He’s right, the economy is sick – and businesses like Trump’s are part of the disease

Mariana Mazzucato in The Guardian

Trump won because he unashamedly stood as the champion of the dispossessed. More than the 16 Republican rivals he left in his wake, and more than the Democratic party standard-bearer he defeated, he led the cry of those who felt they had been left behind by globalisation. He channelled and inflamed inchoate anger, inflamed racial divisions and exploited a sense of burning injustice at a system “rigged” against the little guy. He was the self-styled winner who knew how to play the system, the strong man who alone could fix it.






To Trump, as to the Brexiteers, the enemy was the outsider: the Mexicans, the Chinese (the biggest “theft” in human history), Muslims, even Nato allies. His economic and security messages melded together: it was time to circle the wagons, to put America and Americans first. Trump won because he offered what seemed to the ears of many a plausible narrative about the failures of US economic policy that left so many behind– failures stretching back three decades before the collapse of the economy in 2008.

But while he was forceful about the consequences of a sick economy, his diagnosis could not be more wrong. He won by blaming external forces, trade and immigration. The truth lies much closer to home. It is the actions of US businesses, like his own, that lie behind the failure of the economy to deliver rising living standards for ordinary Americans. They have made money by extracting value, not creating it. And the problem has only become worse since the 2008 crisis.

The shareholder value revolution of the 80s created a corporate governance model that rewards quarterly returns over investments in the productive capacity of companies. Companies increasingly spend their profits, now at record levels, on buying back shares in order to boost stock prices, stock options and executive pay. This has led to a financialised economy, which many of Trump’s policies – including a lowering of corporate income tax – will only worsen.

Until the 80s, wages kept up with productivity, but since then they haven’t, and unions have weakened. As wages failed to keep pace with living costs, personal debt increased to cover the gap.

This rise in personal indebtedness has given life to new types of financial instruments that suck blood out of the system, leading to an increasingly financialised economy. The growth in size of financial intermediation as a percentage of GDP has outpaced growth in the rest of the economy.

The globalisation of capital (in contrast to labour) has meant that when growth falters capital can go elsewhere. Indeed, Trump’s behaviour – setting up businesses, letting them fail, avoiding paying suppliers, using bankruptcy laws to avoid taxes for decades, then setting up another business somewhere else – is the perfect symbol of this asset-stripping form of capitalism.

It is this breaking of the unwritten contract between capital and labour – that is, the sense of shared purpose and shared reward between the American worker and his or her employer and an associated failure to support American workers as they adapt to structural and technological changes - that lies at the heart of the problem. It is not the robots that are the enemy.

The reckoning that should have happened in 2008 never came. Not enough has been done to reform the model of capitalism which is itself responsible for Trump’s rise. We can only hope that his election will finally open the eyes of his opponents as to why new ideas are needed.

For this is not the only way. Trump sees the role of the state as limited to protectionism and funding basics like infrastructure, but what is needed is a much more active state, able to address societal problems through investments in innovation, in order to stimulate private investment and give direction to growth.

We need a decisive shift towards investment-driven growth, replacing the current consumer-driven, credit-fuelled model which adds to the stress of the most vulnerable. Tackling inequality should be a central objective of economic policy, for economic reasons every bit as much as social reasons. We must reconnect the company with society, and instil a sense of broader obligation, rewarding value creation over value extraction. In other countries such as Germany and Scandinavia a more participatory form of stakeholder capitalism gives workers a role on company boards.

Trumpism might be a uniquely American political expression, but the dysfunctions in American capitalism that have given rise to it are not. Though the specifics of the solutions may differ, European models of capitalism have many of the same fissures. Now, more than ever, Europe must find its own distinct language and policies if we are to solve the political, social and economic crisis on this side of the Atlantic .

Why you’re wrong to think that your house will finance your retirement

Treating houses as a financial instrument leads to an undiversified investment portfolio, with a large proportion of wealth concentrated in a single asset

Satyajit Das in The Independent


According to English writer Virginia Woolf, a woman in Victorian England needed money and a room of her own in order to write. In the modern world, housing itself has become a work of fiction.
A house provides shelter and a dwelling place. But increasingly this simple consumption good has been converted into a financial asset or investment as well as instrument of policy.

Governments subsidise home ownership in different ways. They may provide tax benefits such as tax deductions for mortgage-interest payments or lower taxes on capital gains from the sale of a residence. Common concessions include lower property taxes or stamp duty of property transfers as well as direct assistance for the purchase of homes. It also includes housing finance on preferential terms.

The subsidies mean that where they can, people buy multiple homes. The affluent own holiday homes which stay empty for much of the year, while less well-off are made to make do with sub-standard accommodation or, in the case of the poor, no homes at all.

Houses become larger. Virginia Woolf would have recognised these MacMansions: “Those comfortably padded lunatic asylums which are known, euphemistically, as the stately homes of England.”
Over-investment in housing is economically inefficient. Unlike businesses, houses once constructed generate limited income, profits, employment or investment.

Excessive housing investment also creates an inflexible labour force, reducing the mobility of workers. The ability to follow employment opportunities is restricted by fluctuations in house prices, the lack of liquidity of the housing market and high transaction costs (buying and selling can cost 5-10 per cent of the value of the house). It also limits wage flexibility, as workers are constrained by their mortgage commitments.

The replacement of company or government-funded retirement with self-funded arrangements means that houses have become a means for wealth creation. As homeowners pay off their mortgages, their home becomes a major financial asset. But residential property produces no income even where they increase in value. Maintenance costs, utility bills and property taxes mean that houses require rather than provide cash.

Homeowners must generate income by borrowing against their home to finance consumption and eventually finance retirement. The strategy requires realising the home equity (the difference between the value of the house and the mortgage debt outstanding) by either borrowing or selling the property, moving into a smaller house or a rental.

Treating houses as a financial instrument leads to an undiversified investment portfolio, with a large proportion of wealth concentrated in a single asset – the home, which does not produce income.

Investors also buy houses and apartments with borrowed money to rent out. The income from property is rarely higher than that on other income-producing investments. Where borrowed money is used, the rent may not fully cover interest and other outgoings. There is speculative reliance on ever-increasing property prices to boost returns or repay the debt used to finance the property leaving a profit for the buyer.

Reliance on houses creates exposure to volatile house prices. As the global financial crisis illustrated, prices can be affected by a confluence of adverse events – economic cycles, the availability of credit and demographics where large cohorts may retire at the same time. Price fluctuations are exacerbated by the illiquidity of the asset.

Many economies now rely excessively on the housing market. Housing investment sustains economic growth. Unlike many industries, it is largely domestic, driving employment, income and economic activity. In The Age of Turbulence, Alan Greenspan approvingly quotes economics columnist Robert Samuelson’s assessment of his policies in the early 2000s: “The housing boom saved the economy… Americans went on a real estate orgy. [Americans] traded up, tore down and added on.”

Governments continue to promote housing and home ownership using rising wealth from home ownership to mask lack of growth or declines in real income levels and uncertain employment for the population. But the policy is paradoxical.

Current policy, lower interest rates and increased availability of housing finance, boosts the price of existing housing stock rather than increasing housing construction. If it succeeds, then higher house prices ironically make housing unaffordable for large portions of the population.

Where the policy fails, an unwinding housing bubble is difficult to manage, as evidenced by events in the US, Ireland and Spain.

Economic activity slows as individuals and investors suffer large falls in wealth. Governments suffer revenue losses from lower property taxes. At the same time, government expenditures may rise as savers are forced to turn to available social services due to falling income and wealth.

Banks can find their solvency affected quickly by a fall in houses prices because of their high exposure to mortgage loans or property as security, requiring government support.

A considered debate about housing is needed to improve the structure of economies. It may also have an unexpected collateral benefit, improving TV entertainment beyond shows about the property or housing ladders and lift the standard of dinner table conversation above the level of: “Do you know how much they got for the house down the street?”

Neoliberalism: the deep story that lies beneath Donald Trump’s triumph

George Monbiot in The Guardian

The events that led to Donald Trump’s election started in England in 1975. At a meeting a few months after Margaret Thatcher became leader of the Conservative party, one of her colleagues, or so the story goes, was explaining what he saw as the core beliefs of conservatism. She snapped open her handbag, pulled out a dog-eared book, and slammed it on the table. “This is what we believe,” she said. A political revolution that would sweep the world had begun.

The book was The Constitution of Liberty by Frederick Hayek. Its publication, in 1960, marked the transition from an honest, if extreme, philosophy to an outright racket. The philosophy was called neoliberalism. It saw competition as the defining characteristic of human relations. The market would discover a natural hierarchy of winners and losers, creating a more efficient system than could ever be devised through planning or by design. Anything that impeded this process, such as significant tax, regulation, trade union activity or state provision, was counter-productive. Unrestricted entrepreneurs would create the wealth that would trickle down to everyone.

This, at any rate, is how it was originally conceived. But by the time Hayek came to write The Constitution of Liberty, the network of lobbyists and thinkers he had founded was being lavishly funded by multimillionaires who saw the doctrine as a means of defending themselves against democracy. Not every aspect of the neoliberal programme advanced their interests. Hayek, it seems, set out to close the gap.

He begins the book by advancing the narrowest possible conception of liberty: an absence of coercion. He rejects such notions as political freedom, universal rights, human equality and the distribution of wealth, all of which, by restricting the behaviour of the wealthy and powerful, intrude on the absolute freedom from coercion he demands.

Democracy, by contrast, “is not an ultimate or absolute value”. In fact, liberty depends on preventing the majority from exercising choice over the direction that politics and society might take.

He justifies this position by creating a heroic narrative of extreme wealth. He conflates the economic elite, spending their money in new ways, with philosophical and scientific pioneers. Just as the political philosopher should be free to think the unthinkable, so the very rich should be free to do the undoable, without constraint by public interest or public opinion.

The ultra rich are “scouts”, “experimenting with new styles of living”, who blaze the trails that the rest of society will follow. The progress of society depends on the liberty of these “independents” to gain as much money as they want and spend it how they wish. All that is good and useful, therefore, arises from inequality. There should be no connection between merit and reward, no distinction made between earned and unearned income, and no limit to the rents they can charge.

Inherited wealth is more socially useful than earned wealth: “the idle rich”, who don’t have to work for their money, can devote themselves to influencing “fields of thought and opinion, of tastes and beliefs.” Even when they seem to be spending money on nothing but “aimless display”, they are in fact acting as society’s vanguard.

Hayek softened his opposition to monopolies and hardened his opposition to trade unions. He lambasted progressive taxation and attempts by the state to raise the general welfare of citizens. He insisted that there is “an overwhelming case against a free health service for all” and dismissed the conservation of natural resources.It should come as no surprise to those who follow such matters that he was awarded the Nobel prize for economics.

By the time Mrs Thatcher slammed his book on the table, a lively network of thinktanks, lobbyists and academics promoting Hayek’s doctrines had been established on both sides of the Atlantic, abundantly financed by some of the world’s richest people and businesses, including DuPont, General Electric, the Coors brewing company, Charles Koch, Richard Mellon Scaife, Lawrence Fertig, the William Volker Fund and the Earhart Foundation. Using psychology and linguistics to brilliant effect, the thinkers these people sponsored found the words and arguments required to turn Hayek’s anthem to the elite into a plausible political programme.

The ideologies Margaret Thatcher and Ronald Reagan espoused were just two facets of neoliberalism. Photograph: Bettmann/Bettmann Archive

Thatcherism and Reaganism were not ideologies in their own right: they were just two faces of neoliberalism. Their massive tax cuts for the rich, crushing of trade unions, reduction in public housing, deregulation, privatisation, outsourcing and competition in public services were all proposed by Hayek and his disciples. But the real triumph of this network was not its capture of the right, but its colonisation of parties that once stood for everything Hayek detested.

Bill Clinton and Tony Blair did not possess a narrative of their own. Rather than develop a new political story, they thought it was sufficient to triangulate. In other words, they extracted a few elements of what their parties had once believed, mixed them with elements of what their opponents believed, and developed from this unlikely combination a “third way”.

It was inevitable that the blazing, insurrectionary confidence of neoliberalism would exert a stronger gravitational pull than the dying star of social democracy. Hayek’s triumph could be witnessed everywhere from Blair’s expansion of the private finance initiative to Clinton’s repeal of the Glass-Steagal Act, which had regulated the financial sector. For all his grace and touch, Barack Obama, who didn’t possess a narrative either (except “hope”), was slowly reeled in by those who owned the means of persuasion.

As I warned in April, the result is first disempowerment then disenfranchisement. If the dominant ideology stops governments from changing social outcomes, they can no longer respond to the needs of the electorate. Politics becomes irrelevant to people’s lives; debate is reduced to the jabber of a remote elite. The disenfranchised turn instead to a virulent anti-politics in which facts and arguments are replaced by slogans, symbols and sensation. The man who sank Hillary Clinton’s bid for the presidency was not Donald Trump. It was her husband.

The paradoxical result is that the backlash against neoliberalism’s crushing of political choice has elevated just the kind of man that Hayek worshipped. Trump, who has no coherent politics, is not a classic neoliberal. But he is the perfect representation of Hayek’s “independent”; the beneficiary of inherited wealth, unconstrained by common morality, whose gross predilections strike a new path that others may follow. The neoliberal thinktankers are now swarming round this hollow man, this empty vessel waiting to be filled by those who know what they want. The likely result is the demolition of our remaining decencies, beginning with the agreement to limit global warming.

Those who tell the stories run the world. Politics has failed through a lack of competing narratives. The key task now is to tell a new story of what it is to be a human in the 21st century. It must be as appealing to some who have voted for Trump and Ukip as it is to the supporters of Clinton, Bernie Sanders or Jeremy Corbyn.

A few of us have been working on this, and can discern what may be the beginning of a story. It’s too early to say much yet, but at its core is the recognition that – as modern psychology and neuroscience make abundantly clear – human beings, by comparison with any other animals, are both remarkably social and remarkably unselfish. The atomisation and self-interested behaviour neoliberalism promotes run counter to much of what comprises human nature.

Hayek told us who we are, and he was wrong. Our first step is to reclaim our humanity.

Does Trump’s win mean that progress is history?

David Mitchell in The Guardian


A fortnight ago, when the clocks went back, a joke was doing the rounds in various forms. They all went something like: “Don’t forget to turn the clocks back this weekend. Unless you voted for Brexit, in which case you’ve already turned them back 30 years.”

These obviously weren’t pro-Brexit jokes. The notion of turning the clock back is not supposed to connote a return to the good old days or a restoration of youth: it signifies regression, progress reversed, a deliberate worsening. So an obvious implication is that their writers think, and think that most people think, that in general things get better over time.

Well, milk doesn’t. And look at the natural world: things age and die and rot. Or grow and infest and destroy. And sometimes they germinate and bloom. They don’t necessarily get worse, I’m not saying that; but they don’t always improve, either.

Technology confuses this, because that seems to be on a pretty steady upward graph, though it has its blips: in Europe, central heating had a chilly hiatus between the fourth and the 19th centuries. And this whole technological up-graph, from the discovery of fire onwards, may get retrospectively flipped into a huge down-blip in overall human fortunes if it transpires we were gradually making the planet uninhabitable. It’s possible that everything any of us has done since we first started scrabbling around for flint has been a mistake.

You may sense from the last sentence that I’m in a bad mood. When I recently expressed disquiet on Twitter at Donald Trump’s election victory, one respondent said: “You should have been afraid months ago, by now [you should be] slipping into misanthropic apathy.” It seemed like an excellent suggestion.

I’d been hoping Hillary Clinton would win, as you probably were, unless my evaluation of the Observer readership has descended to pollster levels of accuracy. Though, for me, it was mainly a hope that Donald Trump would lose. I didn’t have strong feelings about his opponent. She seemed OK, but then people would darkly say things beginning “Of course you realise…”, the end of which I never properly heard, focused as I was on avoiding the social embarrassment of looking like I didn’t realise whatever it was.

It’s like when I’m introduced to people – I never catch their name because I’m so anxious not to screw up the handshake. “Just look like you realise, for God’s sake!” my brain always hissed over the details. “Everyone else here seems to have realised. You’re an educated person who realises all the complicated stuff that needs to be realised. You can Google it later.”

I never Googled it later, which turns out to have been an efficient non-use of time. Nevertheless, I assembled a vague sense that Hillary wasn’t all that, but at least she hadn’t said that Mexicans are rapists. If there were terrible things about her, she had the grace to keep them secret rather than proclaim them from a podium. Which, under the circumstances, seemed to me a good enough reason to make her the most powerful person on earth. Then I went back to watching Trump.

Trump is so watchable – that’s surely something his supporters and detractors can agree on. It’s not the hair, it’s not the extremist rhetoric, it’s the sheer magnetism of his self-satisfaction. The density of his self-joy is so great it drags your eyes towards it like galactic debris to a black hole. When he puts on a statesmanlike face, you just know his inner monologue is delightedly singing “My amazing face looks so statesmanlike right now!” This is what Ed Miliband never grasped: it’s not about being convincing, it’s about relishing the role.

If politics were just a reality TV show (rather than mainly a reality TV show), Trump would never get voted out. So perhaps it’s surprising that he polled fewer votes than Clinton – though not quite as surprising as the fact that he will become president despite this.
  Illustration by David Foldvari.

Trump’s win hit me in several ways. First, it denied me his defeat scene. I wanted to see that. His character seemed designed expressly for that sort of comeuppance, as surely as the diner redneck in Superman II. I was desperate to see him spun round on his bar stool, all scared. It really feels like a missed opportunity, for him as much as everyone else.

Second, it robbed me of a comforting certainty: he can’t win – he’s too awful. That’s the sentiment I’ve been vacuously exchanging with people for months: “Surely he can’t win,” one of us says. “I know,” says the other. I’ll miss that even though I now regret every time it happened. “It would be a disaster,” was the consensus among me and other out-of-touch liberals, even more so than over Brexit.

And third: I’ve started to look on the bright side and it makes me despise myself. Because, frankly, “It would be a disaster” is much easier to live with than “It willbe a disaster” or “This is a disaster”. So I fail to follow through on my certainty. A mixture of apathy and fear-avoidance extorts a sickly optimism from my brain.

Maybe he didn’t mean what he said; maybe the Republican party will restrain him; politicians never get much done anyway; maybe it’ll all be fine. This either makes me an overdramatising hypocrite a few days ago, or a reality-denying fool now. So I feel lazy, stupid and humiliated by the disturbance to my complacency, as if someone had burst in while I was eating a cream cake in the bath.

I am bewildered by everyone’s conviction that anyone who disagrees with them has been misinformed. Another response to my worried tweet mentioned an article I’d linked to about Trump in the New Yorker: “That’s like reading about Obama on the KKK newsletter,” they told me. Is it? I really don’t think it is. But they seemed so much surer that I’m wrong than I am that I’m right. I’m enough of a historian to understand the insecurity of the lines of communication between what I read has happened and what actually has, but not enough to know what to do. Should I go to that place in Kew?

Civilisations, like investments, can go down as well as up – that’s never been clearer. Trump has routed the Whig interpretation of history along with the metropolitan liberal elite. Things don’t always get better over time. But I’m grateful to have lived through an era when it was still widely assumed that they did.

Narendra Modi is a fraud

Markandey Katju - former Indian Supreme Court judge

Trade is the lifeblood of humanity. Closed doors lead to closed minds

Will Hutton in The Guardian

For 70 years, the US and Britain have underwritten the open global trading system, partly because of a stubborn and correct belief in the merits of free trade, partly out of self-interest as beneficiaries of globalisation and partly because, strategically, it spreads democracy, peace and capitalism.

They have spearheaded successive rounds of tariff cuts and multilateral trade deals and stood by, first, the General Agreement on Tariffs and Trade (Gatt) and its successor, the World Trade Organisation, to keep the system honest. They have cut regional trade bargains, promoted the European single market and, above all, kept their markets open despite other countries, notably China, gaming the system for their own narrow advantage.

The consensus in both countries was that the wider gains transcended any localised pain. No longer. The Americans voting for the anti-trade, America first Trump have consigned all that to history and the unintended consequence of Brexit will mean the same for Britain. The system that underpinned our collective prosperity is about to be trashed.

It brought national and international benefits, including an avalanche of inward direct investment into both countries, powerful international financial and business service sectors, rising global living standards and the economic and democratic transformation of Asia. But both countries’ manufacturing sectors have taken disproportionately heavy hits. Drive round the ailing industrial towns of south Yorkshire or Ohio and compare the economic and social landscape with that of Düsseldorf, Munich, Shanghai or Shenzhen. Decade of consistent manufacturing trade deficits have exacted a cruel toll.

This year, working-class voters across America and Britain’s rotting industrial heartlands delivered their verdict. No more plants moving abroad. No more closures because of cheap imports. No more sales of great companies to foreigners. No more stagnating blue-collar wages. No more immigration. It may be that there are jobs and great prospects aplenty in the burgeoning tech and service sectors in the big cities driven by global trade, but they don’t care. They are hurting and nobody has taken decisive action to help them. The votes for Trump and Brexit mark the end of an era and a new dark age of closure, protectionism and nationalism.

Leading Tory Brexiters will insist that this is a travesty of their position; they want Britain to access more global trade and not be imprisoned, they crazily claim, by the confines of the slow-growing European Union and its bureaucratic inability to cut aggressive trade deals with the rest of the world. They live in a dreamland if they feel that the rest of the world is more committed to free trade than Europe, while EU membership did not hold back Germany from being among the world’s major exporters.

In any case, apart from the promised closure of borders to immigrants, that is not what their voters want, as Nigel Farage always better understood than any of his Tory allies he cordially despises. Working-class voters in south Yorkshire and the West Midlands want the same as their counterparts in Pennsylvania, Michigan and Wisconsin. After all, it was those three states, with their tiny 100,000 vote margin, which gave Trump the electoral college votes for victory. He might be a billionaire, but he is, or at least styles himself, a “blue-collar billionaire”. Blue-collar (post-)industrial workers don’t benefit from free trade and immigration, as he has consistently said for 18 months, in the teeth of opposition from the Republican mainstream who remain free traders. His movement, as he called it, wants to stop both.

‘Build that wall” – along the US-Mexican border – was one of the most insistent chants at his rallies, along with the forced deportation of 11 million illegal immigrants. But more importantly for the international trading system, Trump wants to withdraw from the North American Free Trade Agreement (Nafta) between the US, Canada and Mexico, which he casually dismisses as the “worst trade deal in history”. He also wants an immediate halt in negotiations for both the Transatlantic and Trans-Pacific trade agreements and unilaterally he wants to impose swingeing 45% tariffs, against the rules of the World Trade Organisation (WTO) from which he is prepared to “walk away”, on Chinese imports, which account for half of the US’s trade deficit. Thirty-five per cent tariffs are promised on Mexican imports. The remaining 20 free-trade agreements the US has signed are to be reviewed or abrogated. Cumulatively, the impact would be devastating, killing multilateralism by exposing the already enfeebled WTO as helpless, inciting Chinese and Mexican trade retaliation and destabilising the entire global system of trade and finance.

Optimists say that Trump the president will be much more cautious and realist than Trump the campaigner: his talk on trade should be seen as threats to produce more fairly balanced agreements, not a tearing up of the world system. Maybe. But there cannot be a complete divorce between campaign rhetoric and policy. He believes what he says and nobody in his close coterie is going to urge caution. Not Dan DiMicco, his senior trade adviser, who has promised a potential withdrawal, in the first six months of the Trump presidency, from every major US trade deal if it cannot be shown actively to benefit the US. “The era of trade deficits is over,” he says. “It will be: let’s talk, but otherwise we put tariffs on.”

Another intimate, Walid Phares, has said Trump will go “back to ground zero” on every trade deal, such as the one with South Korea that the president-elect described as “job destroying” and wants to revoke. Trump has already given a commitment that on day one he will declare China a currency manipulator as a precursor to introducing up to 45% tariffs on Chinese imports.

These positions are not posturing: they represent a deeply held view that the US does not need trade except on terms that put America first. The idea that successive American administrations have negotiated deals loaded in the US interest is impossible to concede. Because how else would he explain the rust belt? Equally, there can be no concession that blue-collar jobs are disappearing with or without trade because of robotisation and automation. The America of the 1940s and 50s has disappeared for ever and destroying the international trading system is not going to bring it back.

None of that cuts any ice with a demagogic populist. Trump has promises to keep to a “movement” that expects no less. The last time a Republican president and his party controlled both the House of Representatives and Senate with the same convictions on America first trade was 1928. There were warnings that introducing the Smoot-Hawley tariffs on American imports in 1930 would trigger a slump, but America first Republicans could not help themselves and the Democrats were too weak to stop them.

The Peterson Institute for International Economics in Washington predicts that if Trump raises tariffs on China and Mexico, and they retaliate, then US growth will stop in its tracks for at least two years. The prospects could be even worse if Trump goes further. Already world trade growth over the last year has been the slowest for the last 15. Even introducing the mildest of Trump’s measures must presage a further deceleration and if he goes as far as he promises – walking away from the World Trade Organisation, withdrawing from multiple trade agreements and freely imposing tariffs – then the prospect of a 1930s-style implosion is all too real.

In this context, the foreign secretary, Boris Johnson, babbling alongside other Brexiters about the opportunities for trade deals with the US is surreal. To exit the EU, the one continent pledged to open trade, in order to plunge into a world trade system threatened by collapse is the height of folly. If British voters had known Trump was going to be president in June – and known of his attitude to trade – Remain would have won comfortably. Parliament may find it has a duty to veto the application to exercise article 50 before the end of March; the referendum was only ever advisory and Trump’s attitude to trade changes everything.

One of the many tragedies of the rise of neoliberalism is that the promotion of international trade has been able to be portrayed by some on the left as part of the same portfolio of policies as austerity, privatisation and assaulting trade unions. Wrong. Trade is the essential ingredient of growth and prosperity. The rise of Egypt, Greece and Rome was because the Mediterranean promoted seaborne trade. The rise of maritime Europe after the middle ages was because of Atlantic trade. China has grown so explosively since 1978 because of its opening to trade.

Autarchy, protection and closure to immigration have always meant economic stagnation and, lacking the stimulus of other cultures and ideas, a parallel freezing of innovation and cultural vitality. Trade, exchange and intermingling are the lifeblood of humanity. Of course trade brings losers, and the rise of contemporary Conservatism, with its ferocious enmity to state action to support the incomes, skills and life chances of working-class men and women, in a period of great economic change, laid the foundations of huge anger.

It has been two rightwing demagogues – Trump and his British echo, Farage – who have been the first beneficiaries. But as this drama plays out in recession, nationalism and perhaps even forms of inter-state conflict, there will be a rediscovery of ancient verities. Trade and exchange are the foundations of our civilisation and, whatever Trump and his movement think, the more, the better.

The vision of Indian is under challenge

Yogendra Yadav - Swaraj Abhiyan