Globalization, inequality and polarization (II)

PART 2

People no longer trust the traditional parties because they have been dissatisfied for a long time. Politics no longer offers hope.”

Gilles Lipovetsky

In the first part of this series, I discussed how the weariness and polarization of society can lead countries to fall into the hands of authoritarian governments that undermine democratic institutions. I analyzed the case of Poland today, where the population has given preference to a government that exploits polarization to increase its power. I commented on the case of Germany in the period between the wars, where after an economic crisis that generated great social polarization, the young German democracy collapsed, giving way to Nazism, which resulted in the death of millions of people, leaving Germany Totally destroyed at the end of World War II.

The victory of the left in Chile at the end of last year, two years after the start of the violent protests by the population, shows that even in the country with the highest growth in Latin America, something has gone wrong. Despite the great advances in economic matters in that country, a good part of the Chilean population considers that it has been relegated and is willing to seek drastic change, feeling that it has nothing to lose. This became clear during the electoral contest, specifically in its second round, which took place between the parties of the extreme right and of the extreme left that left aside the traditional parties of the center. In his essay Sismo Social, Felipe González González explains that one of the main factors of this resentment of the Chilean population is the poor distribution of income. According to data from the World Bank, even though per capita income in 2020 amounted to an average of 13,332 dollars per year, 20% of the population receives an income per person of less than 140 dollars per year. On the other hand, even when there are public state universities, the cost of these is similar to that of private universities, so the debt of young university students represents a very high burden. Among the Chilean population there are also complaints about the health system and about insufficient pensions (which is bad news for our country that replicated the Chilean pension system). All this contributes to the fact that an important part of the population, especially young people, feel marginalized from what until now was known as the “Chilean Miracle”. Many feel their aspirations are dashed and are disappointed in the government and the elites that have run the country.

The elected candidate Gabriel Boric has a great opportunity to have the support, until now unconditional, of a good part of the population, which is fed up with the status quo because they feel marginalized. However, he does not have it easy; As we well know, great expectations can be generated, but this does not guarantee that they will be met. Chile has had left-wing governments such as Ricardo Lagos and Michele Bachelet, who have been very conscious of fiscal discipline and respect for the rule of law, which allowed the attraction of foreign and local investment. It is in the hands of the new Chilean president that polarization is not exploited politically to the detriment of the advances (not insignificant) of recent decades.

Donald Trump’s victory in the 2016 elections shows a weariness with traditional politics, with globalization and with the elites that have governed for decades. Many of the auto and steel industry workers in the Rust Belt area (which includes parts of the states of Pennsylvania, Ohio, West Virginia, Kentucky, Indiana, Michigan, Illinois and Wisconsin) who were affected their jobs due to the 2008 crisis and the transfer of production to China and Mexico, voted in favor of Trump. On the other hand, the attempt by anti-democratic forces encouraged by Trump himself who sought to take over the Capitol a little over a year ago, shows how polarization becomes an instrument of manipulation for rulers with dictatorial ambitions, who in order to stay in power seek to destroy democratic institutions, using as a means the anger of a part of the population.

This anger has crystallized into a hatred against globalization. Here it is worth making some clarifications; Globalization has brought immense benefits in both developed and developing countries. As Angus Deaton (Nobel Prize in Economics in 2015) comments in his book Thinking about inequality: “Thanks to globalization, world poverty has been drastically reduced. The number of poor people fell substantially from 1981 to 2013, while inequality in the world has also fallen. Very poor people have moved to the middle and life expectancy has improved substantially.” However, most economists admit that despite the global improvement, inequality within each country has increased. Thomas Piketty in his famous book Capital in the 21st Century argues that in the United States the segment that benefited the most from income growth from 1970 to 2007 was the richest 10% of the population, which absorbed three quarters of the economic growth. . Dani Rodrick comments in his article Populism and the Economy of Globalization: “Globalization has exacerbated the differences between capital and labor, between skilled and unskilled workers, between internationally mobile professionals and local producers, as well as between elites and the people. common”. These claims are supported by economic theory. The Stolper-Samuelson Theorem predicts adverse income distribution consequences for unskilled workers within each country. In other words, when a country specializes in producing and exporting the products in which it has a comparative advantage, the remuneration of the other sectors suffers. This fact has important political repercussions. Hellen Milner in her article Globalization, Populism and the Decline of the Welfare State considers that the antagonism between “winners” and “losers” explains that globalization has caused an increase in support for nationalist and far-right parties in Europe . He comments that the vote in favor of Brexit in the United Kingdom was greater in areas affected by international trade, while in the United States, the districts most affected by international competition, have been replacing their moderate representatives in Congress with representatives increasingly more extremists.

We cannot ignore the fact that the profound social differences within each country have worsened (even when paradoxically the standard of living of the population as a whole has improved) and this has been an important cause of the polarization that we observe today at the world. Another clear fact is that the anger of those who feel marginalized is exploited politically through a narrative against globalization and the economic policies that have prevailed in most countries for several decades.

In the third and final part of this series, I will comment on the unfulfilled expectations of various segments of the population in the face of the feeling of being left behind in opportunities, on the risks of exacerbating the polarization that already exists in society, and on the importance of implementing real solutions and not offer promises that are impossible to keep.

Note: even though it is not the specific subject of this article, the humanitarian tragedy that Ukraine is facing cannot go unnoticed. Although it is necessary to understand the causes of the reaction of the Russian government and the deep political differences between the different regions in Ukraine (which deserves a deeper analysis), it is totally reprehensible that in the XXI century, the Russian government makes use of military intervention and the murder of innocent people, to fulfill its geopolitical objectives.

The author

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