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1/7/17

Global Economy: How Bad Can It Get? Prepare For Economic Nationalism - by Kurt Huebner

2016 was already quite miserable in so many respects; 2017 promises to get even worse. Looking at the chamber of horrors President-elect Trump is putting together and assuming that he will indeed prove at any price that he is the maverick President he promised to be during the campaign, then Washington D.C. will turn into the capital of evil, kind of.

For a long time, political observers from the left analyzed political and economic developments through the lenses of neoliberalism. This concept had at its core the idea that only unfettered markets can deliver growth, jobs, income and wealth. Getting rid of ‘red tape’ not only in the realm of product regulation but also and more importantly in that of environment, labor markets and financial industries was the hallmark for any neoliberal project in the world of western capitalism. This project has come to an end.

2017 will be about economic nationalism where crude elements of growth-enhancing fiscal policy programs go hand in hand with mercantilist and protectionist policies that will erect barriers not only for the flow of goods and services but also for labor.

The scripts for a policy turn from forms of neoliberalism to economic nationalism are already drafted – not only in the US but also across Europe. At this point, economic nationalism is only openly active in Hungary and, one can argue, in the making in Poland. In most European societies, economic nationalism has not yet arrived and, so far, is the hymn of populist opposition parties alone.

An optimistic scenario could make the case that this will also be the state of affairs during 2017. The victory of Alexander Van der Bellen in Austria’s presidential election is the lightning rod for ways in which political populism and economic nationalism can be stopped from becoming official policy. Others make the point that this outcome should be seen as an exemption from the emerging populist trend, and that the Freedom Party in Austria may benefit from Van der Bellen’s victory as voters will be stick to their policy preferences when it comes to general elections where the victor has real power to make political and policy changes.

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