Brexit could be regarded as a fluke. Brexit plus Trump starts to look like a trend. A large question for all leaders now is whether the trend becomes self-reinforcing, an accelerating spiral of nations rejecting the open global order built over the past 70 years. Leaders will want to monitor several indicators that will answer that question in coming months.
A lesson of history is that openness has to be fought for. Free movement of goods, capital, and people always confronts powerful opponents. Today’s globalism strikes us as a remarkable achievement, but remember that we’ve been here before. In the decades before World War I, people traveled across Europe and over most of the world without passports. Migrant workers crossed borders with few restrictions. And trade was increasingly free, accounting for a rising proportion of GDP in many economies.
The war quickly reversed all that progress, and not until after World War II could nations begin the great project of returning to a more global order, which has since lifted billions of people out of poverty. It has taken decades because every step has been a fight.
Are we about to reverse all that progress again? Could be. Brexit is an obvious reversal of the trend toward a more open Europe. Donald Trump’s promises to impose heavy tariffs on Chinese and Mexican imports, if he keeps them, would spark retaliation and a plunge in global trade. Exiting Nafta and the World Trade Organization, as he has also threatened to do, would cancel decades of work to widen free trade.
Such actions by Trump would be especially dramatic steps toward a new cycle of global closing after a long cycle of opening, but other indicators also bear watching.
Results of a national referendum in Italy on Dec. 4 could signal support for the explicitly anti-globalist 5 Star Movement. On that same day, Austria will hold the second round of its presidential election, in which Freedom Party candidate Norbert Hofer will probably do well and may win; his party is anti-establishment and anti-immigrant. And France’s presidential election in April and May now seems likely to be the strongest showing yet for Marine Le Pen, leader of the protectionist, anti-immigrant National Front.
Finally, Germany will hold a federal election sometime in next year’s second half; the most striking trend in recent local and regional elections has been the weakening popularity of Chancellor Angela Merkel’s party and the strong rise of Alternative for Germany, which is anti-immigrant, anti-euro, and opposed to further European integration.
Populists in those countries and others, notably Hungary and the Netherlands, which also hold elections next year, cheered Trump’s win. They’re celebrating it as another step, after Brexit, toward an accelerating reversal of today’s open world order.
Which it may be. Closing, which is economically destructive, begets more closing as self-defense or retaliation; it’s self-reinforcing. Opening, which is economically constructive, isn’t; it has to be fought for. We’ll know soon enough which way the world is heading. For better or worse, the consequences will be momentous.
Sign up for daily insights, updates, and opinion on leadership and leaders in the news at the Power Sheet.
