The Global Swamp
Donald Trump should export MAGA caps to Macron’s France and May’s England.
By Daniel Henninger
Maybe Donald Trump should export red MAGA caps to France and the United Kingdom. Make France Great Again. Ditto England.
The photos this week of a shell-shocked Emmanuel Macron and beyond-beleaguered Theresa May show what a heavy lift renewed greatness has become for once-great nations. How come?
With all due respect to the glories of 18th-century France, the only measure of greatness that concerns us now is the period after the devastation of World War II. Europeans rebuilt their economies from rubble and did so quickly. At the same time, they erected a welfare system to ensure social well-being, an Enlightenment idea.
It took Europe’s leaders about 40 years to see that welfare spending was eroding the growth of their postwar economies. So in 1992 they produced the Maastricht Treaty, which both mandated measures of fiscal discipline on profligate members - not least France - and created an institution called the European Union. The fiscal discipline largely failed, but the rules-making institutions of the EU flourished.
It is possible to draw a straight line from Maastricht to the mayhem this week in London over Brexit and in Paris over gasoline prices.
By now, a commentators’ consensus has emerged that the cause of these troubles is the people living in cities, towns and villages across Europe who feel the past 25 years have benefited everyone except them.
This global revelation sank in, of course, only when the reviled Donald Trump succeeded to the U.S. presidency after appealing to these presumably forgotten men and women.
What are known as “the political elites” aren’t happy with any of this. They believe that the postwar political and economic institutions created by people like them produced widespread well-being - which was true for a while - and that the path forward now requires giving them a chance to fix things for the forgotten.
They flatter themselves.
The hero of global economic growth the past quarter-century isn’t them. It’s the microchip.
Every historic burst of progress since the Industrial Revolution has depended on innovation, and I don’t mean political innovation. That hasn’t happened since John Locke.
The microchip - it is a banality to point out - has been a historic multiplier of productive possibilities. New ideas about what, where and how to do business exploded everywhere, leading to more new ideas, which created the global economy, a fantastic achievement for a tiny electronic device.
Some people, however, believe they came up losers in this economic revolution, and they are in revolt.
Let us segue to another truism today among the commentariat - that the economic and social damage endured by this discontented working class is mainly the result of the financial crisis of 2008. And let us assume there is something to this point.
Some day a young, politically neutral economist will do a comparison of the U.S. economy from 2009 to 2016 and from 2017 through midyear 2018.
A short version of this comparison is a question: How did the U.S. economy go from an OK condition in January 2017 to an intense, nationwide labor shortage and rising wages less than 18 months later?
The “sugar high” explanation is partisan obtuseness. Something more economically interesting had to have happened.
The answer likely lies in deciphering the effects of the Trump administration’s abrupt unwinding of the Obama era’s economic regulations.
The Obama years don’t necessarily bring into question the idea of regulation itself but of hyper-regulation. They overdid it, suddenly layering rules across the entire U.S. industrial landscape. The economy gagged.
Against the backdrop this week of Paris in flames and London’s Brexit struggles, our interest isn’t so much in the Obama regulations themselves as in the state of mind that produced so many of them.
Presumably each Obama regulator assumed that individually he or she was doing good. It wouldn’t have occurred to any of them that in the aggregate they and their rules were anesthetizing a fundamentally healthy economy.
This is the mandarin mind-set that has prevailed in the nations of Europe for nearly 70 years and in the European Commission for 25. They built a welfare and regulatory structure piece by incremental piece until the U.K., France, Spain and Italy choked. Germany unilaterally reformed itself in the early 2000s, and grew.
This is the mind-set that drove so many Brits to Brexit. It is the mind-set Mr. Macron was trying to undo with reforms of the French labor system until he himself succumbed with a gas tax on the middle class in the name of saving the planet.
This is the global swamp.
Oddly, the U.S. in the third year of the Trump presidency may be remembered for trying to manage the economy through tariffs, quotas and the forced immobility of labor and business. Meanwhile, the post-Obama Democrats, laughably, want “socialism.”
But that astonishing, bursting economic resurrection of the first two Trump years should stand as a case study of the good that can happen when a nation’s leaders choose microchips over mandarins.