Trade-off: aggregate prosperity and national autonomy

As Rana Foroohar and Ian Bremmer noted on CNN today, the world order is changing. The influence of international institution is waning while international policy in east Asia is increasingly dictated by the leaders of America and China. The trajectory of the post World War II ear, towards free trade between nations and deeper integration is going into reverse.

Most people never saw the benefits of globalization. For a majority in the West, GDP growth and stock market gains were simply abstractions, nothing more than a ticker feed on the news or sounds-bites in political speeches. Globalization, along with automation, also bought labor market disruption and kept median wage growth well below GDP and inflation. Along with the perceptions that institutions like the UN were weak and corrupt, faith in the free-market policies, at least with respect to in international trade, have come to be regarded as policies designed to enrich the haves, leaving the have-nots behind. The sense that government and the bipartisan consensus on international relations was no longer benefiting Americans lade to the election of a populist president in 2016¹.

At an aggregate level, the deepening of trade relations and the entanglement of countries in complex supply chains delivers economic growth but comes at the expense of national autonomy.

That was seen by policy makers after the Second World, not as a trade-off but as a double win; not only would countries be more prosperous, but the chance of armed conflict would be reduced. But as the prospect of war recedes that entanglement is seen less as a benefit ad more as an infringement on national sovereignty and self determination. The disaffection with globalization was harnessed by those who felt their local power was ebbing and flowing to centralized international bodies.              

 
In China the disaffection with the international order has different roots. China has concluded that the World order, with it structures systemically designed to favor developed countries by maintaining the economic status quo, was inconsistent with its economic ambitions.  So as its influence has it has grown, both economically and politically on the world sate, it has begun to create parallel and competing institutions. These now offer countries in the region a powerful incentive to defect from the existing order and join the rising Chinese sphere of influence.

These two forces, China's bypassing of the current international order, and America's withdrawal from it, is leading to a significant reshaping of international relations and the re-balancing of what has now come to be seen as a trade-off between aggregate economic growth and national autonomy. The pendulum is swinging back from global economic (and in Europe, political) integration toward bilateral deals making and greater national autonomy. The uni-polar post cold-war world order which to all intents a purposes revolved around the US is becoming bi-polar. With a weakening Europe, riven by internal tensions, both economic and political, the US and China will emerge as the foci of international relations in the 21st century.     

1. Similar trends were apparent on a smaller scale in Europe and led to Britain's decision to leave the EU