The danger of Trump at Davos

The danger of Trump at Davos
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The White House announced that President TrumpDonald TrumpPence: Supreme Court has chance to right 'historic wrong' with abortion ruling Prosecutor says during trial that actor Jussie Smollett staged 'fake hate crime' Overnight Defense & National Security — US, Iran return to negotiating table MORE will attend the World Economic Forum in Davos, Switzerland, if the reopening of the government this week goes as planned. The forum has become the political convention of globalization, a kind of ground zero for globalized economic thought. If the World Economic Forum is the antithesis of everything Donald Trump campaigned for, why is he planning to go to Davos? It is probably for two reasons. The first is that he is going as a disrupter and a publicity seeker.

At last year’s forum, Chinese President Xi Jinping praised globalization. Xi leads a country where just about everyone in the country has benefited greatly from globalization over the past 40 years. From a 50-year-old Chinese peasant who remembers life without running water, to the hundreds of millions of people who have moved into a Chinese version of middle class life, to the more than one million people in the country who now have assets of over a million dollars, China’s citizenry as a whole benefited from globalization.

Just two months before Xi’s speech at Davos, Trump had won the presidency on an anti-globalization platform by exploiting the deep range of anger felt by the many Americans who had been left out of the country’s manhattanized globalization boom. Davos would be a perfect stage for Trump to rally his base on the false idea that the United States has gotten dramatically poorer because of globalization.

Of course, the facts show just the opposite of what Trump touts. America was, and still is, the biggest winner of globalization. China, a country that had been in abject poverty, did become much richer because of globalization. But America, which started off as the wealthiest global player after World War II, became even wealthier with globalization.

In 1980, about the time when globalization first started to become a major factor, the United States had a gross domestic product (GDP) of $2.8 trillion, while China’s was only $302 billion. By 2016, the U.S. economy had grown to $18.6 trillion, and the Chinese economy grew to $11.3 trillion. The U.S. economy grew massively during that period, even taking into account the crash of 2008.

Of course, China’s rate of growth during the same time was much higher, but that is just basic common sense. If you start with very little, you need to catch up. China needed to build steel mills and highways, and to send electricity its rural areas. The United States did all that a long time ago. The point is that the United States did not get poorer as China grew. In fact, it was quite the opposite. In a globalized world, trade — contrary to the Trumpian manifesto — is not a zero sum game.

Since China started at practically zero when globalization began, its winnings look much more impressive to the outside world than reality. In the aggregate, China has become a much wealthier country, but on a per capita basis it is still very poor compared to the United States. As an example, in 2016 China’s per capita GDP was only $15,400 compared to $57,000 per capita for America. Even Greece, the stick person of Europe with a per capita income of $26,800, is wealthier than China.

As the world moves further away from the age of manufacturing, the loss of manufacturing jobs because of automation and technology becomes an easy issue to exploit as a rallying cry against globalization, even though the connection is tenuous. Globalization had nothing to do with all the jobs lost in upstate New York by people who use to make Brownie cameras. Does anyone buy a Brownie camera anymore? Additionally, globalization has nothing to do with the department stores that can no longer compete against Amazon, or with your neighborhood supermarket, where cashiers have been replaced by scanners.

But besides being the disrupter, another reason Trump is going to Davos could be to seek common ground with Vladimir Putin and the other anti-globalist leaders. Trump with his winner-take-all real estate mindset feels more at home in Putin’s world of yesterday than in America’s globalized world of today.

Trump fails to understand that Russia, unlike the United States or China, is the globalized disrupter because it has little skin in the globalized game. Russia, with its oligarchian oil-dependent economy, never truly perceived the need to develop industry or trade that would be desired by the globalized world.

On the other hand, America’s new highly competitive technology and artificial intelligence industries need globalization — not national rivalries — in order to continue to grow. For Trump to use the global economic platform of Davos to argue otherwise does a tremendous disservice to America’s future.

Edward Goldberg is a professor of international political economy at New York University’s Center for Global Affairs and author of “The Joint Ventured Nation: Why America Needs A New Foreign Policy.” His next book is “The Globalization Manifesto.” Follow him on Twitter @EdwardGoldberg.