As 3,000 top business and political leaders awaited Donald Trump’s speech at the Davos World Economic Forum on Friday, my mind flashed back to Davos in the early 2000s when those who denounced multilateral trade deals and institutions were outliers.
In 2000 and 2001 I watched cadres of scruffy anti-globalization protesters march up Davos’ narrow main drag, blocked by riot police, and occasionally heave a rock through a shop window. By 2003, Davos organizers – wary of unrest – had encouraged a counter-Davos forum that was held in a local high school and debated issues like “Can globalization be ethical?” and “Alternatives to free trade.”
No one could have imagined that an antiglobalist who disdains multilateral trade pacts would become the most-awaited speaker of Davos 2018. Yet the demands of those early protesters and Trump’s America First message – while superficially similar — could not be more at odds.
To anti-globalizers on the left, globalization meant a race to the bottom, corporations moving jobs to countries that exploited low-wage workers while despoiling the environment. They argued that U.S. workers were hurt by the lack of a level playing field. They wanted to address inequities in wages and regulations that hurt the poor.
Those aren’t the concerns that motivate Trump.
Trump’s Davos speech – delivered carefully and uncomfortably from a teleprompter – was a sales pitch for more investment in America. Nothing wrong with that, in principle (although it was bizarre to listen to an American president who barely mentioned geopolitics as he addressed an assembly of world leaders).
But his pitch to the global elite was for policies that disproportionately benefit the wealthy and won’t lift those the downside of globalization has left behind.
The president proudly touted his tax cut. And he bragged of stock-market gains and massive deregulation; this reminded me of grim Davos Forums past, where world leaders reeled from the consequences of lack of regulation in the aftermath of the 1997 Asian crisis and the crash of 2008.
Yet for a supposed populist, Trump’s speech was sorely lacking any mention of growing income inequality, which the Davos 2018 Risks Report rightly named as one of the industrial world’s biggest economic challenges.
And, of course, a dramatic disparity in income growth is one of the biggest economic challenges facing this country. In 2016, 20 percent of U.S. national income was taken in by the top 1 percent of the population, while the bottom 50 percent garnered around 13 percent. This disparity was far lower in Europe.
The tax cut that Trump bragged about will do little to address that gap. The one-time bonuses that some U.S. companies are offering and attributing to the cut, and which the president cited in his speech, don’t guarantee pay raises. With unemployment low, there is little indication so far that the huge corporate gains from the tax cut will go to job creation, especially decent-paying jobs that benefit less-educated workers. And then there’s the destruction of medical care that adds to the burdens on the working poor.
But inequality was not on Trump’s agenda at Davos. He proudly cited U.S. job gains on his watch, but didn’t mention that job creation last year was lower than it was during each year of President Barack Obama’s second term.
“America is open for business,” the president proclaimed, as if that alone could resolve the structural problems that globalization helped create. Yet Trump’s base will see few benefits if U.S. business profits repatriated under the new tax code go to stock buybacks and further enrich the 1 percent. No doubt Trump will deflect responsibility by blaming Hillary Clinton.
The president’s bizarre claim in his speech that the market would have gone down 50 percent if a Democrat had been elected reminded his audience that facts are not the president’s forte. And Trump couldn’t resist taking a swipe at the U.S. press from the Davos stage.
No wonder, then, that the Davos crowd, which politely applauded Trump, was far more enthusiastic for French President Emmanuel Macron.
“Let us not be naive, globalization is going through a major crisis,” Macron said, “and this challenge needs to be collectively fought by states and civil society in order to find and implement global solutions.” He also said that “a race to the bottom” by constantly lowering taxes was not a sufficient response to the inequalities globalization creates.
And Germany’s Chancellor Angela Merkel got it. “Let us never accept a situation where people are left behind, particularly in the digital economy,” she said. “If we don’t manage [this] we will have Luddites.” She warned against the “poison” of populism.
Both Macron and Merkel have seen how far-right political populists feed off the discontent of those who feel bruised by technology, trade, and rapid societal change. Both are thinking seriously about job training, education, and global cooperation to cope with the fallout of the technological change.
On the other hand, Trump appeared confident that his deal-making (and bilateral, not multilateral trade deals) was sufficient to ensure widespread prosperity. His pitch was the perfect blend of globalist and populist, wooing corporate titans while pledging to empower the dreams of the American people. At Davos, America’s salesman-in-chief pushed policies that mainly boost the 1 per cent, while insisting to the 50 per cent that he is really on their side.