It’s been a crazy year. As the last days of 2016 have taken fan-favorite stars like Carrie Fisher, Debbie Reynolds, and George Michael, Facebook and Twitter have been ablaze with people sharing their displeasure that 2016 seems to be adding insult to injury in its waning moments before it exits into the history books. “You Suck 2016” has lit up my Facebook feed from a plethora of unhappy friends.
We’ve become accustomed to the constant spin cycle of the cable news programs churning out headlines of fear and gloom to satiate an audience, but two headlines this year didn’t need any spin to get our attention: Great Britain voting to leave the EU and Donald Trump winning the Presidency of the United States. Both were as shocking as the Chicago Cubs winning the World Series. In some respects, had the starting pitcher for the Cubs in Game 7 worn a tutu, many would have found that less shocking than “Brexit” and “Trumerica.” Both were considered a joke—until they became a reality.
What happened? What does this mean? Is this just an extension of right vs. left fighting? The easy answer is to dismiss what’s going on as just another chapter in the war of conservative vs. liberal ideals and policies, but that would be intellectually lazy, painting with too broad a brush. The ripple effect of these events allowed the hidden tectonic shifts of culture and the global economy to finally be seen and felt by the public at large. The hidden is now in the open.
Both Brexit and Trumerica can most accurately be described as a referendum on globalization. Globalization is a word we throw around a lot, but what does it mean? Here’s a good definition: “Globalization is a process of interaction and integration among the people, companies, and governments of different nations, a process driven by the international trade and investment and aided by information technology. This process has effects on the environment, culture, political systems, economic development and prosperity, and on human physical well-being in societies in the world.” (www.Globalization101.org)
This impersonal, almost textbook definition doesn’t say anything about whether globalization is good or bad. It just “is.” Neutral. Just a way of doing business in the world. Almost benign.
The debate around globalization is roiling the world. My Harvard Business School professor Rawi Abdelal in a recent conference call to Presidents and CEOs of organizations from around the world shared data showing forming fault lines circumnavigating the globe. They transcend ethnic divides, religious affiliations, and national boundaries. For years the right and left have made assaults on aspects of globalization with little effect, like a lone hyena in the Serengeti trying to take down a big wildebeest only to be tossed helplessly to the side. In 2016, however, the lone hyena has returned with his pack—and they’re making a serious assault on the globalization beast. It will be interesting to see what happens in 2017.
The fault lines that first manifested themselves in Britain are now being debated in every corner of the globe from London to Cape Town to Jakarta and Sao Paulo, and the debate has just started. The traditional political lines are being redrawn as groups square off.
- Rich vs. poor
- Skilled labor vs. unskilled labor
- Educated vs. uneducated
- Young vs. old
- Rural vs. urban
- Diverse communities vs. homogenous communities
So who voted to leave?
(Graph Attribution: Professor Rawi Abdelal, Harvard Business School)
- (Older People) Statistically, as age increased perceived value of staying in the European Union dropped sharply.
- Age 18-29 = 25% voted to leave
- Age 30-39 = 48% voted to leave
- Age 40-59 = 50% voted to leave
- Age 60+ = 63% voted to leave
- (Those without a formal education) Only 30% of university grads voted to leave the European Union.
- (Working Class) 65% of working class voted to leave the European Union.
(Graph Attribution: Professor Rawi Abdelal, Harvard Business School)
But hasn’t globalization been good for business?
There is no doubt that globalization has been great for certain sectors of business. Those in finance, technology, industrial, and global trade have benefited greatly, which may be reflected in close to 70% of college grads in Great Britain voting to stay in the EU. It certainly can be said that many emerging markets have benefited from globalization and entry into the world economy.
However, one thing is apparent. Those left behind in Great Britain were the working class, who lost jobs, felt threatened by outsourcing and immigration, and did not see real economic gains that other sectors of London did. They voted en masse to leave the European Union.
Governments worldwide failed to ensure that all sectors of the economy benefited from globalization. They failed to help those whose industries were threatened in these disruptive times. A key issue is, how do governments help those who are being displaced? Too many displaced workers don’t see that pathway of reintegration back into the local economy and that is why there will be more “Brexit” votes in the future. Populist movements in Sweden, Denmark, Greece, Hungary, France, and Scotland are pushing referendum votes similar to Brexit that are gaining momentum with people on the street wanting to exert more national control over their destiny wrestling power back from Brussels.
Further fault lines to consider that portend to a larger cultural issue.
- 81% of those who feel multiculturalism is bad voted leave the EU.
- 71% of those who feel that multiculturalism is good voted to stay in the EU.
- 80% of those who view immigration as bad voted to leave the EU.
- 80% of those who view immigration as good voted to stay in the EU.
Although political pundits will spin recent votes on both sides of the Atlantic as being focused on traditional right and left issues there could be nothing further from the truth. On the surface we have the traditional lines but the major currents running beneath the surface that have swayed these elections is in regards to where you stand on economic issues. This explains why Hillary Clinton lost many traditional states that had been democratic strong holds for years. When West Virginia, the haven of the late Democratic icon Senator Robert Byrd, goes Republican you know something fundamentally has changed.
I knew the winds had changed when I went home to visit my in-laws in the coal mining outskirts of Charleston, WV and people were driving around with Trump stickers on their vehicles and “Make America Great Again” hats were as common as WVA and Marshall gear in the local Walmarts. Their industry had been decimated when President Obama singlehandedly shut down the coal mining industry with the stroke of a pen. With thousands out of work and no plan or viable alternative on the table they were looking for change even if it meant leaving the Democratic party who had basically won that state for over a generation. Ohio, Pennsylvania, Wisconsin, and Michigan, traditional union strongholds, had similar stories and were a virtual clean sweep for Donald Trump. Yes Mr. Dylan, “the times are a-changin’” and yes, “it is all about the economy stupid!”
Back across the Atlantic, what does Brexit mean for the EU (and by that I mean Germany which is the lone juggernaut keeping the system afloat at the moment)? As Britain left the EU, Germany lost a key ally as Britain agreed with, and voted with Germany on most issues in the EU. Losing a key economic ally is certainly unsettling for them, and other nations are now considering if the EU is a worthwhile project to pursue. Those in Brussels will continue to preach the insanity of leaving the incredible value of the EU—but they have to be questioning who is listening. The real decision makers are drinking coffee and discussing the issues on the Rue de Charonne, Grosser Muristalden, Calle Zurbano, Krymska, and Avenue des Champs Elysées. Rhetoric is extremely cheap and no one is betting on prognosticators today.
So—what happens now?
Young people in the US are more anti-globalization than the European Union. As the cultural center (from Hollywood’s perspective) of the globe it will be interesting to see the impact of Trumerica on the far corners of the world and the local debates they are having. Has the Brexit ripple turned into a wave with Trumerica that will grow to crash in local elections on the continents? How will the anti-immigration sentiments that are taking hold in countries around the world play out? Predictions of a stock market “correction” in 2017 were coming from many circles prior to the Trump victory. Wall Street is now riding a euphoric high of optimism. Is this a short Las Vegas honeymoon heading for the inevitable crash, or will President Trump help usher in a longer lasting growth trajectory with new policies? Will President Trump live up to the promises he made to those who voted him into office or like the politicians before him will he deftly pivot to his real agenda? Much remains to be seen.
What can we do?
From the millennial entering the workforce to the baby boomer at the tail end of their career potentially looking for an “encore career” we all need to be aware and understand how these fault lines will impact our communities, industry, and career.
As we monitor these changes, the march towards continued globalization may have a setback or slow down but it is highly unlikely to reverse or unwind in any substantial ways. Furthermore, though nationalist movements and protectionist policies may succeed old industries will continue to change…rapidly. Technology and automation in every sector will continue to impact and displace workforces globally. Every person must take it upon himself or herself to learn and develop skills useful in the new economy regardless of industry, age, or educational background.
This is one of the main reasons I wrote Love Your Work: 4 Practical Ways You Can Pivot to Your Best Career to give specific steps anyone can take to have success in the coming years in this new economy. Don’t be blindsided and caught off guard without a plan. Being aware of what is happening and how it will impact everyone from the day laborer to the white-collar staff member is critical. It is possible to pivot now to ensure you can take advantage of the opportunities that are being created in this new economy. Most importantly, don’t get left behind as the world changes.
I recommend reading up on the global issues outlined above in the Wall Street Journal, Financial Times, and The Economist for a balanced global perspective. In the coming months, I recommend “keeping your powder dry” (cash on hand) and don’t be over-leveraged with debt.
A major commodities trader in the US regularly featured on CNBC and FoxNews recently told me he predicted a stock market correct in Q1 of 2017 if Trump won and probably Q3 if Hillary won. He believes the structural fundamentals of the economy are clear and regardless of the president that a correction is coming. In mid-January, I will post on that assessment and give a further update on the issues outlined in this article.
By: Robert L. Dickie III
Data in this article provided by Lord Ashcroft polls and Professor Rawi Abdelal, Harvard Business School
Feature Picture Attribution: CNN Money, Patrick T. Fallon/Getty Images
Brexit Photo Attribution: Brexit Photo, BBC.com