Across the world, the political consensus that supported the spread of globalisation finds itself under attack from populist figures from both the right and the left, who have won support by challenging the political mainstream. This raises the question, could the trends that have shaped the global economy – free trade, surging mega-cities, and the supremacy of knowledge workers – go into reverse?
However, we see the global economy adapting to match these protests. The process of change will bring more of the disaffected into the mainstream, by sharing the benefits of the globalisation, and ultimately strengthen the trends driving the Global Cities over the long-term.
As austerity has become widespread, globalisation has become a focus of criticism in an increasingly divided political debate. The nature of those divisions have been well illustrated in the 2016 U.S. Presidential race and the U.K.’s EU referendum.
In the U.S. election, Republican nominee, Donald Trump, successfully mobilised voters concerned over immigration, and frustrated by growing income inequality. Another source of tension is the decline of U.S. heavy industries, and the rise of new tech and finance jobs that typically require a college degree. These factors also underpinned the ‘leave’ vote in the U.K.’s EU referendum. The Brexit vote in the U.K. is the latest, and perhaps the most spectacular, example of how the disaffected can use the ballot box to challenge globalisation.
Conversely, the runner-up for the Democrat nomination, Bernie Sanders, successfully appealed to younger voters who felt shutout from the economic mainstream. Large college debts, temporary work contracts, and high house prices have left some millennials railing against the establishment. Thus a younger demographic of voters rallied to a candidate opposing globalisation.
Elections in 2017 in France, Germany and The Netherlands could uncover further evidence that the populists are gaining political ground.
"FOR TOO LONG THE ISSUE OF BRINGING MORE YOUNG PEOPLE INTO THE ECONOMIC MAINSTREAM VIA HOME OWNERSHIP HAS BEEN IGNORED, AND NOW WE ARE EVEN SEEING THE FALLOUT IN THE POLLS"
SPREADING THE BENEFITS
However, globalisation has faced similar challenges before: from the volatile politics of the 1920s and 1930s, to the trade union militants of the 1970s. Globalisation saw off these threats and resumed its onwards march, and did so by adapting to win over people by spreading the benefits.
This will be achieved by courting the alienated, thus building a new political consensus with a wider support base. Integrating the disaffected into the economic network of the Global Cities will be central to this process.
If greater curbs on immigration are actually introduced, they will actually increase the focus of companies on attracting and retaining high skilled workers, particularly millennials. If it becomes more difficult to bring people in from abroad, the premium commanded by home-grown talent increases.
Improving the lot of former heavy-industry centres will be more challenging, although very low government bond yields will improve the chances of state assistance. Some former-factory towns could be linked by high speed rail to Global Cities, and be redeveloped as large dormitory suburbs. Others will benefit from ‘near shoring’ back office jobs. However, it is building links with the Global Cities (and thus globalisation) that will deliver regeneration.
Critical to winning back disaffected millennials will be improving their job security and quality of life. On jobs, ironically the pendulum of the market economy is moving in their favour, as the question of how to attract and retain this demographic is rising up the corporate agenda. Moreover, as we enter the age of self-driving vehicles, drones, and artificial intelligence, the younger generation will become central to the economy, thanks to the ease with which they interact with technology. Time is on the millennials’ side.
HOMES FOR MILLENNIALS
For quality of life, housing is a major issue. Many millennials feel excluded from the globalised economy because a basic step towards joining the propertied classes, namely home ownership, continues to move further out of reach for them in many of the Global Cities.
This requires a public policy response to accelerate the planning process, incentivise development of affordable inner city homes, and speed up the recycling of former industrial sites as mixed-use districts. The demand is there for new city homes, as is the capital to fund the process, it is a matter of removing the barriers.
For too long the issue of bringing more young people into the economic mainstream via home ownership has been ignored, and now we are even seeing the fallout in the polls. It is time to build more homes.