Sunday 16 June 2019

Michael O'Sullivan: 'Demise of globalisation is imminent, as a new world order waits to be born'

The fracturing of the old geopolitical system can be seen as a threat - or a great opportunity, writes Michael O'Sullivan

The Trump baby blimp in Dublin during the Trump visit. Photo: Liam McBurney
The Trump baby blimp in Dublin during the Trump visit. Photo: Liam McBurney

Michael O'Sullivan

Donald Trump has left Doonbeg. The collateral damage from this trip to Europe has not been as bad as some expected - the conflating of borders and walls, the sowing of chaos in the Tory leadership race and a frosty meeting with Emmanuel Macron. There is of course plenty that can go wrong from here - the trade dispute with China or deteriorating relations with Iran and Russia, to a possible impeachment.

Last week's visit underlined the irresistible temptation for much of the media and many of his political opponents to regard Donald Trump as the defining event in politics today. That they do is his great and maybe only success.

The reality, however, is that Trump is simply part of a process that is acting to break down the established socio-political and economic order of the last 30 years.

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In this he is joined by Brexit, the rise of populist parties across the eurozone, and the emergence of ''strongman''-led rule in countries from Brazil to Turkey, to give a few examples. Throw in the re-arming of Japan's military, the uncertainty and distrust sown by the US-Sino trade war and the reality that cyber wars are ongoing, and the outlook becomes more bleak.

These multiple ruptures mark the end of globalisation. All of the elements of globalisation - trade, the flow of ideas and people, the transfer of technology, are slowing. Trends that have marked the world order of the past 30 years such as multilateralism and the spread of democracy, are also being checked.

This is crucially important for Ireland because it has done so well from, and through, the period of globalisation that began with the fall of communism. The threat - and opportunity - for Ireland lies in what comes next.

At this stage, the debate is merely focusing on the apparent shortcomings and contradictions of globalisation. Importantly, many people feel assailed by the pace of change, be it the impact of social media on their children or the threats of technology and climate change. For the majority, Justin Trudeau's breathless assertion that ''the pace of change has never been this fast, yet it will never be this slow'' is more a reason to be fearful than hopeful.

As a result, many Americans and Europeans feel that political systems are not responsive to them and some will make increasingly radical political choices to curb this. In many countries - France, Germany and the UK - political systems are fracturing, once-dominant parties like France's Republicans or Germany's Social Democrats are being marginalised.

Geopolitically, the world is also fracturing. We are entering a multipolar world where the US, the EU and China will be predominant, to the detriment of middle-sized nations. Ireland will increasingly be forced to assert its allegiance to the EU over the Anglo-Saxon countries, and may find it increasingly attractive to partner with other small states in the Hanseatic League 2.0.

If these kinds of trends seem ''big picture'', the reality, as the trade dispute between the US and China is showing, is that they can impact many aspects of our lives - the interest rates we pay, the security of jobs, the price of food stuffs and the battles our diplomats are tasked to fight.

The fracturing of the old order will for a time seem chaotic. It will involve the levelling out of many of the imbalances in the world. The levelling will happen in many ways: for instance, it will involve the levelling of political accountability and responsibility between political leaders and "the people", the levelling of institutional power - away from central banks and 20th-century institutions such as the WTO and IMF and toward new treaties (on risk and monetary policy) and new institutions (for example, a truly effective and powerful climate body and an institution or agreement that oversees cybersecurity).

In this "levelling", Brexit and Trump are the first catalysts. More signs will come, and we will be less and less able to ignore them. We are at a turning point similar to that of the late 1980s, when many people focused on the fall of communism itself and few saw that a bigger trend, globalisation, was about to take hold. In today's world, what initially appear as isolated events are beginning to form a pattern breaking down what we might call the old order.

The opportunity in this transition phase, however, which many do not grasp, is that it is one where new political templates will need to be created, a new multipolar order will need to be fashioned and a world in which a fresh approach to cultivating organic economic growth will need to be discovered.

In particular, this transition will have to navigate at least two economic hurdles, each the legacy of the way the world economy has grown over the past 10 years. They are high levels of indebtedness and the gargantuan role that quantitative easing has given central banks in policy. Like climate change, neither of these fault lines gets sufficient policy attention (Ireland may be an exception here), they are political cans that can be kicked down the road.

This is where policy denial may prove fatal. Problems like indebtedness will only be resolved when the threat they pose is so great that it is too late. In this light, don't be surprised if the world needs to endure a 2024 International Debt Conference, echoing that of 1924, where debt restructuring and forgiveness become the only means of resetting the financial landscape. Such an event might be part of a greater reform, a sort of Treaty of Westphalia for finance, where the deployment of policies like quantitative easing is restricted to all but emergency conditions. The most interesting aspect of this paradigm shift may be in public life. New laws will have to be fashioned as a reaction to technological advances in cyberwarfare, genetics and artificial intelligence. New political issues such as the importance of mental health to healthcare systems and societies will rise to prominence. New political parties will also rise, and some of these will cut across national borders, and may be more actively centred on issues like data privacy to religion. Interestingly, Ireland's Citizens' Assembly garners more attention from other countries looking to reset their democratic processes.

Perhaps the most challenging political issue is how to bridge the divide between people and those elected to serve them. A fascinating template, and one that has not had sufficient attention comes from the The Levellers, a mid-17th-century group in England, who participated in the Putney Debates. Their achievement was the crafting of three ''Agreements of the People'' which were the first popular conceptions of what a constitutional democracy might look like.

They are interesting for two reasons. The first is that in the context of the time their approach was constructive and practical. Their agreements spell out what people want from those who govern them, in a clear and tangible way. They for example proposed term limits on political office and that laws regarding indebtedness are applied equally to the rich and poor.

The second way in which they are interesting is the way their movement was countermanded and then snuffed out by Cromwell and the Grandees. Like so many idealistic political start-ups (such as Change UK), they failed. This should encourage the growing number of new political parties and new candidates (witness the cast in last November's US mid-terms) to be worldly-wise in how they approach the process of political reform and change.

The greater lesson from the Levellers is that a new contract, or Agreement of the people 2024, is needed in public life today, be that in the US, Kenya, Italy or Brazil, to delineate what people want from their political systems, and to give politicians the impetus to act on this. The EU is a case in point. Survey evidence suggests that most Europeans no longer have a clear sense of what the European project means for them in a tangible way, and that it is not sufficiently clear as to what set of values should bind different nationalities to act and think in the same way as Europeans. In that respect, Brussels needs very badly to reconnect with its citizens.

The EU represents the area of greatest opportunity for Ireland, in at least four respects. Ireland should use its ''Hanseatic'' coalition to drive the EU to be more pro-growth (and less debt needy) in its institutional mindset. It should also push for the completion of the building of the eurozone, but in a way that allows sensible fiscal flexibility for euro countries rather than a common fiscal straitjacket.

As Britain leaves the EU, Ireland can become an arbiter of the English-speaking world into the EU. Then, given the vast presence of tech companies in Ireland, it needs to be much more stringent and ambitious in being a leader in data protection, cyber welfare and in the general legal infrastructure around technology.

As a final word, the socio-political carnage that Brexit has sown in Britain shows the pitfall of a country that ignores how the world around it has changed, and that refuses to adapt strategically to that change. In a changing world, the biggest risk to Ireland is that most of its institutions are suited for the 20th or even 19th centuries.

Weekly newsflow highlights recurring crises of management, recruitment and performance in healthcare, policing, the army, transport and in public utilities, to name a few. To date, many of these are dealt with on a piecemeal basis, or in some cases not at all. They all have common roots. The more the world around us changes, the more these faultlines will be exposed.

Michael O'Sullivan is author of 'The Levelling' (PublicAffairs, forthcoming), thelevelling.blog/

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