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Globalisation, post-Trump

Thomas Piketty

Let it be said at once: Trump’s victory is primarily due to the explosion in economic and territorial inequality in the United States over several decades and the incapacity of successive governments to deal with these. Both the Clinton and the Obama, administrations frequently only went along with the move to liberalisation and sacralisation of the market launched under Reagan, then Bush, father and son; at times they even exacerbated them. The financial and commercial deregulation carried out under Clinton is an example. The suspicion of proximity with finance and the inability of the Democrats’ politico-media elite to learn the lessons from the Sanders vote sealed the deal. Hillary won the popular vote by a whisker (60.1 million votes as against 59.8 million for Trump, out of a total adult population of 240 million), but the participation of the youngest and the lowest income groups was much too low to enable key States to be won.

The tragedy is that Trump’s programme will only strengthen the tendency to inequality. He intends to abolish the health insurance laboriously granted to low-paid workers under Obama and to set the country on a headlong course into fiscal dumping, with a reduction from 35 per cent to 15 per cent in the rate of federal tax on corporation profits, whereas to date the United States had resisted this perpetual race against time which came from Europe. In addition, the increasing ethnicisation in politics in America does not bode well for the future if new compromises are not found. Here is a country where structurally 60 per cent of the white majority votes for one party while over 70 per cent of the minorities vote for the other and where the majority is on the verge of losing its numerical superiority (70 per cent of the votes cast in 2016, as compared with 80 per cent in 2000 and 50 per cent forecast in 2040).

The main lesson for Europe and the world is clear: as a matter of urgency, globalisation must be fundamentally re-oriented. The main challenges of our times are the rise in inequalities and global warming. We must therefore implement international treaties enabling us to respond to these challenges and to promote a model for fair and sustainable development. Agreements of a new type can, if necessary, include measures aimed at facilitating exchanges in goods and services. But the question of liberalising trade should no longer be the main focus. Trade must once again become what it should never have ceased to be: a means in the service of higher ends. In concrete terms, there must be an end to the signature of international agreements reducing customs duties and other commercial barriers without inclusion in the same treaty, and as from the outset, of quantified and binding measures to combat fiscal and climate dumping. For example, there could be common minimum rates of corporation tax and targets for carbon emissions which can be verified and sanctioned. It is no longer possible to negotiate trade treaties for free trade with nothing in exchange.


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