Why globalism failed

JOEL KOTKIN

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Not so long ago, the West was captivated by visions of the ‘end of history’. Francis Fukuyama, Thomas Friedman, Kenichi Ohmae and others envisaged the permanent triumph of a global neoliberal order. They foresaw the emergence of a system controlled by an ever-expanding army of technocrats and professionals, concentrated in a handful of great cosmopolitan cities, riding on ‘advanced’ industries and services.

That world has been turned upside down. Today’s world – divided by geopolitics – looks closer to the one conceived by Samuel Huntington in his 1993 essay, The Clash of Civilisations.

Nations, it turns out, do not share the same worldview. Russia has turned inwards, adopting an ever more quasi-Tsarist, Orthodox pose. China, having used capitalism and capitalists to achieve its greatest power for a half-millennium, is now reverting to a model indebted to both the imperial past and Chairman Mao. In other parts of the world, primitivist urges, whether Islamic or evangelical Christian, have reasserted themselves.

It is countries like China, not the avatars of liberalism, that are now clearly ascendant. Over the past 20 years, the share of the world economy controlled by the G7 (Canada, France, Germany, Italy, Japan, the UK and the US) has shrunk from 65 to 44 per cent. Today, China produces almost as many manufactured goods as the US, Japan and Germany combined. This is one reason why there are now more billionaires in Beijing than in New York City.

Amid a generally weak global economy, the fastest growth now takes place in India, as well as resource-rich Saudi Arabia and parts of Africa. In terms of purchasing power, the combined wealth of the Global South-dominated BRICS nations – Brazil, Russia, India, China and South Africa – surpasses that of the G7.

The new realities are also altering the geography of wealth and power in the high-income countries. Not long ago it was seriously suggested that ‘mayors’ should ‘rule the world’, since economic growth was destined to cluster in a handful of superstar cities. Now even the New York Times bleakly warns of an ‘urban doom loop’, noting that America’s big cities lost two million people between 2020 and 2022. The world coming into being will not be the exclusive plaything of elites in London, New York or Berlin. Instead, they will have to compete with places like Dallas, Phoenix and the exurbs of Houston, as well as Eastern centres like Beijing, New Delhi and Mumbai.

What went wrong for the globalists?

Once-confident globalists failed to pay attention to three critical issues: the continued importance of the material realm, the crucial role of demographic change and, lastly, the importance of culture.

The war in Ukraine shows how the material economy still matters. It has intensified the global struggle for food, energy and critical minerals. And it has widened divisions across the globe – including within the West. Tellingly, very few non-Western countries have imposed sanctions on Russia, largely due to their interest in its vast natural resources. India, most of Latin America and Africa are currently buying Russian raw materials at discounted rates.

While the West demonises coal, oil and gas for their environmental impacts, most developing countries want to grow their own economies by developing fossil fuels as well as importing them. Countries like India are busily building coal plants and have pledged to resist what they describe as the West’s ‘carbon imperialism’.

The World Economic Forum, the United Nations, the European Union and lavishly funded non-profits may dream of wiping out fossil fuels. But, due largely to demand from developing countries, fossil-fuel usage is still growing, accounting for an overwhelming share of all energy used across the globe.

The West’s climate wars

The Western elites’ climate zealotry is now a serious problem. As Robert Bryce has shown, in 2021 green non-profits received well over four times as much as those advocating for the use of nuclear or fossil fuels. The Net Zero policies these organisations promote have had catastrophic effects in places like Germany, whose industrial base is facing devastation. Some now think that even the Russian economy is out-performing Germany’s.

Net Zero and the resultant high energy prices are facing a strong political backlash. They have helped to revitalise Germany’s populist right, and they are also unsettling establishment parties in France, the Netherlands, Sweden and Italy. These domestic political conflicts are being fought out between those who rely on affordable energy – factory workers, farmers, people involved in logistics – and the climate-obsessed classes concentrated in newsrooms, the universities and among the corporate elite.

Geography shapes much of this conflict, particularly in large resource-rich countries like the US. Here, the vast hinterland dominates energy-dependent industries like agriculture, resource extraction and, increasingly, manufacturing. These industries have helped many of these states enjoy broad-based job growth. Last year, Texas, Nevada, Florida and Arkansas experienced the US’s highest personal-income growth, while California ranked last, followed closely by Maryland, Massachusetts and New York. Over the past decade, the six-fastest growing southern states – Florida, Texas, Georgia, the Carolinas and Tennessee – added more to the national GDP than the northeast, once the perennial powerhouse.

The depopulation bomb

People remain the ultimate resource and the high-income world has ever fewer of them. Increasingly, countries in the West lack the skilled and energetic young people who are critical to innovation. Countries with severely low birthrates usually experience reduced economic growth. This is demonstrated by Japan, whose labour force has been declining since the 1990s and will be a full third smaller by 2035.

Similar dynamics are evident across the West. As the employment base shrinks and the demands of the elderly rise, some countries like Germany are raising taxes on the existing labour force to pay for the swelling ranks of retirees. For the OECD as a whole, the dependency ratio (an age-population ratio of those not working and those working) is likely to increase from 33 per cent in 2023 to 53 per cent in 2050. Generally, many younger workers will not be able to count on pensions to maintain their post-retirement living standards, even in well managed countries like Singapore.

In the future, China will also face a similar problem. The elderly population in China is expected to rise from over 250million today to over 400million by 2040. And China’s working-age population (those between 15 and 64 years old) peaked in 2011 and is projected to drop by 23 per cent by 2050.

The best positioned countries now are largely those that were once the most impoverished, notably India. It is now the world’s most populous country and is consistently ranked the fastest growing large economy in the world. Unlike Russia, Ukraine and much of the West, India has the human resources to fill its military ranks, and to drive its industrial and tech firms. Africa and parts of the Middle East could also enjoy a similar advantage, particularly if they can keep corruption to a minimum and resist control from China or the West.

These same countries may well rescue the West from the most severe impacts of demographic stagnation. Canada has made this a conscious policy, and is expected to up its immigrant population by an estimated 1.5million by 2025. In the US, foreign-born residents have contributed to the rapid growth of Sun Belt cities like Houston, Dallas and Miami. These cities have now received more newcomers than the traditional gateways, like Los Angeles, New York, Chicago and San Francisco.

Those expensive, highly regulated urban centres are also losing a new base of millennial residents. These younger people are moving from historic urban job centres to the more livable and affordable hinterlands. The key factor here is the rise of remote working. One study from the University of Chicago suggests that nearly 35 per cent of American workers – and almost half of those in Silicon Valley – could do their jobs away from an office. Most of the new wave of start-ups has adopted a remote-working model.

This suggests America’s future will be both more dispersed and less traditionally urban. Indeed, the number of babies born in Manhattan this past decade has dropped by nearly 15 per cent. Demographer Wendell Cox estimates that the percentage of households with children between the ages of five and 17 was close to three times higher in suburbs or exurbs than in or near the urban core. Crime-ridden and depopulating San Francisco is already home to more dogs than children under 18, and Seattle boasts more households with cats than two-legged offspring.

The West’s cultural meltdown

Meanwhile, as the West is faltering, the globalists are waging a culture war on their own societies. University professors, elite journalists and corporate hegemons are openly contemptuous towards both their nations’ traditions and the views of most of their fellow citizens. Globalists tend to view Western culture as uniquely cruel, unjust and destructive to the environment. This has eroded traditional values like patriotism, especially among the young and the highly educated. Barely a third of Americans aged 18 to 29 think the US has ‘a history to be proud of’.

Globalist elites’ strident attitudes on race, gender and climate work to undermine their credibility with much of their national populations. Most Americans, for example, do not support racial quotas, sex-change treatments for children, or believe that America is fundamentally evil.

Unsurprisingly, faith in key globalist institutions – the state bureaucracy, the mass media, the education establishment as well as the corporate giants – has diminished around the world. In the US, more than three-fifths of the public lack trust in the federal government, notes Gallup.

This cultural dynamic doesn’t just threaten the neoliberal order – it also threatens the West on a more fundamental level. A civilisation can survive only if its members, particularly those with the greatest influence, believe in its basic values. Europe is, if anything, further down the road of cultural deconstruction than the US. After all, the EU is vigorously pursuing a post-national project, aimed towards a pan-European wokeness.

By embracing identity politics, Europe and North America have given up on the liberal commitments to free speech and inquiry that drove their original ascendency. The woke takeover of universities and even scientific institutions means that many researchers in the West are now burdened by ideological constraints, where they are forced to worry about meeting ‘diversity, equity and inclusion’ (DEI) criteria and to pretend that there are more than two sexes. This has created an environment that is bound to stifle innovation.

One can be horrified by the Chinese or even the Indian governments’ autocratic tendencies. But these countries still grip the keys to success – a commitment to conquering the material world, an embrace of their own history and a deep self-belief. Little wonder, perhaps, that people in India and even much of Africa tend to be more optimistic about their future than their counterparts in the West or Japan.

The globalist elites may be wrecking the West, but they are also sowing the seeds of their own downfall. There is still a future to fight for.

Joel Kotkin is a spiked columnist, the presidential fellow in urban futures at Chapman University and executive director of the Urban Reform Institute. His latest book, The Coming of Neo-Feudalism, is out now. Follow him on Twitter: @joelkotkin