CHAPTER 1
WINNERS AND LOSERS
I am the master of my fate,
I am the captain of my soul.
—WILLIAM ERNEST HENLEY
“It’s time for a local revolution,” the candidate told the roaring crowd. “Countries are no longer nations but markets. Borders are erased. . . . Everyone can come to our country, and this has cut our salaries and our social protections. This dilutes our cultural identity.”1 Marine Le Pen’s four sentences capture every important element of the anxiety rising across the Western world. The borders are open, and the foreigners are coming. They will steal your job. They will cost you your pension and your health care by bankrupting your system. They will pollute your culture. Some of them are killers. Le Pen fell short in her bid to become France’s president in 2017, but her message remains compelling for the twenty-first-century politics of us vs. them.
But this is not a story about Marine Le Pen or Donald J. Trump or any of the other populist powerhouses who have emerged in Europe and the United States in recent years. Spin the camera toward the furious crowd—there’s the real story. It’s not the messenger that drives this movement. It’s the fears, often, if not always, justified, of ordinary people—fears of lost jobs, surging waves of strangers, vanishing national identities, and the incomprehensible public violence associated with terrorism. It’s the growing doubt among citizens that government can protect them, provide them with opportunities for a better life, and help them remain masters of their fate.
As of December 2015, just 6 percent of people in the United States, 4 percent in Germany, 4 percent in Britain, and 3 percent in France believe “the world is getting better.”2 The pessimistic majority suspects that those with power, money, and influence care more about their cosmopolitan world than they do about fellow citizens. Many citizens of these countries now believe that globalization works for the favored few but not for them.
They have a point.
Globalization—the cross-border flow of ideas, information, people, money, goods, and services—has resulted in an interconnected world where national leaders have increasingly limited ability to protect the lives and livelihoods of citizens. In the digital age, borders no longer mean what citizens think they mean. In some ways, they barely exist.
Globalism—the belief that the interdependence that created globalization is a good thing—is indeed the ideology of the elite. Political leaders of the wealthy West have been globalism’s biggest advocates, building a system that has propelled ideas, information, people, money, goods, and services across borders at a speed and on a scale without precedent in human history.
Sure, more than a billion people have risen from poverty in recent decades, and economies and markets have come a long way from the financial crisis. But along with new opportunities come serious vulnerabilities, and the refusal of the global elite to acknowledge the downsides of the new interdependence confirms the suspicions of those losing their sense of security and standard of living that elites in New York and Paris have more in common with elites in Rome and San Francisco than with their discarded countrymen in Tulsa, Turin, Tuscaloosa, and Toulon. “The globalists gutted the American working class and created a middle class in Asia,” former White House strategist Steve Bannon told the Hollywood Reporter a few days after Donald Trump’s 2016 election victory. “The issue now is about Americans looking to not get fucked over.”3
In the United States, the jobs that once lifted generations of Americans into the middle class—and kept them there for life—are vanishing. Crime and drug addiction are rising. While 87 percent of Chinese and 74 percent of Indians told pollsters in 2017 that they believe their country is moving “in the right direction,” just 43 percent of Americans said the same.4
In Europe, the European Commission and the unelected bureaucrats who enforce its rules have legislated for its twenty-eight member nations without understanding their varied needs. In recent years, they’ve failed to halt a debt crisis that forced many Europeans to accept lower wages, higher prices, later retirement, less generous pensions, and an uncertain future, all while telling them they must bail out foreign countries that have spent their way into debt. In the migrant crisis, globalist European leaders insisted that all EU members must accept Muslim refugees in numbers determined in Brussels, and barricades and a spike in nationalism were the result (I define “nationalism” as one form of us vs. them intended to rally members of one nation against those of other nations).
Were the wave of populist nationalism sweeping the United States and Europe the only signs of globalism’s failure, it would be bad enough. But there’s a larger crisis coming. Many of the storms creating turmoil in the U.S. and Europe—particularly technological change in the workplace and broader awareness of income inequality—are now headed across borders and into the developing world, where governments and institutions aren’t ready. Developing countries are especially vulnerable, because the institutions that create stability in developing countries are not as sturdy, and social safety nets aren’t nearly as strong as in the United States and European Union. They face an even bigger gap between rich and poor, and the reality that new technologies will kill large numbers of the jobs that lifted expectations for a better life will be much harder to manage. In short, just as the financial crisis had a cascading effect through financial markets and real economies around the world, so the sources of anger convulsing Europe and America will send shock waves through dozens of other countries. Some will absorb these shocks. Some of them won’t. As poorer people in developing countries become more aware of what they’re missing or losing—quality housing, education, jobs, health care, and protection from crime—many will pick up rocks.
It is not rising China, a new Cold War, the future of Europe, or the risk of a global cyberconflict that will define our societies. It’s the efforts of the losers not to get “fucked over,” and the efforts of the winners to keep from losing power. Not just in the United States and Europe, but in the developing world too, there will be a confrontation within each society between winners and losers.
And winners and losers there will be. It’s too late to assuage the anger of people whose needs have been neglected for years, too late to stop the technological advances that will exacerbate the inequality and nativism stirred up by globalism. What remains to be seen is who will win—and who will be the scapegoat. In some countries, us vs. them will manifest as the citizens versus the government. In other countries, the division will be between the rich and the poor. In some cases, disgruntled citizens will blame immigrants for their problems, punishing “them.” And in other cases, an ethnic majority will turn on an internal ethnic minority, blaming them for the problems.
“Us vs. them” is a message that will be adopted by both the left and the right. Antiglobalists on the left use “them” to refer to the governing elite, “big corporations,” and bankers who enable financial elites to exploit the individual worker or investor. These are the messages we hear from Senator Bernie Sanders and Greek Prime Minister Alexis Tsipras. Antiglobalists on the right use “them” to describe governments that cheat citizens by offering preferential treatment to minorities, immigrants, or any other group that receives explicit protection under the law.
How will governments choose to react? The weakest will fall away, leaving us with more failed states, like Syria and Somalia. Those still hoping to build open societies will adapt to survive, attempting to rewrite social contracts to create new ways to meet the needs of citizens in a changing world. And many governments that have a stronger grip on power will build walls—both actual and virtual—that separate people from one another and government from citizens.
We can no more avoid these choices than the world can avoid climate change, and the time is now to begin preparing for a world of higher tides. This is the coming crisis. This is the conflict that will unravel many societies from within.
HOW DID WE GET HERE?
In Europe and the United States, the battle of nationalism vs. globalism has deep historical roots, but recent history has given it a new intensity. First, there was the earthquake. The financial crisis of 2008–2009 drove anti-EU fury in response to bailouts and austerity in Europe and resentment of Wall Street and its political enablers in the United States. In the United States, the right dismissed the Occupy Wall Street movement as a vapid left-wing fringe group without significance. The left waved off the Tea Party movement as a motley assortment of angry, aging racists intent on “making America white again” and well-heeled Republican Party activists disguised as grassroots patriots. Other Americans ignored both sides as if nothing important was shifting in American politics. The migrant crisis and a series of terrorist attacks then boosted a more xenophobic set of politicians and political parties in Europe. A number of EU member states established temporary border controls, and some openly defied EU rules. Britons voted to take back control of their laws and borders in 2016, and Trump was elected president as a battering ram against globalist elites and the media in the United States.
Then the anger seemed to abate, and we experienced an illusion of moderation. Barricades in the Balkans and a deal between the EU and Turkey to sharply slow the flow of migrants into Europe eased the refugee crisis and pressure across the continent for another round of border controls.5 Anti-Muslim firebrand Geert Wilders finished second in Dutch elections in March 2017. Two months later, pro-EU newcomer Emmanuel Macron overcame the challenge from Le Pen to become France’s president, though the broader election story was the sound defeat of traditional parties of the center-right and center-left that had dominated French politics for decades in favor of a candidate who, like Trump, had never before run for office.
The center-left showed renewed strength in Britain, though it relied on large numbers of working-class Brexit voters for its revival. Germany’s Angela Merkel, defender of European unity, won a fourth term as chancellor. In the United States, the Trump backlash went into high gear. The new president’s approval rating settled into a narrow range between the mid-30s and low 40s, and his legislative agenda stalled. Courts blocked some of his plans, and various scandal investigations kept him distracted, though Democrats found no credible message of their own for U.S. voters.
The next chapter is now being written, and it will not be a better one. That’s because globalism contains the seeds of its own destruction: Even as it makes the world better, it breeds economic and cultural insecurity, and when people act out of fear, bad things happen.
ECONOMIC INSECURITY
Globalization creates new economic efficiency by moving production and supply chains to parts of the world where resources—raw materials and workers—are cheapest. In the developing world, the influx of capital from wealthier nations has created the first truly global middle class. In the developed world, this process bolsters the purchasing power of everyday consumers by putting affordable products on store shelves, but it also disrupts lives by killing livelihoods as corporations gain access to workers in poorer countries who will work for lower wages.
Trade has not become as toxic a political issue in Europe as in the United States. In part, that’s because the European Union includes so many small countries that depend on trade for economic growth, and exports are a crucial growth engine for Germany, the EU’s largest economy and de facto political leader. In fact, its current account surplus, a measure of the flow of goods, services, and investment into and out of a country, topped China’s to become the world’s largest in 2016.6
In addition, social safety net protections in many European countries cushion the blow to workers when they’re displaced by trade-related change. In exchange for the higher taxes they pay, Europeans enjoy more generous and longer-lasting jobless benefits than Americans, have broader access to health insurance, and pay lower tuition fees for both first-time and older students. Those who champion trade in the U.S. try to make up for these differences with promises that government will provide those who lose when trade moves jobs overseas with so-called trade adjustment assistance—money, retraining, and other forms of support. But these benefits are easier to promise before deals are approved than to deliver after they’re signed and politicians no longer need to keep their word.7
Beyond trade, globalization boosts technological change by exposing businesses of all kinds to international competition, forcing them to become ever more efficient, which leads to greater investment in game-changing innovations. Advances in automation and artificial intelligence are remaking the workplace for the benefit of efficiency, making the companies that use them more profitable, but workers who lose their jobs and can’t be retrained for new ones won’t share in the gains. Technological change then disrupts the ways in which globalization creates opportunity and shifts wealth.
As a result, large numbers of U.S. factory jobs have been lost not to Chinese or Mexican factory workers but to robots. A 2015 study conducted by Ball State University found that automation and related factors, not trade, accounted for 88 percent of lost U.S. manufacturing jobs between 2006 and 2013.8
Broadening the effect, the introduction into the workplace of artificial intelligence is also reducing the number of—and changing the skill sets needed for—a fast-growing number of service sector jobs. The consulting firm McKinsey & Company has estimated that 73 percent of work in the food service and accommodations industries could be automated in coming years. More than half of jobs in the retail sector could be lost, and two-thirds of jobs in the finance and insurance sectors are likely to disappear once computers can understand speech as well as humans do.9 What does that mean for the future of work? What does it mean for the middle class? It means that jobs are eliminated, and the middle class continues to shrink. Though technological change may eventually create more jobs than it kills, there’s not much reason for confidence that fired workers will get the education and training they need for tomorrow’s more technically sophisticated jobs.
In the world’s wealthiest countries, particularly the United States, wealth inequality has steadily widened as globalism has advanced. According to a study published by Pew Research in December 2015, “After more than four decades of serving as the nation’s economic majority, the American middle class is now matched in number by those in the economic tiers above and below it.” In 1970, middle-income households earned 62 percent of aggregate income in the United States. By 2014, their share had fallen to just 43 percent. The median wealth (assets minus debts) of these households fell by 28 percent from 2001 to 2013.10 Crime and drug addiction have spiked. Nearly 40 percent of U.S. factory jobs have disappeared since 1979.11 In 2018, U.S. stock markets hit historic highs as U.S. companies drew record profits, but the American middle class is in real trouble.
In an essay for the magazine Commentary published in February 2017, Nicholas Eberstadt painted a vivid portrait of the dire state of America’s manufacturing class. Between 1948 and 2000, he noted, the U.S. economy grew at about 2.3 percent a year per capita. Since 2000, growth has slowed to less than 1 percent. From 1985 to 2000, the number of hours of paid work in the U.S. rose by 35 percent, but between 2000 and 2015 the increase fell to just 4 percent. Many American workers have fallen out of the labor force completely and have no plans to return. “For every unemployed American man between the ages of 25 and 55,” Eberstadt wrote, “there are three who are neither working nor looking for work.” Some 57 percent of white men who have left the labor force receive a government disability check. About half of U.S. men who stopped looking for a job take pain medication every day.12
President Trump brags that unemployment will hit historic lows in early 2018, but as Trump himself pointed out during his run for president, we must look closely at how the U.S. calculates its jobless rate. According to the U.S. Bureau of Labor Statistics, unemployment fell to 5 percent in September 2015 and has moved steadily lower since, but there’s a very good reason why so many Americans are cynical about this number.13 If you earn less than $10 per hour and work two or three low-wage jobs to pay your bills, you are considered “employed,” even if you still can’t make your rent. If you’re a construction worker who went unpaid last week because bad weather shut down your work site, you are considered fully employed. If you have a temporary job or part-time job, you count as employed during the weeks you work. Even if you have no benefits or a roof over your head, the U.S. Bureau of Labor Statistics’ headline unemployment number treats you the same as a person earning $10 million a year. And if you’ve stopped looking for work after years of failed attempts to get a job, you’re not considered “unemployed.” You aren’t considered at all. No matter your age or how badly you need work, if you’re not actively looking for work, you don’t exist in this measure of the nation’s economic strength.
Globalization’s champions continue to sound the trumpets, and many political officials and business leaders still insist that trade creates jobs without admitting that it can kill jobs as well. In his final days as secretary of state in January 2017, John Kerry used a visit to Vietnam to reassure his audience that Americans still believe in cross-border commerce. “Protectionist trade policies won’t work,” he told the audience in this state-dominated communist country. A few days later and half a world away, Chinese President Xi Jinping pledged his commitment to promoting “global free trade” during a speech at the World Economic Forum in Davos. “Pursuing protectionism,” he warned, “is like locking oneself in a dark room. While wind and rain may be kept outside, that dark room will also block light and air.”
Yet a new chorus of angry voices in the United States counters that while globalization has been very good to China—and to American corporations and shareholders—it hasn’t done much for the American worker. From both left and right, we now hear that trade ships jobs overseas, leaving workers with no future. “Globalization,” says Le Pen, is “manufacturing by slaves for selling to the unemployed.” U.S. trade policies, warned U.S. presidential candidate Bernie Sanders in 2016, “have enabled large corporations to shut down in this country, throw American workers out on the street, and move to low-wage nations.” Yes, a surge of imports brings lower prices for local consumers, but it becomes harder to afford even the cheapest of products when those consumers have lost their jobs.
In the United States, these tensions began building well before the political earthquakes of 2016, during the financial crisis of 2008–2009, when bankers got bailouts and workers got pink slips. Public outrage extended beyond politicians to the media and to failed CEOs who were offered huge piles of cash just to quit. Anger followed everyone who seemed to live above and beyond the damaging effects of these trends. Trade became a contentious issue long before Donald Trump used it to become president, but his ability to speak plainly and forcefully to voters angry about lost jobs helped him capture the 80,000 extra votes he needed to win Pennsylvania, Wisconsin, Michigan—and the U.S. presidential election.14 Trump also capitalized on growing fear of both Mexican migrants and Muslim militants to argue for a fortress approach to government, to build a border wall, and to try to close the door on as many Muslim refugees as he could. His “America First” rallying cry was crafted to build confidence that he, unlike his opponents, put their interests above the wealthy and well-connected who built fortunes off global trade and investment.
In Europe, the 2010 debt crisis plunged the eurozone into turmoil. Emergency austerity in some countries, economic stagnation in others, and declining demographics throughout have produced pain and frustration. Citizens of some European countries were told their taxes would be used to bail out workers in other European countries that have free-spending governments. Citizens in the countries that received those bailouts were told that their rescue depended on a willingness to work longer for less generous pensions and services.
People who are afraid for their livelihoods lash out as they look for others to blame for their troubles. And economic fears generally breed a second kind of fear.
CULTURAL ANXIETY
The second way in which globalism creates fear centers on identity. Globalization doesn’t just move factory-built products. It also moves people, feeding public anxiety by shifting the racial, ethnic, linguistic, and religious makeup of communities, sometimes abruptly. Many Americans believe that some illegal immigrants, willing to work for less, take the low-wage jobs that working-class Americans are trained to do while others live off public assistance paid for by U.S. taxpayers. And as political scientist Dani Rodrik points out, immigrants to Europe, whether from inside other EU countries or other parts of the world, add to anxiety among the unemployed that there will be more competition for jobs and fewer social services to go around.15 This was a particularly controversial issue during the Brexit campaign, as exit advocates like the Conservative Party’s Boris Johnson argued that “uncontrolled immigration is politically very damaging, particularly when politicians promise that they can control it,” because it creates “huge unfunded pressures” on the National Health Service and other public services.16 In other words, the foreigners are coming for both your job and your health insurance.
In the United States, as in many European countries, there’s an especially strong sense of national identity based on racial, ethnic, and religious affinity. Two June 2017 reports published by the Voter Study Group, a nonprofit research firm, offer interesting conclusions. The first, authored by political scientist John Sides, found that “nearly two-thirds of Trump’s primary supporters believe that being Christian is important to being American. This . . . finding implies a continuing divide over whether members of minority religious faiths, and especially Muslims, can be fully American.”17
Fears of diluted identity mix with economic anxieties. Despite the Republican Party’s traditional aversion to entitlement programs, political scientist Lee Drutman has found interesting data on the movement of a surprising number of Barack Obama voters toward Donald Trump. From a survey of 8,000 Americans conducted in December 2016, Drutman identified a group of voters he classified as “populist” because they were “liberal on economic issues [and] conservative on identity issues.” About 28 percent of Obama 2012 voters who qualified as “populist” then chose Trump in 2016. Most of these crossover voters agreed with the statement that “people like me are in decline,” expressed strong support for protecting safety net programs like Social Security and Medicare, but also held negative views of racial, ethnic, and religious minorities.
According to Drutman, “We can see that Trump’s biggest enthusiasts within the party are Republicans who hold the most anti-immigration and anti-Muslim views, demonstrate the most racial resentment, and are most likely to view Social Security and Medicare as important.”18 And while it may seem strange that voters motivated by racial resentment would have voted for Obama, they apparently believed that the first black U.S. president would protect their pensions and health insurance while Mitt Romney, his 2012 Republican opponent, would roll them back. It is this economic insecurity that explains growing opposition to existing free-trade deals like the North American Free Trade Agreement (NAFTA) and proposed plans like the Trans-Pacific Partnership (TPP).
In Europe, this fear of lost identity and economic insecurity come together with the cross-border flow of human beings. First, the free movement of EU citizens across the EU’s internal borders, a central principle of the European Union, brings people with foreign names who speak different languages into the labor force in countries across the union.
The percentage of UK residents born outside Britain more than doubled between 1993 and 2015, from 3.8 million to about 8.7 million of 65 million people in total.19 That’s a direct result of EU rules on free movement of people within the union, particularly from poorer countries of the east to wealthier countries of the west. “What did Brexit play on?” asked the newly elected pro-EU French President Emmanuel Macron in 2017. “On workers from Eastern Europe who came to take British jobs. The defenders of the European Union lost because the British lower middle classes said, ‘Stop!’” Macron told a British newspaper.20
Add the migrant crisis that brought the largest influx of homeless people since World War II, many of them Muslims fleeing violence and oppression in the Middle East and North Africa, and Europeans begin to feel much less secure about the future of their nations. Recent terrorist attacks, many of them like those in Paris (2015), Brussels (2016), and Manchester (2017) carried out by Muslims born inside Europe, have added accelerant to the political fire. The financial burden of integrating so many migrants will be hotly debated for years, and many estimates of its size are politicized, but a member of the advisory council for Germany’s Ministry of Economic Affairs estimated in 2017 that the cost of integration for Germany alone would top €400 billion.21 The newest arrivals, in particular, will need access to social services that put considerable strain on welfare systems. In addition, a surge in racism is predictable when white Christian men come to see that they don’t dominate the United States and Europe as they once did. Western countries are beginning to look more like the rest of the world, and at a time when it’s fast becoming harder for a person without a university degree to earn a living, the suddenness of this trend gives it a new intensity.
More than 2.5 million migrants applied for asylum in the European Union in 2015 and 2016.22 More than 1.1 million arrived in Germany alone.23 That’s one reason why in 2017 Alternative for Germany (AfD) became the first far-right party to win seats in parliament since the end of World War II. The far right has also made big gains in Austria, in part by promising a tougher approach on borders and immigration. The backlash has transformed the political landscape. Though anti-EU, anti-Muslim nationalists like Le Pen and the Netherlands’ Geert Wilders have failed so far to win power, every economic slowdown, migrant controversy, and terrorist attack inside European borders will reamplify a political message that is sure to outlast their personal ambitions.
Antiestablishment parties continue to feed popular fury in nearly every EU country. Their leaders insist that unelected Brussels-based Eurocrats strip EU nations of their ability to defend themselves against all sorts of economic and security threats. As in the United States, European nationalists call for border controls, and they vilify journalists, politicians, and business leaders—groups that Italy’s comedian-turned-political-arsonist Beppe Grillo calls the “three destroyers.”
In Eastern Europe, nationalist anger and a rejection of the democratic values of the European Union have gained a much stronger foothold, particularly among the so-called Visegrád countries: Poland, Hungary, the Czech Republic, and Slovakia. Governments of all four have publicly pledged to ignore an EU quota system for accepting refugees from outside the union. Slovak Prime Minister Robert Fico was the first to close the door, and Hungary followed suit. Poland’s President Andrzej Duda has called for a referendum on the refugee question, which he knows will allow Poles to vote to keep them out. Under the EU quota system, the Visegrád Four were expected to accept 11,069 refugees. By June 2017, Slovakia had admitted sixteen, the Czech Republic had taken in twelve, and Poland and Hungary had accepted zero.24 The European Court of Justice has ruled that all members must comply, and the European Commission has threatened penalties, but the leaders of these countries, confident in the support of enough citizens to win the next elections, have not backed down.
Social values of openness and tolerance for racial, ethnic, and gender diversity are still dominant in Western Europe, but these values are increasingly called into question, even in more tolerant European countries and in the United States. During the migrant crisis in 2015, a poll published in the French newspaper Le Figaro found that a majority of people in Western Europe favored an end to the Schengen Agreement, which maintains open borders within an area that includes twenty-six European countries. That total included 53 percent in Germany, 56 percent in Italy, and 67 percent in France.25 Here again we see a poll conducted at the height of an emergency, but it shows the willingness of anxious people to reject the values said to underpin their societies when they feel they’re under some form of immediate threat. Some 68 percent of Americans who identify with or lean toward the Republican Party said that millions of illegal immigrants had voted in the 2016 U.S. presidential election, despite no evidence to support the claim, and 73 percent said that voter fraud happens “somewhat” or “very often” in the United States. Do Americans still put democratic principles before party or personalities? A majority of Republican voters also said they would support postponing the 2020 election if Trump and Republican lawmakers suggested it.26
Finally, globalism also inspires fear by enabling connectivity. The instantaneous global flow of ideas and information connects more people more quickly than ever before and gives them new opportunities for education, collaboration, and commerce. But it also gives them more to be angry about, new ways to broadcast that anger, and new tools to help them coordinate protest. It shows them terrorist attacks in real time, stoking fears of unfamiliar names and faces.
In addition, the fragmented nature of the Internet has created “filter bubbles,” the places we go for reassurance in the form of ideas and information that confirm our biases and connect us with others who share them.27 Tell me which party you vote for, and I’ll tell you which cable TV channels provide your news, which websites you like best, and which newspapers you trust. This creates an environment in which neighbors receive completely different sets of information about the world and the threats it contains. Add the online algorithms that record our searches, interpret our “likes,” and keep us in the company of like-minded friends. Social media allows us to follow those we agree with and ignore those we don’t, enabling us to deprive ourselves of opportunities to deepen our thinking and change our minds.
HERE TO STAY
Whatever happens to the current wave of political leaders elevated by public fear and frustration in Europe and the United States, the trends that have given them an audience will only gain strength. Whatever the headlines today, this week, or this year, the battle of us vs. them will only become more intense.
First, there is little reason to believe that a decades-long trend toward greater inequality and a greater sense of economic unfairness, particularly in the United States, will be reversed anytime soon. According to a study published in December 2016 by the independent National Bureau of Economic Research, incomes for the bottom half of earners in the United States remained flat between 1980 and 2014, while income for the top 0.001 percent of the richest Americans surged a jaw-dropping 636 percent. The top 1 percent of U.S. adults earned 27 times what the bottom 50 percent earned in 1981. By 2016, it was 81 times higher.28 Politicians, economists, and ordinary citizens will continue to debate why that is and whether widening inequality is fair. But no matter who is right, the wealthy are unlikely to persuade those struggling to get by that their gains are entirely the result of superior talent and hard work. That’s a problem that will plague U.S. politics long after Donald Trump has left the stage, and Trump’s “tax reform” plans appear likely to make matters worse.
Nor should we expect a sudden narrowing of economic strength between the wealthier countries of Northern Europe, where unemployment is relatively low, and the poorer countries of Southern Europe, where unemployment remains stubbornly high. Resentments over bailouts and austerity will create new opportunities for new politicians to exploit in years to come. In addition, the turn toward identity-driven nationalist politics in Eastern Europe will make it difficult for Germany and France to sell the sorts of EU and eurozone reforms that might make European institutions stronger, more resilient, and more accountable.
Widening inequality further, those who do get work will probably see their taxes rise. The wealthiest companies can continue to use their political clout to push for tax rules that allow them to move money across borders to exploit tax advantages. As Rodrik has written, governments will then depend more heavily for revenue on taxing the wages and consumption of individual citizens.29 That trend will extend the transfer of wealth and widen inequality further.
Nor is there good reason to believe there will be fewer immigrants in the future. In 2016, there were 65.6 million men, women, and children around the world living as refugees, the highest total since World War II, and the inability or unwillingness of political leaders to do much about it says this problem won’t soon be solved.30 President Trump may build a border wall, in one form or another, especially since more than 70 percent of those who voted for him say they want it, but that won’t keep out every immigrant who takes to the road in search of a better life. Nor will it end public anger about immigration when a first- or second-generation American commits a heinous crime or an act of terrorism.31
The free movement of people remains a crucial element of the European ideal. Citizens of EU countries will continue to cross internal borders for as long as the European Union continues to exist, and opportunistic politicians will blame them when unemployment is high. There isn’t going to be a comprehensive Middle East peace plan or a surge in prosperity across North Africa in coming years that would persuade migrants to surrender the dream of life in Europe. The flow may slow, but they will continue to try to reach Europe, by boat or on foot, and many will bring their children.
There is evidence that inequality is a source of violence. A FiveThirtyEight analysis of publicly available data from the FBI and the Southern Poverty Law Center found that income inequality “stood out as a predictor of hate crimes and hate incidents.” Data from both before and after the 2016 U.S. presidential election showed that “states with more inequality were more likely to have higher rates of hate incidents per capita.”32 Other studies have found that links between inequality and violence exist in both developed and developing countries.33 No society will ever be perfectly fair. Inequality of outcomes is a fact of life. But it’s becoming increasingly difficult for those falling from the middle class to believe that an equal-opportunity country could produce these kinds of results. Even if you think they’re wrong, we shouldn’t expect politics to remain immune to the political pressures created by inequality on that scale, and there is little good reason to expect a dramatic narrowing of inequality in the United States anytime soon.
Terrorism is unlikely to subside. ISIS, al-Qaeda, and other militant groups around the world will continue to target Europeans and Americans both at home and abroad. These groups may not occupy large expanses of territory, as ISIS once did in Syria and Iraq, but the defeat of ISIS fighters in those places will return a significant number of radicalized, battle-tested recruits to attack the countries they come from. For reasons both geographic and demographic, Europe is at much higher risk than the United States, but neither can ever fully contain the threat posed by those who would use a car, a truck, a gun, a knife, or any other easily available weapon to kill strangers at random. Politicians will continue to make empty promises to do something about it. They will continue to fail. Citizens will hold them accountable.
Cyberspace is another arena in which government will become increasingly less able to provide basic public protection. During the Cold War, the reality of mutually assured nuclear annihilation made it unthinkable for NATO and Warsaw Pact countries to start World War III. Instead, the people of Korea, Vietnam, Angola, Afghanistan, Nicaragua, and other developing countries paid the price as East and West fought proxy battles against enemies, real and imagined. Today, there is no country in the world that can match U.S. military spending. When Donald Trump became president, he asked Congress to increase U.S. defense spending by $54 billion, an incremental increase that tops the entire 2017 Russian defense budget.34 Over time, a lower oil price will push Russia’s military spending still lower. But attacks in cyberspace are much less expensive and not nearly as dangerous as conventional attacks, because it isn’t always clear who is responsible. That’s why we can expect a lot more of them—and for their sophistication and scale to grow.
In addition, while nuclear weapons are held exclusively by a few governments, cyber weapons are available to anyone with the skill and ingenuity to develop them. At very low cost, individuals and small groups of thieves, activists, and amateur troublemakers can inflict the kind of harm on the world’s most powerful governments, companies, institutions, and individuals that would have been unthinkable a decade ago. That’s why it will only become more difficult over time for the U.S. and European governments to protect critical infrastructure, citizens, their identities, their data, and their money against attacks from criminals, anarchists, terrorists, or other governments. It will become more difficult to contain the expanding flow of false information that shapes opinions in the twenty-first century and to safeguard the integrity of elections in open societies. That too will feed the public’s sense of vulnerability and create political opportunities for those offering simplistic solutions.
Another factor that’s likely to exacerbate inequality: next-generation automation. The technological revolution in the workplace has only just begun. A 2017 study published by the Institute for Spatial Economic Analysis found that nearly every major American city will see half of its current jobs replaced by robots by 2035. It’s not a surprise that most of the endangered jobs are in the administrative, sales, food preparation, and service sectors. Truck drivers will become a thing of the past as well. But the study also forecasts that advanced technology will replace workers with machines in the offices of doctors, lawyers, schools, and universities.35
Even more sobering is the work of MIT’s Daron Acemoglu and Boston University’s Pascual Restrepo for the National Bureau of Economic Research. In a study published in 2016, Acemoglu and Restrepo predicted that the net effect of automation and other technological changes in the workplace would ultimately prove positive as they created new kinds of jobs that paid higher wages to replace existing lower-wage work. But in 2017, they revised their views based on more detailed research. They found that industrial robots were responsible for as many as 670,000 lost manufacturing jobs between 1990 and 2007, that this number was likely to rise as the number of robots quadruple in coming years, and that other sectors weren’t creating enough jobs to offset the losses in manufacturing.36 “The conclusion is that even if overall employment and wages recover, there will be losers in the process, and it’s going to take a very long time for these communities to recover,” according to Acemoglu.37
This isn’t simply a story about robots sending workers home. As in the past, new technologies will create new jobs—and new kinds of jobs. But the increasing automation of the workplace, advances in machine learning, and the broad introduction into the economy of new forms of artificial intelligence will ensure that jobs of the future will require ever higher levels of education and training. As anyone now paying tuition—for themselves or someone else—knows all too well, the price of higher education in the United States is rising faster than for almost any other service. College tuition has risen by about 6 percent per year, according to Vanguard, a money management fund. If the increase continues at that rate over the next generation, a four-year college degree for an American born in 2017 would reach $215,000 at a public school and $500,000 at a private one,38 further compounding an already growing student debt crisis in the United States.39 Those who can pay will get the education, and those with the knowledge and skill set will have opportunities for good-paying jobs that those without them won’t have. “If you’ve worked in Detroit for ten years, you don’t have the skills to go into health care. The market economy is not going to create the jobs by itself for these workers who are bearing the brunt of the change,” Acemoglu warned.40
Human beings want security, opportunity, and prosperity, and governments want to claim credit for providing these things. Both the government and the governed want to believe they have the means to retake control of their circumstances when they believe these things are threatened. This is the battle line between us and them. Nationalism grows from a need to reassert control by declaring shared solidarity. It promises to confront the forces that are believed to breed disorder and that compromise both personal and national sovereignty. It pledges to build strong walls to keep “them” at bay.
Despite much-improved economic performance in the United States and around the world in 2017 and 2018, the battle between us and them continues in every country where fear of change is on the rise. As we’ll see in the next chapter, this is not simply a story of Europe and America. This struggle is set to go global.