow us to fix this problem.