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Globalization Has Run Its Course…But What Comes Next?

9/13/2016

Globalization Has Run Its Course…But What Comes Next?
Searching for a New Paradigm for Global Growth

While economists may believe in a smoothly adjusting system of checks and balances to keep supply and demand in reasonable equilibrium, capitalist systems rarely work as efficiently as theory requires for market efficiency to perform as advertised. We are continuously in a race between under and over capacity with price as a moderating factor. This process of creative destruction (of weaker enterprises and resale of older capital) provides the forward momentum for the economy with business fixed investment the usual mechanism for recovery from cyclical declines acting to drive the recovery. Unfortunately in this age of global companies and long distance supply chains, the net result of this creative destruction is the concentration of supply in fewer companies as the weaker firms are eliminated. Natural selection and survival of the fittest then is the natural law of nature and of modern capitalism in an age of globalization.
Since the 1930’s the usual signal to businesses that the end is near has been government intervention in the form of Keynesian pump priming and changes in monetary policy (lower interest rates). In a globalized world, the link between capacity in one country (or over capacity) and demand in others is less direct. Add in subsidies of governments to keep firms in business and it is easy to see that normal signals to investors can fail and any equilibrium in markets is random and short-lived. One final element is the Internet allowing near instantaneous changes in prices and information on available suppliers no matter how distant or remote. The usual friction coming from less information is eliminated reducing the protection of domestic suppliers and ultimately leading to their bankruptcy and to rising unemployment in small towns and cities long used to near full employment.

The tendency is to add too much capacity in one country or region going through a rapid re-make (called economic development) compounds problems especially when that excess capacity (as is the case in iron and steel) can be easily exported making excess capacity not a national problem but an international one.   It is possible once the over capacity is recognized weaker, less well run or capitalized companies, collapse pulling down their financial backers be they banks or equity investors. This sends tremors throughout the economy starting a new recessionary cycle that snowballs into unemployment and cascading banking failures. The impact can even spread to more firms in geographically distant countries through links of the global supply chain.    In a fully globalized economy this over capacity leads to lower prices and reduces the incentives of national champions to add capacity thus short-circuiting the investment recovery cycle and forcing governments to try to compensate for the loss of income. Over dependence on companies in this region can also lead into entropic failures across the long distance supply chains until the global economy collapses. This is what is happening today as China’s over extended companies fail one after another. The year 2015 will likely be considered the year that the costs of globalization were finally realized in the economic realm and also in the more critically important political realm.   This may be the year that the establishment support for global trade integration collapses in rich and poor alike – the result could be a new round of protectionism with all the unintended consequences on businesses globally.   It will, if no alternative business and social paradigm is found lead to a long period of secular stagnation with global economic growth underperforming past norms leading to more people unable to move from marginal to stable consumers and producers.

In a globalized system over, not under, capacity is a more normal condition. Economies of scale are built into the cost advantage of countries with large domestic markets or where the government supports employment actively, like in the case of China by State banks offering subsidized loans to sustain this growth. This encourages inefficient over-production until the company fails taking down supplier chains that now stretch around the globe. Cheap money from State owned banks has allowed new facilities to be built in advance of demand just to insure sufficient economic growth to absorb the flow labor from agricultural areas to urban areas.   Like in the Soviet era when government investments fueled industrialization, in China cheap capital offered to private firms and subsidies to State owned companies encouraged this over investment in heavy industries with more easily exported commodity-type products (semi-finished factors of production at the first stage of processing from finished plate to extruded wire or casting products).
Where banks are mainly private (as is the case in most advanced for more fully developed emerging markets), recessions tend to dry up credit (as happened in 2008-09) and weaker firms facing reduced demand and maxed out credit lines, go out of business.    Foreign firms, initially hurt by the slowdown may suffer less and have more financial staying power.   With wider networks of possible markets, some of which escape the worst effects of recessions in other countries, they can better survive periods of slow growth.

Companies domiciled in large natural markets (large population countries or trading areas) may fail to widen the markets they serve thus losing the resilience to outlast growth slowdowns or recessions at home. Some of the losses of smaller American companies can be laid to milking cash cows at home and failing to see the risks of this narrow focus until its too late to change. Foreign firms, even smaller companies, usually had to widen their net of customers to maintain growth and thus can, if recessions are staggered, survive and even prosper from the recovery phase. When demand picks up as the economy recovers, long-time suppliers find they can’t recover fast enough lacking economies of scale (heavy industries) that State-owned firms with backing from government controlled banks have.
Globalization also weakened the historic relationships between first tier companies and their smaller suppliers.   Information economies of scale allowing companies to shop for suppliers and even change suppliers yearly. Convinced that price matters more than quality, this often adds future costs when cheaper substitutes fail or lack quality controls, but by then bonuses for saving money have been paid to the wizards of finance. This continuous competition for the lowest prices leaves long term suppliers without adequate business so that when foreign firms fail there no longer exist domestic substitutes. Lack of loyalty by first tier firms to second and third tier firms leaves the underlying manufacturing base hollowed out.   Like companies indifference to their workers, indifference to suppliers makes the global economy unstable and dangerous prone to collapses and political uncertainty as governments try to overcome structure imbalances caused by opening markets too fragile to survive the competition.

Changing corporate culture may be the most useful approach to insuring long-term economic prosperity for rich and poor alike. Populist backlash against globalization is a natural outcome of the uneven pattern of benefits and costs that the last three decades have offered both to rich and poor countries alike. If we are to insure stable, beneficial economic growth then companies will have to do their part. Keynesian stimulus without support from the private sector has often led to growing and unsustainable imbalances on current accounts and government balance sheets. With world population size reaching towards 9 billion, mass migrations occurring as climate change affects regions already in food deficits destabilize social and political balance in countries still better off leading to backlash against immigrants.
In this paper we have examined how globalization has impacted long-term growth for three groups of countries – wealthy advanced countries, emerging markets, and developing countries. Gaps between these three groups remain wide and are unlikely to narrow without changes in the way the private sector and national governments interact. No single nation, including the United States, can change its destiny by closing off the world, and yet this is the message of populist candidates everywhere. Turning the clock back on the past is impossible, but allowing the current system of disjointed growth to continue will also fail to solve the most pressing of the world’s problems:
Income inequality and depressed real wages from global completion leading to uneven growth in demand and forcing governments to support growth through tax breaks and direct aid. One study suggested that the top 1% took in 85% of the income growth occurring since the recession began in 2008 reducing significantly the circular flow needed to lubricate and support short and long-term growth. Concentration of early stage manufacturing in single countries or regions opens the world economy to supply chain failures and economic blackmail leading to populist outrage against globalization as jobs shift from higher valued manufacturing jobs to lower value service employment for less skilled workers. Managerial capitalism with its short-term goals of the next quarter’s numbers reduces the ability of governments to influence company behavior using the “bully pulpit” making recovery from economic recessions difficult. Failure of companies to hire and invest using excess profits to maintain depressed share prices often with borrowed money opens the door to a 1930’s style depression. Corporate internationalism helped by trade agreements that reduce barriers to entry for foreign-made products opens the door for anti-globalization nationalism leading to the potential for backlash against existing and future agreements to integrate the world economy. Climate change and drought may be the final straw forcing a reassessment of internationalism as nations start to look inward for solutions to problems despite decades of integration making slogans like “America first” or Brexit obsolete and dangerous simplifications and solutions. In a way we are inching closer to the 1930’s world with just the major actors changing. Russian nationalism and feelings of loss of global position replaces German nationalism with military expansion taking precedence over economic opportunities.   The recovery from the financial crisis of 2008 has been in spurts of optimistic growth followed by sudden collapses in confidence and rising wage inequality in ways similar to the late 1930’s. In the Pacific Chinese expansionism replaces Japanese and is in the process of developing an economic sphere of influence as the US retrenches leaving a vacuum for China to fill. In short the idea of a cooperative global strategy to solve the pressing issues and motivate world spanning corporations to work in concert with governments may be just a pipe dream.

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Why I used a Trump-like in my fiction novel -- The Phoenix Year

8/3/2016

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“Of course,” Von Kleise said. His voice was icy and without compassion, but also was without hate or anger. “Who doesn’t know of Master town and Master City: pleasure palaces for the rich and famous, all with your name alongside faux art and atrocious architecture?” He paused, taking a sip of water, then resumed speaking. His eyes zeroed in on Masters’ eyes, adding to the American’s nervousness. His calm compounded Master’s anger.
“You were driven by an overpowering self-love, an ego that was larger than even New York itself. What a soaring vision you had! Did you give away any of your large fortune to worthy causes? No;.Rather you simply spent it on yachts, houses, aircraft, things, …not people. In fact, Masters, it was your success in making your name synonymous with wealth and power that made you and your lovely wife perfect candidates for what we had planned.”

I revised the Phoenix Year initially when it was redeveloped around mid-1990. I wanted a man with an infinite ego who put his name on all his properties, who was a womanizer, and whose wives were fixtures of New York tabloid papers. Part of the multi-factor plot was to collapse through over leveraging his real estate empire as one of the elements to send the stock markets of the world into terminal collapse so shares could be purchased at rock bottom, Depression-era prices, and gold would go to new highs.

In my book Ben Masters is framed for murder and his wife and daughter carried off to Asia as hostages and sold off as sex slaves, while his partner overleverages his empire priming it for collapse. But in my book he's a hero, freeing his wife from a Thai brothel only to lose her in Switzerland again. In the end of the novel he climbs to the top of a major mountain in the Bernese Oberland to free her only to die at the end.

I used him as a characterature of a self promoter, a man living on the name and the brand, but little did I ever expect him to run for President. My Ben Masters was far more rational than the Donald Trump now running for President.

As Heinrich Von Kleise the billionaire at the heart of the plot to remake Capitalism says to my character Ben Masters before he is shot:

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What happens to the world economy if Trump Wins!

7/26/2016

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What if Donald Trump wins and tries to impose the kind of anti-globalization tariffs and taxes on trade. Aside from the obvious problems of doing this legally, but given his ability to do things in an extra-legal fashion on the idea that he is some kind of elected tyrant with a "mandate" to rebuild America in the image of some mythical time when America was "Great", and assuming that he doesn't get impeached by the Congress and carried out of the White House in a straight jacket, then it is fair to analyze the impact of what he has proposed over and over again on the US and world economy.

As someone who has warned against the dangers of rising rate deficits and completely open markets on the US economy starting long ago when I was the Senior Economist in the Pentagon and continuing to this moment in time when the horse has long been gone from the stable making reversing thirty years of avoiding the issue for fear to inciting the specter of protectionism, I know better than others the dangers of this strategy and fear its consequence. Imports are damaging to smaller producers and there is no getting around this, but they are beneficial more often than not to the companies that import the products, and for workers who have incomes they offer cheaper products. I usually used the ceiling fan as the best example. Ceiling fans have been a ficture in drug stores since the 1930's, and were made in the United States by high end companies as fashion accessories with prices closer to $ 500 to 700 until probably around the mid-1970's. But they were very expensive. But as the electrical industry in Taiwan began to develop, entrepreneurs in the US said why not make then in Asia cheaper. And by the end of that decade they were everywhere selling for sometimes under $ 150 or less and the market exploded. So no doubt American consumers have benefited from everyday low prices. So that is exactly the point--add a 45% tariff on Chinese and now Mexican imports and you will find that retail has nothing to sell and shipping companies nothing to ship, and workers in companies buying intermediate inputs will be laid off.

That of course is a start of the snowball that comes from his ideas. Lets deport 11 million workers most of them doing jobs that they alone can do. All those old white factory workers I am sure voting for Mr. Trump (note he is always Mr. Trump like Kind Trump) will be willing to do roofing and yard work to replace the sudden loss of a good share of the work force concentrated in industries that no white or African American Americans might want to do. And who will do the brick work and grunt work on Mr Trump's buildings or golf courses. It would be a disaster for the economy and worse it would leave millions of dependents dependent on social services that will be starved by his tax cuts.

Trump wants to cancel NAFTA and renegotiate all trade agreements. I was in Geneva working at UNCTAD during the mid-1970's when the Tokyo Round was being negotiated. You don't renegotiate agreements that take years to negotiate. So if the US unilaterally repudiates the agreements we already have the world will retaliate. Perhaps once we were large enough share of the world economy to dictate terms, but that was just after the end of World War II. In today's globalized economy we can't dictate terms. Reneging on our obligations would open the door to global protection and the result will be a disruption in global supply chains and likely an increase in inflation everywhere. What is unlikely to happen is that factory jobs will suddenly and miraculously return to these shores. A more likely result will be economic and social collapse. Perhaps this is the reason for the plan -- an economic emergency allowing Trump to ask for a period of extra-legal powers to right the sinking ship.

There are ways that can help rebuild localized manufacturing that will not destroy the US or world economy. Companies have to be more sensitive to workers needs and share more of the gains form globalization on workers from the top to the bottom. But Trump's vision is not the way to solve the pressing issuesof wage inequality and underemployment. It is time for the Democrats to lay out the truth, to paints the scenario in the starkest terms to the misguiding and angry electorate who support this demagogic megalomaniac who has captured the Republican Party.

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Alternative Economic Archetype for the 21st Century—the Post-Competitive Model

7/9/2016

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What might a post-competitive economy reorganized around growth and fair wages look like. Let's imagine that Adam Smith way back in the 18th century had suggested that economies work best when they are cooperative rather than competitive.

If private greed (self-interest) is out, then what could be its replacement as the organizing principle for the global economy? Cooperative self-interest is one possible solution to this problem. Declining incomes lead to slower growth and economic weakness and if this analysis is correct then it becomes in every stakeholder’s interest to maintain incomes and subsequently expand the market—in rich and poor countries alike. Wealth disparities between advanced countries and poor are so great that slow growth in Western Europe may be worth more than double digit growth in incomes in sub-Saharan Africa. Destroying high paying jobs in the United States without replacing incomes there weakens all companies even if it appears to be beneficial in the short-run to the country shifting production to save a few dollars to pass through to the bottom line.

Since the end of the era of the great business trusts, governments have been in the business of breaking up or reducing business combinations that distort competition. It is illegal almost to talk to competitors in quasi-social settings. With each firm acting alone, as if its business decisions have no impact on the economy as a whole, the result is to amplify the unusual event that begins the downturn, turning what could be a short-lived retrenchment into a long-lasting recession or as in the early 1930’s a Great Depression.

The question then is there a better way to coordinate strategies.

The Presidential bully-pulpit no longer works with companies seeing themselves as citizens of the wider world. Obama tried it tapping GE CEO Jeff Immelt to head a business panel back in 2011 to boost jobs as the economy began to falter as the stimulus wound down. Little came of this initiative because it ignored the problem that CEO’s answer not to the nation state where they sell their products, but to their shareholders alone. But failure to see the woods from the trees can lead to the kind of bombastic statements of someone like Donald Trump who views the Presidency as a Kingship offering to impose by his own fiat massive tariffs directed a companies that move production overseas.

And finally the popularity of Bernie Sanders on the left and Donald Trump on the right should be sufficient warning to companies long used to doing as they please with workers and economies in their quest to maximize private worth to see the bigger picture that without individual worth there is no change of recovery. It is not surprising then to me that there is a renewed interest in adopting universal basic incomes as a strategy to insure stability. The unequal sharing of knowledge and the ability of firms to produce value without paying workers full value for their work, thus concentrating wealth in fewer and fewer people’s hands will ultimately reduce the ability of economies to maintain growth, but will also lead to social revolutions. Of course blow back from mechanization is not new. Luddites destroyed machines to stop the rapid industrialization of British industry that destroyed jobs and livelihoods. Productivity is a double edged sword that can lead to periods of slow or even negative growth despite record levels of output per worker if the benefits are passed to the owners of the machine capital rather than human capital.
As the Economist in its June 4th, 2016 issue discusses in its special section on the history of “Universal basic incomes” report suggests that in light of the ability of outsourcing and automation of work to destroy useful activities the only way to sustain demand and maintain a healthy circular flow of funds is through some form of income redistribution. While living off the dole may be attractive to some, it is morally offensive and psychologically damaging to the majority of the population still able to find gainful employment and pay taxes to support the dispossessed of an economy.   The problem isn’t automation of manufacturing, but rather how to split the benefits of that mechanization in ways that encourage useful activities in the service sector and the government sector.

At the turn of the 19th to the 20th century the larger share of the value-added from food went to the farmers. Food products were sold closer to their bulk forms, but as agricultural productivity increased, employment declined and labor shifted towards manufacturing. Farmers sold raw wheat grains to millers who sold to industrial size bakeries and break became a commodity. As productivity increased in manufacturing labor shifted to services and more sub sectors stole the value-added as productivity increased again shifting labor towards other activities and the average hours worked declined from six days a week to five.   Today we are seeing more workers under employed leaving a financial hole in the circular flow.

Thus to keep the world economy growing and more workers gaining from the global integration, then private business must take the lead to maximize growth and employment, not profits and shareholders interests. Without private sector buy-in, then the entire edifice of globalization will collapse as protectionist walls are built without proper analysis of the consequences. Unlike Donald Trump's mythical wall with Mexico keeping out Mexicans, protectionist walls have real consequences for the buyers and the sellers. The last time they were raised was in the Great Depression and we all know what that turned out to be, the first stage of a World War that was the most destructive in human history in terms of lives lost and property destroyed.

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In my novel, The Phoenix Year it ends with a global collapse to mirror the 1929 Depression induced by a group of very wealthy and very concerned men acting to game the global financial system by taking advantage of the rich or near rich’s obsession with “self-interest.” In The Phoenix Year, the wealthy men see the problems of the global economy as being individual and collective greed. Workers are less important than shareholders and Boards of Directors are captives of senior managers. The men in this group, the Ancient and Honorable Order of the Phoenix, own and manage the companies they or their fathers or grandfathers founded. Their time horizons are longer than the managers of most of the world’s private companies who worry about making next quarters targets more than insuring that their companies grow, and their employee prosper. As Heinrich Von Kleise, Swiss billionaire at the heart of the conspiracy, explains to Michael Ross, the American economic advisor to the President:

“We have created great wealth, but also great inequality. We are choking on our own excesses from income inequality that robs economies of demand for ordinary things, to the pollution that overconsumption and limited regulations has unleashed on our planet. Billions of people will be without water or food in the future, as floods and droughts afflict rich and poor alike. Free enterprise has created a paradox, greater abundance, and even greater poverty. Markets are not self-correcting, nor fair. Rarely do they produce results that are even approximately optimal. We are at a point, Michael, that without some higher authority stepping in, our world will self-destruct, choke on its on excesses, and billions will die. It is the economist’s delusion that free markets work best.”

Just as British votes took the leap into the unknown with Brexit or Trump-istas wishing for the simple solution that comes with the words “trust me” with your future without any substance, these men decide to game the world system of finance and investment, destroying in one final period of uncertainty fortunes and creating the collateral damage to small and large investors in the wake of this destruction.

Dr. David L. Blond works as a private economic consultant specializing in quantitative analysis of economic data. He began his career working for the United Nations in Geneva, Switzerland. During the period of 1978 – 1985, he was a Senior Economist in the Office of the Secretary of Defense in Washington, and after leaving that position worked for various major global economic forecasting and consulting firms in senior positions developing some of the largest and most complex global economic models ever developed for use by private sector clients. He lives between Washington and Santa Fe, New Mexico. www.davidlblond.com @davidblond2000

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From Ashes to Rebirth – A Post-Competitive Economy

7/8/2016

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In my opinion, the problem comes from letting company decisions be taken in the interests of shareholders by hired gun managers with short time horizons. By destroying the tyranny of captive Boards and Group - managers measure their success in profits, not growth and innovation, their goal is to build a new system of cooperative, non-competitive behavior driven by growth metric; employment, wage equality, new investments in solutions for global problems. By eliminating the metric of profits alone from the equation and reorganizing these companies into global keritsu-like companies linked in common purpose they see the private sector sharing fully with government responsibilities for managing economies.

Of course what I wrote in The Phoenix Year and how it turns out may not square with the world we have post-Brexit, but the themes of the failure of private companies to see the larger picture and to work together to make the whole larger than the sum of the parts are the same themes that British voters explored with their Brexit votes for radical change in the old order. The fact that any simple solution – get out of Europe, British jobs for British workers only, make Britain Great or Trumps themes of xenophobia, American supremacy and America First (damn the rest of the world) — will always have unintended consequences, and make the cost of leaping into the unknown so great and so worrisome. No one knows the economic fall-out from Brexit for the United Kingdom or the world, but what we do know is that keeping with the status quo will no longer work either – even if the UK stays in Europe, Europe itself must see this as a wake-up call for elites everywhere that the forgotten little people need more than, as Thomas Malthus once said, “his crust of bread.”

Globalization by itself is not the problem, it may well be the only viable solution today, but globalization that works for everyone – rich and poor alike – is the real goal and the one that the wealthy men in my novel were trying to attain. It is time to search for real solutions rather than simple palliatives like tax cuts or more regulations. The solution likes in a new economic paradigm; one less wedded to pure market based solutions and the assumption that individual or corporate self-interest alone is the best solution. A cooperative, post-competitive economy is what we will ultimately have to achieve if we are to meet the needs of the billions of poor and middle class without destroying the planet in the process.

Dr. David L. Blond works as a private economic consultant specializing in quantitative analysis of economic data. He began his career working for the United Nations in Geneva, Switzerland. During the period of 1978 – 1985, he was a Senior Economist in the Office of the Secretary of Defense in Washington, and after leaving that position worked for various major global economic forecasting and consulting firms in senior positions developing some of the largest and most complex global economic models ever developed for use by private sector clients. He lives between Washington and Santa Fe, New Mexico. www.davidlblond.com @davidblond2000

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“The Problem is Capitalism – American-style, Shareholders Sovereign, Managerial Capitalism” by Dr. David L. Blond, QuERI-International

The problem is lodged mainly in the underlying premise of globalization’s advocates that in a complex world economy fewer barriers improve efficiency and profits rather than national wellbeing. It assumes that gains from trade outweigh costs and dislocations caused by global competition; or that self-interest alone of the private sector will insure a smooth functioning of the markets. In my opinion, Nazi Germany had a smoothly functioning economy built on slave labor and profit for Nazi Party members, but to survive it needed to gather more people to enslave.

Self-interest alone will not solve climate change or political dysfunction in global capitals or feed hungry and cure the sick or full employment. Self-interest is the second best solution because the world economy is just too complicated to be managed by some all-seeing central authority. The problem is that self-interest of one group, owners of capital (directly or indirectly through retirement accounts and investment funds) may not be in accord with the self-interest of workers or even nation states. It is this sentiment that sees NAFTA as a danger to American workers even if it insures the smooth functioning of a complex North American economy and lower prices in grocery stores and retail establishments.

In my novel, The Phoenix Year, set in 2016 with the backstory of the economy after the 2008 financial collapse, at least some of what has happened since its publication that form the plot details of the novel’s predicted economy – the collapse of oil prices from $110 to just over $30 is part of the novel predicted for 2015-16, along with a slowdown in China that leads to a drop in world trade during these years among other elements of the story. It included the surging nationalism throughout Europe and continued malaise and debt problems of the Southern tier of countries. It didn’t anticipate BREXIT, but it did include a rising nationalist politician in Germany calling for a renegotiation of Germany’s participation in the European Union. All these factors contribute to extreme volatility of stock markets helped by a fair amount of insider trading leading up to a series of events including the collapse of a overleveraged real estate empire, on a single weekend at the end of October of 2016. For good measure, the novel also included a real estate promoter from New York, who, at least, doesn’t run for President because he’s been framed for the murder of his wife and daughter. But the effect of multiple shocks to the system combined with the reliance on computerized trading algorithms by more so called money managers leads to a near total, 1928-32 collapse of equity prices. At the same time, the price of gold reaches new heights. At this point, the plan is to sell a huge stock pile of secretly accumulated Russian and African gold and buy control of more than 200 of the world’s largest, most influential companies with the proceeds.

Dr. David L. Blond works as a private economic consultant specializing in quantitative analysis of economic data. He began his career working for the United Nations in Geneva, Switzerland. During the period of 1978 – 1985, he was a Senior Economist in the Office of the Secretary of Defense in Washington, and after leaving that position worked for various major global economic forecasting and consulting firms in senior positions developing some of the largest and most complex global economic models ever developed for use by private sector clients. He lives between Washington and Santa Fe, New Mexico. www.davidlblond.com @davidblond2000

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Brexit and the New Normal by Dr. David L. Blond, QuERI-International

6/27/2016

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On Friday morning, June 23, 2016, the “Masters of the World,” the magicians of Wall Street and the City of London, awoke to a frightening future – the world they knew and could profit easily by manipulating pieces of paper to gain outsized fortunes and influence, no longer existed. Finance and the wizards of finance were under attack from the little folks. The little people, those left behind by the fast moving post-war world, had spoken, making a choice that could unravel the carefully balanced world order where efficiency is more important than personal worth, where entire communities are sacrificed for the ‘Almighty Dollar.' The forgotten people, left behind by capitalism’s rapid changes under globalization, had been given a rare opportunity to drive home the point that not everyone had profited from this global integration. Not everyone is a brain surgeon or rocket scientist or Master of the World with six figure salaries and bonuses. The men and women who live in Council flats with children who are school leavers without Oxbridge educations too long had been ignored by the London elites, too often paid off with another benefit rather than offered stable, well paid, jobs in industry. There is more to life than watching tele all day and going to the Pub at night to remember when they had jobs that meant something to someone, that made products for which they could point to. Too long companies were given the ability to move work out and finished products back in without considering the damage to communities. In short, globalization was at the root of the Brexit with immigrants simple another face of this global integration. And it didn’t matter that leaving the EU will not make their lives better or put more money into the NHS, what mattered was for the first time in a long time they could rain on the parades of, how Harry Potters Uncle put it, “your lot.”

When the American version of Brexit, Trexit arrived in Scotland, like a laird inspecting his fief, golf carts and all, he had only a few days before learned what Brexit was all about. In his utter ignorance, he equated Brexit with his own success to push his own agenda of xenophobia. He, too, appeals to the people left behind by globalization; those that left rural communities that once had good, stable well-paying jobs. And on his return to the United States, he doubled down on his message promising to start a trade war with China and tear up NAFTA. His slogan is all about “nationalism,” “Make America Great Again” and “America First.” Putting the country first is nothing new, but you can’t be “the exceptional nation” and also the nation that puts America first without considering the consequences for all others.

In my opinion, Trump is the thin skinned result of playing the race card for too long in Republican politics by elites that long ignored their voters left behind by this new century where machines can replace human capital and trade, well-paying jobs in industry for the millions without more than a High School education. “America First” is a slogan that a British Firster might relish, but it presupposes that America is no longer great because we have so many outsiders, non-white, harder working, or brown people in our midst apparently stealing jobs. But Trump makes good points about the indifference of the elites to the problems caused by globalization and the loss of jobs in the rural areas. Too many people have been ignored and left behind, and globalization and open markets have often bad consequences, and no amount of saying, as economists have often tried to do, that winners should compensate losers, does not substitute for a meaningful days work.

I have been making these points for more than twenty years in various publications; raising alarms about the loss of manufacturing jobs and a growing dependence on imports. My mantra has been, despite my professional career as one of the preeminent economists specializing in measuring and forecasting the global economy, fair and balanced trade. The growing imbalances, too long ignored by the economic profession fearful of raising the specter of “protectionism,” are at the root of the problems with globalization – from Greek debt to Donald Trump. These concerns of corporate indifference to workers and communities are at the heart of the novel, The Phoenix Year, published in March 2014 by Wattle Publishing (see www.davidlblond.com). It was revised to reflect the current economic environment. The first volume deals with globalization and income inequality in today’s economy, it is one attempt to see if there might well be an alternative to the winner take-all capitalism that is at the root of the problems we face today.

Dr. David L. Blond works as a private economic consultant specializing in quantitative analysis of economic data. He began his career working for the United Nations in Geneva, Switzerland. During the period of 1978 – 1985, he was a Senior Economist in the Office of the Secretary of Defense in Washington, and after leaving that position worked for various major global economic forecasting and consulting firms in senior positions developing some of the largest and most complex global economic models ever developed for use by private sector clients. He lives between Washington and Santa Fe, New Mexico. www.davidlblond.com @davidblond2000 email: dblond@queridata.com

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Dr. David L Blond is a well known economists with experience in government and the private sector. Published in 2014, The Phoenix Year, an economic thriller about the events leading up to the global market collapse New novel available on Kindle --The Rings of Armageddon based on insights learned during his 7 years as the Senior and only economist in the Office of the Secretary of Defense at the Pentagon.

Globalization Has Run Its Course…But What Comes Next?

Why I used a Trump-like in my fiction novel -- The Phoenix Year

What happens to the world economy if Trump Wins!

Alternative Economic Archetype for the 21st Century—the Post-Competitive Model

Offering A New Way Forward

From Ashes to Rebirth – A Post-Competitive Economy

Is the Problem Capitalism?

Brexit and the New Normal by Dr. David L. Blond, QuERI-International

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