Our Age of Political Nostalgia

By Dee Smith

If homo sapiens has been around for about 300,000 years, then we have lived all but 3 percent of that in circumstances almost entirely different from the present day. To put it another way: even with a generous allowance of 10,000 years or so for settled life in something like cities (which is what “civil”-ization means), for 97 percent of our existence we lived in very small groups and, except for wide-ranging nomads, with very little change over vast periods of time (centuries or even millennia). And even the nomads could usually count on migration routes leading them to familiar places, over and over again.

We are now thrust into a world where we are clustered into groups of a size unimaginable to our ancestors. They would seldom encounter anyone outside their little bands; now we all meet people every day whom we don’t know and who are different from us, and we need to co-exist with them. We are required to deal with levels of novelty, complexity and social regulation for which we are not adapted.

This goes a long way, I think, towards explaining what is happening politically and socially around the world today. Our lives are full of what scientists call “baseline resets” — we have to recalibrate our understandings and expectations over and over. We hardly become accustomed to a certain configuration of things, and then it changes. And it changes yet again. Some people embrace this. The “move fast and break things” entrepreneurs claim to do so. For most of us, however, it is highly disorienting, uncomfortable and emotionally distressing.

If we could just go back to the way things were! Vast numbers of people, of all socio-economic groups, pine for a world in their past — often a world that never existed in the way that they believe it did.

In the US, for example, so-called “liberals” — Democrats and their ilk — bemoan the loss of a US-led Liberal International Order, a rules-based international system that many analysts believe never actually existed in the way that it is remembered. This brand of nostalgics sees the post-WWII era, and particularly the “long decade” between the fall of the Berlin Wall and the 9/11 attacks, as a golden age of international cooperation, when in fact it was a short period of unipolar U.S. dominance following the collapse of the Soviet Union, a period in which there was a great deal of conflict. Of course, it seems like a golden age to those who found themselves briefly its masters! But they fear an approaching age when the “progressive” system and message no longer resonate or hold, and overt authoritarians, operating from positions that they abhor and see as threatening, are ascendant.

On the other side, in the US, many Republicans and members of right-wing movements harken back to a lost age of white social dominance. To some extent, this did exist, but it was not the halcyon period they that think they remember. Firstly, most of them were not actually alive at the time. It was a period filled with hatred and civil violence. Furthermore, the definition of who and what is “white” has never been clear. For example, Italians in the US were not, and then they were. Some Hispanics would be considered, or consider themselves, white; others would not. Besides, return to a lost white world is no longer even a possibility. The US has become “minority-majority.” White nostalgics fear an age when what are remembered as traditional white values, if not white people, become sidelined.

Similarly, the term “conservative” has been warped beyond recognition. What is it, exactly, that conservatives wish to conserve? The fact that “move fast and break things” tech leaders call themselves conservative and support conservative politicians is an oxymoron in the most literal sense.

The situation is similar in many other places around the world, whether the past is Soviet Russia, Maoist China, or various strongman dictatorships or ephemeral democratic Camelots. For much of the last couple of centuries, the Enlightenment doctrine of progress imagined the golden era in the future. As human life seemed to improve (or was said to be improving) through new systems of governance and technology, life would generally become better and better. We have now reverted to what has been the norm for most of our history, an assumption that golden ages lay in a mythic past.

The political and social status quo is increasingly seen as having failed to deliver. Life is not better than it was—and it is not getting better—for most people. They do not believe that the lives of their children will be better than their own. In fact, they increasingly just “don’t believe” in the current system, wherever they live and whatever the system is. When I presented the television series A World on the Brink in 2017, I found that there was one phrase with which everyone agreed, regardless of where they lived: “what we have is not working.” That was already 7 years ago! Since then, the needs and concerns of most peoples have really not been addressed.

The bottom line is this: conditions have changed radically; whatever happens next, they are going to change even more. The answers are unlikely to be found in any of the dominant political systems of the past few centuries. We need to think again and we need to think quickly. We need to come up with new approaches that are relevant and adaptive to the very different age we are living in and the even more different ages that are emerging. I say “approaches” because need to give up on universalism — there can be no universal system that will fit the bill, or so it seems. There may well be, and will probably be, many different and divergent systems in different places and for different people.

But they won’t be like it is now, or like it was. And that is hard.

The European Union's Right-Wing Future

Elections for the European Union’s parliament more than confirmed predictions of a nationalist rise and of a decline in support for environmentalist parties. The initial reaction was nonetheless one of shock, a reaction compounded by French President Emmanuel Macron’s surprise decision to dissolve the National Assembly and force an election as a sort of referendum on French extremism. (“The rise of nationalists, of demagogues, is a danger for our nation but also for our Europe, for France’s place in Europe and in the world,” Macron declared.) News cycles being what they are, there then followed a calming line of argument that emphasized European Commission President Ursula von der Leyen’s insistence that “the center is holding.” Finally, the argument was made that the center might be holding for now but the mainstream political groupings that provide that center need to change course now, before the political support for European union really does decline.

SIG’s view is that the European parliamentary election results fundamentally reflect the victory of economic concerns over moral ones. The project of European unity has always had a moral proposition at its core: that nationalist competition within Europe leads to war, and therefore European unity is a project of peace. European unification since the 1940s has been animated by a sense that it was morally superior to all the political alternatives. For a number of reasons, that sense of moral direction is being lost.

One reason is the structural problem of democratic representation. The “democratic deficit” of the European Union and its predecessors has been a chronic complaint that has been ameliorated in various treaties but cannot be entirely resolved. National governments are more truly representative and therefore more legitimate than the delegations each member state sends to Brussels/Strasbourg.

The political response to this has been twofold. The first response is to reject the EU as unrepresentative and unaccountable and revive the nation-state as the best available alternative. Alice Weidel, of the German party Alternative für Deutschland (AfD), put it with characteristic bluntness: “We’ve done well because people have become more anti-European.” AfD recorded its best performance yet in European elections, moving into second place ahead of Germany’s current governing party.

The second response has been to increase the power of the European Commission and its president, that is, to increase the power of the European executive. On the face of it, this would seem to be the opposite of democratic: the empowerment of a very indirectly elected president and of commissioners approved by her after being proposed by national governments. But the rise of the Commission was in response to a strongly felt political need, during the 2007-08 financial crisis and the euro crisis that followed, for there to be greater power in Brussels. This was not a reward for Brussels’s political successes. Rather it was a response by the European political class to the inability of national governments to solve the financial crisis on an individual basis — and to the realization that if Brussels were not strengthened Germany, because of its economic dominance, would come uncomfortably close to being master of Europe. Then-Chancellor Angela Merkel shepherded a process by which German power was both acknowledged and contained within the reforms of the 2009 Treaty of Lisbon. Since 2019, President von der Leyen, who rose to prominence as a long-serving member of Merkel’s government, has enlarged the Commission’s effective power, pushing forward policies on the environment, defense, technology, competition policy, foreign policy, agriculture, the euro, and much else. Her presidency has made the EU more effective and thereby more worth voting about. The turnout last week was the highest in 30 years. In that quite real sense, the democratic deficit is shrinking.

However, if the European Union has become more responsive to voter needs since 2019 and a more plausibly effective companion to member states’ national governments, it has also become a prosecutor of war (in Ukraine), raised the barriers to immigration, and utilized regulatory, competition and other industrial policies as weapons against, principally, the US and China, though also Russia. In short, the EU is losing that sense of peace-loving, internationalist moral distinction that differentiated it from the patriotic model of nationalism it was invented to replace. The EU is becoming a center-right power tolerant of illiberal identitarian and economic policies and engaged in war.

The consensus opinion has been that the European parliamentary elections were a struggle between a morally legitimate, internationalist center and a demagogic, nationalist right surging upward from the murk of history. What seems more likely is that the EU is becoming a political manager for a European nationalism that can be relatively at ease with the sub-European nationalisms currently thriving in Germany, the Netherlands, Austria, Italy, Belgium and France. Austria aside (and adding Luxembourg), that has been the core group of European unification since 1951. It may prove to be the core of a right-leaning Continent.

Re: Re-globalization

Two substantial articles this week argued, in different ways, that ‘de-globalization’ is an indiscriminate and misleading term. What we are truly entering is a period of ‘re-globalization’. The First Law of Punditry is to always contradict, and contradicting those who speak of de-globalization is true to pundit tradition. De-globalization has indeed been frequently used over the past few years, along with subsidiary terms such as de-linking, de-risking, friend-shoring, and near-shoring. It may well have had its season. With ‘re-globalization’, we could be witnessing the rise of a new analytical cliche from the husk of an old one. SIG’s view, however, is that de-globalization still has room to run

In Foreign Affairs, the economist and former senior Biden official Brad Setser argues, under the commanding headline ‘The Dangerous Myth of Deglobalization’, that US-China de-linking has mainly resulted in lengthier supply chains for US imports: Chinese components have to travel longer as they detour through Vietnam, Malaysia, and Mexico on their journey to American markets. As he underlines, China’s manufacturing exports in general have risen under so-called de-globalization, spectacularly so in electric vehicles and other sectors that have been the focus of Chinese industrial policy. Setser also emphasizes that corporate tax avoidance, by US multinationals in particular, has proved to be a resilient form of capital globalization despite recent regulatory initiatives. These two examples lead him to conclude that deglobalization ‘offers analysts a simple story to tell’ but ‘the reality is more complex’, a conclusion that is inevitably true: reality is always reliably more complex than any one-word descriptor.

In World Politics Review, Roland Benedikter has advocated for ‘re-globalization’ as a more accurate term that escapes the disadvantages of de-globalization. His argument has three main contentions: that the pro-globalization alliance of neoliberal capitalism and ‘leftist cosmopolitanism’ has been broken in favor of economic nationalism; that autocratic non-Western states are leading a charge against globalization that feeds on and encourages a revival of non-alignment in the global South; and that globalization depended on the military umbrella of American power. The umbrella, he maintains, is being withdrawn by American unwillingness to continue paying for it, the determination by China and others to challenge it, and the displacement of it by economic, political, technological, and military competition in space, from low-earth orbit to the moon and beyond.

Setser’s two main points and Benedikter’s three are all well made. Several will be familiar to SIGnal readers. None benefit much from being shoehorned into a debate over the proper definition of de-globalization (Setser) or the substitution of a new term like re-globalization (Benedikter), but they all have the virtue of drawing attention to how subtle and complex the ongoing reconfiguration of political and economic internationalism actually is.

SIG’s view is that de-globalization continues to be a useful shorthand term for describing that reconfiguration, but it is only a shorthand, a point of departure rather than a destination. The main factor remains the re-emergence of states as economic actors maximizing their autonomy on behalf of their respective peoples, most often ethnically and culturally defined. This phenomenon is consistent across democratic and un-democratic societies, rich and poor ones, ex-imperial states and ex-colonial ones. It can probably be dated from the Asian financial crisis of 1997, when China showed that state management of international capital flows was not a first step on the road to serfdom. The triumphal period of the US-led post-Cold War liberal international order then amounts to the six years from 1991 to 1997 — not notably long.

The principal counterforces remain the diffusion of technology and education, the cross-border movement of people (driven principally by economic inequality, at one end, and demographic stagnation or decline at the other), and the mobility of capital in terms of both investment and the securing of profits (very much including offshore). None of this is necessarily liberal or orderly. Globalization and de-globalization are twin forces in a single dynamic that does not resolve into one or the other. ‘Re-globalization’ is a valiant attempt to be neither here nor there, but the reality it confronts is both at once.

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Paying the China Price

In his recent meetings with France’s President Emmanuel Macron and EU Council President Ursula von der Leyen, Xi Jinping mocked the concept of “dual-use” equipment such as semi-conductors, saying that by European definitions rice would be dual-use because soldiers have been known to eat it before battle. (Dual-use is commonly applied to products or technologies that have military as well as non-military uses. The proximate cause for the discussion was Chinese exports to Russia, which help Russia sustain its war in Ukraine in the face of Western sanctions.) Xi also rejected the concept of Chinese industrial “over-capacity” in reaction to charges, emphasized in the meeting by von der Leyen, that state subsidies have enabled Chinese steel and car manufacturers to dominate European markets with underpriced goods.

Of particular concern to von der Leyen’s home state of Germany is China’s dominance of electric-vehicle production. Macron urged Germany’s Chancellor Olaf Scholz to attend the talks with Xi, but Macron is less keen than Scholz on protecting Europe’s EV manufacturers from Chinese competition. This difference was a principal reason why Europe’s largest economy was absent from talks that pivoted on Europe-China economic relations. From an investor perspective, Europe’s current geo-economics offer little more than chronic unpredictability. Xi Jinping’s strategy is to divide the European powers from each other and from the US, a strategy that should be harder to do than it is.

The disturbing reality is that Xi is not wrong. The concept of dual-use is infinitely expandable. If its deployment were simply an artifact of political opportunism — for example, a means to foster non-Chinese semiconductor production — the problem presented would not be so difficult. But most advanced technologies, and the innovation systems that underlie them, really are dual-use, and in the end so is rice.

What Xi is really pointing to is the impossibility of neutrality. It was impolite of him to do so and probably bad politics, which could explain why the CCP’s Internet-scrubbing mechanisms were tasked with removing references to dual-use at the time of the Paris meetings. But for Xi it must be hard to resist pointing out to Europeans how dependent they are on Chinese tech inputs, not just for their own industries but for there to be much chance for European companies to compete with American ones. European states cannot be neutral profiteers trading with both sides in the US-China conflict. At the same time, Biden’s industrial policies (particularly for electric-vehicle production), US dominance of the West’s Ukraine policy, and the prospect of a second Trump administration all combine to gravely weaken trans-Atlantic solidarity when it is most needed. This is a key CCP strategic goal.

“Over-production” is also incoherent. The European argument is that Chinese production is state-subsidized and in excess of domestic Chinese demand for electric vehicles. The second charge is the weakest. Like Germany, China produces cars in excess of domestic demand because it wants to sell EVs on the world market. That’s what exporting is. It makes no sense to insist that Germany be able to continue manufacturing Mercedes or Volkswagens in excess of German consumer demand but China should not be able to do the same.

The state-subsidy charge is stronger but still not massively convincing. German subsidies to German consumers (4500 euros, sometimes more, per purchase) incentivized the buying of 2.1 million EVs in Germany from 2016 to the end of last year. Part of the goal of this policy was, through subsidized pricing, to artificially boost German consumer demand for electric vehicles and thereby subsidize German car manufacturers’ transition to EV production. When the German government rather abruptly cancelled its EV subsidy to address a budget shortfall, German manufacturers like Mercedes and Volkswagen undertook to pay it themselves for existing orders.

That policy is not intended to last, however. At some near date, Germany and other European states with auto industries will have to choose between protecting their own car industries until they are able to compete with Chinese competitors (a very distant prospect), leaving their markets open to Chinese EV imports (already accounting for 37% of European EV imports in 2023), or somehow managing the China trade at the EU supra-national level. The last option is the one the EU is aiming at, but it will meet strong resistance from individual European states who do not want to lose their auto industries to European competitors (mainly Germany) and from European consumers, who will be stuck with higher prices. Those high prices will in turn delay Europe’s transition to greener transport. This is the fate that US protection of EV manufacturing (and much else) is intended to avoid for Americans — but at the cost of hobbling European EV exports into the US market, further impairing the geo-economics of trans-Atlantic solidarity.

Efforts to reorient manufacturing to address climate change keep running into the wall of geopolitical competition. Meanwhile, the Chinese government has economic and environmental challenges of its own and will continue to try to punch its way out of them by subsidizing domestic production and controlling domestic consumption to favor Chinese goods.  Each side in this drama will correctly accuse the others of “over-capacity” and unfair state subsidization.

China has the advantage of an unblushing commitment to state capitalism and an immense captive domestic market. It also has an ideological advantage of sorts in that it frames its own economic growth in a long narrative — “changes not seen in a century”, in Xi’s phrase — of anti-imperialism. Ultimately, the Chinese contention is that Western-led modernization was itself “unfair trade” on a very grand scale, achieved at gunpoint and cementing first-mover advantages that Chinese state policy is dedicated to undoing. Of course, Chinese growth is fueled much more by a Chinese nationalist will to power than by any notional anti-colonialism. It is a Sinicized version of the German imperial push for a “place in the sun” alongside the other imperial economies of the 1890s, including Japan. The increasing brutality of the CCP regime both domestically and in its foreign policy is an index of where its commitments lie. It came to praise globalization but in all likelihood will end by burying it.

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Latin Risks Rising

Five years ago, the head of a major think-tank in the US could credibly say that “there are no geopolitics in Latin America.” But that not-for-attribution remark has become steadily less true ever since. Latin American economic prospects are now shaped by both regional inter-state tensions and broader geopolitical currents, not least the U.S.-China rivalry (see SIGnal, “Green Protectionism,” 25 April 2024). For now at least, investors have to accept that non-market considerations will have deep effects in some major Latin American economies.

The 2015 discovery of significant offshore petroleum reserves in territorial waters claimed by Guiana and Venezuela reignited a disagreement more than a century old. The Esequibo region, which holds around 15 percent of Guiana’s population but makes up more than two-thirds of its territory, has been in dispute since before 1899: the Paris Arbitral Award then designated it part of Guiana, but Venezuela never agreed. Late last year Venezuela held a referendum that designated Esequibo its 24th state. Venezuela’s move could well lead to armed conflict.

Meanwhile, more than 8 million Venezuelans have left the country in the past decade due to dire economic and political conditions. Many have fled to neighboring Colombia, whose citizens resent expenditures on refugees by the Colombian government even though many refugees are Colombians who fled to Venezuela during Colombia’s decades of insurgency and civil conflict.

Ecuador was until quite recently a safe country for residents and visitors alike. But in the last few years, suppression of drug smuggling through Colombia resulted in the opening of a route across northern Ecuador to the Pacific, and from there to the US and Europe. This has plunged the entire country into a violent spiral, and Ecuador is now one of the most dangerous countries in the world — due entirely to exogenous, transnational factors.

As social guardrails have been eroded across the region by the decline of religion and social institutions, the movement of populations into large cities, and by the resulting splintering and estrangement of family structures, the social prohibitions against violence and crime have also eroded.

The weakening of Latin American institutions has sometimes been worsened by democratization. The PRI (Institutional Revolutionary Party) held power in Mexico for 71 years, until 2000. The PRI had an informal deal with drug cartels formed in the 1970s to satisfy increasing illegal drug demand from the US. If the cartels did not let their violence leak into Mexican society, the government would leave them alone. As cynical as it was, the arrangement kept something of a lid on social violence in Mexico.

When Mexico became fully democratic with the election of the PAN (National Action Party) in 2000, the deal collapsed. This was in part because the PRI apparatus that had managed it was gone. Mexico had no independent civil service; most everyone in government was part of the PRI. When the “PRIistas” left, the arrangements and relationships that had controlled violence left with them. Elaborate anti-gang campaigns and the militarization of Mexican policing have had little positive effect. The number of gangs has increased, as has their violence. In Brazil, by contrast, gang consolidation and “professionalization” seem to have contributed to a reduction in violence.

Many of the conflicts in the region are attracting players like China, Russia and Iran — a major arms supplier to Venezuela. These countries have an interest in the oil markets, whether as consumers (China) or fellow producers (Iran and Russia). Chinese technology firms, increasingly frozen out of Western markets and facing strong competition in Asian ones, value Latin America. Chinese consumers depend on Latin America for foodstuffs from soybeans to cherries, fish and beef, the great majority coming from Brazil, Mexico, Chile, Peru and Colombia. As the foreign policies of China, Russia, Iran and others consolidate and harden around a core narrative of anti-Americanism, the United States, obsessed by migration, has been steadily losing political power in the region.

Yet the natural resources of Latin America are becoming more and more vital to the US, in an era of the weaponization of strategic resources like critical minerals (e.g. lithium), of nearshoring, and of decoupling from China and Russia, in particular.

Latin America’s strategic importance is likely to grow, but the US has not sufficiently cultivated the relationships that would allow “win-wins” with countries in the region. The US should change course on this while there is still time.

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