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Reversing Openness Becomes a Trend

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.

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What We’re Reading Today

Matthias Müller to defend his first year at VW
On Friday, the Volkswagen CEO will meet with the company’s supervisory board, in a vote to sign off on a five-year investment plan. But successes have been slim at VW, as the car maker continues to fight off damages from the emissions cheating scandal. The about $20 billion in fines and settlements have hindered Müller‘s ability to maneuver. But his biggest hurdle could be transitioning the company to fight off technological changes coming from new competition in Silicon Valley and from traditional competitors, like Mary Barra‘s GM. WSJ

Uber asks Taiwan to let the people decide
Taiwan’s government has asked Apple and Alphabet to remove the Uber apps from the app stores in the country. In a letter to Taiwan President Tsai Ing-wen, Travis Kalanick‘s company asks the government to allow citizens to decide on whether they want the service in the country. Uber operates as a technology platform in Taiwan, but the government believes it should be labeled a transportation firm and pay millions in back taxes. Reuters

Nike, Starbucks urge Trump to remain in climate deal
In a letter to President-elect Donald Trump, President Obama, members of Congress, and over 360 businesses and investors asked him to continue efforts to curb global warming. The letter was a reaffirmation of the businesses’ commitment to the Paris Agreement on climate change. Mark Parker‘s Nike, Howard Schultz‘s Starbucks and Art Peck‘s Gap were among the businesses to sign the statement. Fortune

Pepsi boycott fed by fake news
Trump supporters have led a boycott of the soft drink, after fake statements from CEO Indra Nooyi floated through social media, saying that Trump voters can “take their business elsewhere.” Nooyi never made the statements and congratulated Trump on his victory. She did condemn the ugly rhetoric towards women during the campaign.  CNNMoney

Building Better Leaders

If a company wants a CEO to make changes…
…then hiring an outsider CEO will create a more drastic strategy shift. Insider CEOs develop new entrepreneurial strategies faster, however.  Harvard Business Review

Over half of the top 60 employers…
…keep their paid leave policies private. It’s possible that they don’t offer the same benefits to all their workers, which is why they want them to remain secret. Fortune

How to know if someone is lying to you via email
If the email lacks first person pronouns or ask unrelated and unanswered questions, then it matches common lying techniques.  Science of People

Political Updates

Japan’s Prime Minister is set to meet with Trump
But Shinzo Abe and his team had not been able to finalize the Thursday meeting with President-elect Donald Trump‘s transition team by late Wednesday. They remain in the dark on where it will take place and who will attend. It’s meant to be Trump’s first meeting with a foreign leader as president-elect. Reuters

Trump and Democrats find common ground
As Trump builds his strategy for his first 200 days, he has met with New York City Mayor Bill de Blasio and has floated possible infrastructure spending. A major public-works building program has long been sought by Democrats. Some Democrats are looking at ways they can align with Trump on child tax credits, paid maternity leave and trade in an effort to split Republican support. NYT

Jamie Dimon says no
The J.P. Morgan Chase CEO has told Trump‘s transition team that he does not want the position of Treasury Secretary. The transition team was hopeful that Dimon would accept. The bank’s shares fell 2.5% on the rumors that he was leaving to take the role. Fortune

Up or Out

SpaceX head of communications Dex Torricke-Barton has left the company to pursue a new career, promoting social change.  Fortune

Fortune Reads and Videos

Twitter’s decision to ban ‘alt-right’ accounts…
…could backfire. It draws Twitter further into the discussion of what’s acceptable and unacceptable speech. Fortune

E-commerce holiday sales predicted to jump 13% this year
Online sales could surpass $100 billion for the first time, as Forrester predicts they reach $112 billion. Fortune

Half of all items sold on Amazon…
…now come from third-party vendors. Prior to this today, Amazon owned and shipped a majority of items on the e-commerce platform. Fortune

Kellogg’s will add cinnamon to Frosted Flakes…
…after social media users clamored for it. Fortune

Happy Birthday

Former House Speaker John Boehner turns 67 today.  Biography

Howard Dean, the former Vermont governor who’s currently reportedly vying for the Democratic National Committee chairman, turns 68.  Biography

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Produced by Ryan Derousseau