Reality Bites

January 20, 2017

The phoney war ended this week.

From September 1939 to May 1940, Britain and its allies were technically at war with Germany. Hitler, however, was focused eastward. For eight months – coinciding with a warm Indian Summer– Western Europeans lived in relative peace and quiet. Though the world was irrevocably changed, the consequences remained hidden for a while, leaving many to look back on the “phoney war” of 1939-1940 with a kind of nostalgia.

Beginning with the “Brexit” referendum last June and continuing with the election of Donald Trump, Britain and the United States have been living in a similarly ignorant limbo. Voters chose to shake up the relationships and institutions built by Western allies following  the Second World War – a system underpinned by intergovernmental cooperation, limited economic coordination, and free(-ish) trade. Yet while the coming transition looms large, we still live under the tried-and-tested postwar regime for now.

That has started to change with Theresa May’s Brexit speech on Tuesday and Trump’s inauguration today. More countries may come later: anti-establishment populist parties are expected to perform well in upcoming elections in the Netherlands, France, and Germany.

As they gain real power, relatively inexperienced populist leaders on both sides of the Atlantic will face pressure to fulfill their campaign promises – including some that are not particularly well-grounded in reality. Many of the most dubious promises share a common theme: the idea of getting something for nothing from other countries.

The British Government’s strategy has been, to quote from a government aide’s notes, “have cake and eat it.” That meant achieving freedom from the parts of the EU it didn’t like (such as free movement of people) while retaining privileged access to the European single market. Despite seasoned observers’ warnings that such an agreement was never in the cards, it took the government the better part of a year to acknowledge that such a sweetheart deal was a non-starter with the EU. May, on Tuesday, pivoted to a new tradeoff-free construction: Britain will reassert control over migration while becoming a “great global trading nation.” It remains anathema to admit that regaining immigration controls entails losing the favorable treatment Britain gets in other areas.

Trump has fallen into the same traps. Some cake-and-eat-it promises are so egregious that they verge on silly, like the idea of building a border wall and forcing Mexico to pay for it. Others are more important but less evident. For instance, levying tariffs on China or Mexico might indeed repatriate some jobs. But a tariff is just economists’ jargon for a tax – a tax that will cut profits for foreign producers at the cost of higher prices at home. What’s more, no one in Trumpworld seems willing to acknowledge the near-certainty of other countries retaliating against any new trade restrictions with their own measures.

In reality, most decisions in the realm of international politics and economics involve some form of tradeoff. Of course, we expect politicians to put a positive spin on their platforms and promises, maximizing benefits and minimizing costs. But what is happening now goes further: In Britain, tabloids have denounced as traitors people who identify logistical challenges posed by Brexit. In the United States, Trump has mostly avoided offering any detailed proposals at all. In both countries, there is denial that tradeoffs exist.

Populist leaders on both sides of the Atlantic are also making a concerted effort to delegitimize the sort of expert analysis meant to make these tradeoffs clear to the voting public. In response to dire economic projections, Brexit-backing cabinet minister Michael Gove notoriously announced that, “people in this country have had enough of experts.” Trump has dismissed all manner of establishment analysis, culminating in his battle with the intelligence community over the Russian hacking scandal.

Ultimately, though, the phoney war cannot continue indefinitely. As Wile E. Coyote discovers every time he runs off the end of a cliff, gravity always catches up.

Beginning this week, we begin to face the consequences of what the voters opted for – many without realizing it: Trump and Brexit represent a fundamental rejection of the postwar establishment that, despite its many problems, has fostered a (relatively) peaceful international system predicated on norms, institutions, and cooperation in addition to the ever-present forces of national competition. We are going to replace that with a return to the more nationalist and mercantilist postures of a bygone era, freeing ourselves from the fetters of international agreements.

That might be what the people chose – but it will not come without cost. The real question now is, will the costs exceed the benefits? And, if they do, who will the voters blame.