The Crisis of the 2020s

China's population pyramid. The crisis of the 2020s will be triggered in part by the end of cheap imports from China and the return of inflation.

New Year's 2021. Little seems to have changed over the past three years. Technologically, there are more smart devices to entertain you or to help you with your work. Economically, things are supposed to be better, but that's not your impression. Politically? Not much either. Most of eastern and central Europe has gone nationalist, but they always were, weren't they? There's Italy, where Berlusconi governs with two nationalist parties, but isn't that a rerun of what he finagled two decades earlier? Finally, North Africa is in the news, but no one seems to know what's going on there.

Yet something is afoot. A friend makes a remark he never would have before. He of all people! At the health club you try to follow the news on TV, but it seems harder to follow than usual. You're thinking of traveling abroad, but it's more complicated, supposedly because of the terrorist threat ...

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The Crisis of the 2020s will not be readily apparent when the decade begins. Nationalist parties will be in power over most of Europe, but the Western European "core"—the United Kingdom, France, and Germany—will still be postnational. Yet even there nationalist parties will have made inroads at the regional and municipal levels. These electoral successes will be self-reinforcing, with one leading to another, especially in regions that are culturally and linguistically similar.

But this nationalist consensus will have to reckon with an opposing consensus that is already in place and likewise self-reinforcing. This postnational consensus took shape in the 1940s, when elites throughout the West blamed nationalism for the Second World War and the preceding depression. It grew stronger in the 1950s and 1960s with competition by the two superpowers for the hearts and minds of emerging nations in Asia and Africa. The Cold War had the perverse effect of making the United States and the Soviet Union mirror images of each other, each trying to preach its own universal gospel to the unconverted. 

This elite consensus entered a new phase with the end of the postwar boom in the 1970s and a slowdown in economic growth throughout the West. This slowdown has been attributed to several causes:

- The postwar boom was driven by low prices for raw materials, especially oil. In the 1970s oil prices spiked, as did prices for other key commodities.

- The postwar boom was also driven by population growth—the baby boom. Young adults spent more on housing, children's clothes, educational supplies, and other family-related purchases. They also became more willing to invest in the future, both personally and collectively, since they were literally investing in their children. During the 1960s fertility rates declined dramatically, and by the 1970s declines in school enrolment and household spending had become noticeable. 

- A backlog of technological innovation had piled up during the Great Depression and the Second World War. By the 1970s this backlog was largely gone.

- Thrift and saving had become ingrained during the depression and the war. By the 1970s the culture had shifted toward greater acceptance of living beyond one's means.

These causes should be viewed with some caution, since the slowdown happened across very different political and cultural contexts in North America, Western Europe, and Japan. It also happened in the Soviet Union and Eastern Europe. Slow growth may simply be the historic norm, and economies return to this norm as they mature. In any case, policy makers are less interested in causes than they are in solutions, and to find solutions to slow growth they have consciously or unconsciously turned to postnational thinking for inspiration. 

A slowly growing economy isn't necessarily bad for the average person. Because population growth has likewise slowed throughout the West, economic growth, however sluggish, translates into more wealth per capita. Because companies can no longer count on a growing market, they have to compete much more with each other for market share, thus improving the quality of the goods and services they offer. They also have to compete for a limited supply of labor, thus bidding up wages and raising productivity through automation and robotization. Japan has taken that path, and it isn't doing so badly despite the doom and gloom one hears. Labor scarcity means that 74% of Japanese aged 15 to 65 have a paid job—well above the OECD average of 67%. Only 1.2% of Japan's labor force has been without work for a year or longer—below the OECD average of 2%. Also, Japanese life expectancy at birth is 84 years—well above the OECD average of 80 years.

Slow growth may not be bad news for the average person, but it is for the rentier class—those whose income comes not from work but from dividends, interest, and speculation. When economic growth falls to 2 or 3% a year, this becomes their return on investment. It's not enough to live on, at least not in the style they're used to.

The rentier class has thus pushed Western governments to make the economy grow faster than it normally would. Since the 1970s, growth has been spurred through financial stimuli of one sort or another: tax cuts, deficit spending, lower interest rates, and monetary expansion. This is still a popular response, but the shortcomings are now well-known. The immediate one is inflation—in the 1970s inflation rose to double digits throughout the West. It has since been contained by a mix of money supply management and globalization, i.e., outsourcing jobs to low-wage countries and insourcing low-wage labor for jobs that cannot be outsourced (agriculture, construction, services). In the U.S., massive low-wage immigration began with the Reagan amnesty of 1986, although this outcome was emphatically denied at the time. Upward pressure on wages has further slackened with the decline in unionization, itself largely a result of globalization, particularly the loss of jobs in manufacturing and the shift to less easily unionized jobs in services. Finally, immigration itself has been seen as a way to stimulate the economy through increased aggregate demand, particularly for real estate and construction.

While these stimulus measures help to spur growth over the short term, the outcome seems more dubious over the long term. Today, interest rates are at record low levels throughout the West, and immigration is running at record high levels—in the U.S., legal immigration alone is over three times what it was in the 1960s. Yet year-to-year economic growth is much lower: 1.6 to 2.5% in the 2010s versus 2.3 to 6.5% in the 1960s.

The economy seems to habituate to these stimulus measures. We thus have the apparent paradox of more and more stimulus producing less and less growth. This paradox has three causes:

- People take further growth for granted, particularly in their willingness to go into debt. Growth becomes a Ponzi scheme.

- Uninterrupted growth leads to accumulation of inefficiency. Without periodic recessions to remove wasteful companies and work practices, the economy becomes less productive.

- Sources of immigration have shifted to cultures that are less oriented to the market economy and to the values that make it possible. Historically, most economic growth has been within two culture areas: Europe, especially northwest Europe, and East Asia. These cultures are characterized by high levels of trust, high future orientation, and low willingness to use violence for personal disputes (Clark 2007; Clark 2009; Frost 2015; Frost 2017; Frost & Harpending 2015). Most immigrants to the West no longer come from either culture area. As a result, trust is declining, fear of violence is increasing, and more resources are being earmarked for external behavioral controls (police, private security), which are replacing the internal behavioral controls that used to be enough. Transactions now have to be double-checked for evidence of fraud, theft, or counterfeiting, with the result that economic activity costs more and in some cases is no longer worth doing.

For the near future, Western policy makers will continue to follow the postnational consensus, not so much because they believe in it but rather because they are immersed in it and have little exposure to alternate views. This echo chamber will, in fact, cause the prevailing consensus to become more radical over time. One example is the recent call from Canada's council of economic advisers for a sharp rise in immigration:

The 14-member council was assembled by Finance Minister Bill Morneau to provide "bold" advice on how best to guide Canada's struggling economy out of its slow-growth rut. 

One of their first recommendations, released last week, called for a gradual increase in permanent immigration to 450,000 people a year by 2021 — with a focus on top business talent and international students. That would be a 50-per-cent hike from the current level of about 300,000.

The council members — along with many others, including Economic Development Minister Navdeep Bains — argue that opening Canada's doors to more newcomers is a crucial ingredient for expanding growth in the future. (Blatchford 2016)

This is the backdrop for the Crisis of the 2020s. On the one hand, the postnational consensus will continue to radicalize in the core countries of the Western world. On the other hand, a very different consensus will dominate most of central and eastern Europe, with inroads being made into France and Germany. These opposing consensuses will diverge more and more, if only because mutual antagonism will make dialogue impossible.

The crisis itself may be triggered by one or more factors:

- Inflation will return after a four decade absence. China's supply of cheap labor is drying up, and alternate sources, such as Africa, will prove unsuitable. Prices for certain commodities, especially food, may also rise. This will be pivotal because globalism has gone unchallenged among the elites largely because it has delivered on its promise of inflation-free growth.

- There will be a growing realization that the new migrants to Europe have a different work ethic. They will end up being tax consumers rather than, as hoped, tax payers. Forget about them paying for your pension and health care.

- The French presidential election of 2022 will be much closer than the one in 2017, the result being a narrow defeat or a narrow victory for the Front national. Either way, the country will become ungovernable. A similar situation may or may not develop in Germany after the 2021 federal election.

- NATO may try to intervene in one or more countries in eastern or central Europe.

The actual trigger will matter less than the instability of the world-system. This instability will cause even minor conflicts to escalate, either within the Western European core or, perhaps, in response to a failed intervention in Eastern Europe.

Such escalation will be demanded by those who support the postnational consensus, yet it will work to their detriment. A world-system is stable only if, as Wallerstein (1974) argued, it meets three conditions:

- Military strength is concentrated in core societies

- Ideological commitment to the system is pervasive, i.e., "the staff or cadres of the system (and I leave this term deliberately vague) feel that their own well-being is wrapped up in the survival of the system as such and the competence of its leaders. It is this staff which not only propagates the myths; it is they who believe them."

- Peripheral societies are unable to unite against core societies.

Conflict, especially armed conflict, will destroy the illusion that the postnational consensus is a consensus and thus the only sensible way of viewing reality. Uncertainty and disenchantment will spread even among "sensible" people. Furthermore, if military strength no longer remains concentrated in the core, being used, for example, to intervene in the periphery, there may not be enough people in uniform anymore to defend the entire world-system. Defeat in one country may lead to a chain reaction where one country after another defects to the other side.

References

Blatchford, A. (2016). Finance Minister's key advisers want 100M Canadians by 2100, Thestar.com October 23

https://www.thestar.com/business/2016/10/23/finance-ministers-key-advisers-want-100m-canadians-by-2100.html  

Clark, G. (2009).The Domestication of Man: The Social Implications of Darwin, ArtefaCToS, 2, 64-80

http://campus.usal.es/~revistas_trabajo/index.php/artefactos/article/view/5427 

Clark, G. (2007). A Farewell to Alms. A Brief Economic History of the World, Princeton University Press, Princeton and Oxford.

Frost, P. (2017). The Hajnal line and gene-culture coevolution in northwest Europe, Advances in Anthropology, 7, 154-174.

http://file.scirp.org/pdf/AA_2017082915090955.pdf

Frost, P. (2015). Two Paths, The Unz Review, January 24

http://www.unz.com/pfrost/two-paths/

Frost, P. and H. Harpending. (2015). Western Europe, state formation, and genetic pacification, Evolutionary Psychology, 13, 230-243.

http://evp.sagepub.com/content/13/1/147470491501300114.abstract

Wallerstein, I. (1974). The rise and future demise of the world capitalist system: concepts for comparative analysis, Comparative Studies in Society and History, 16(4), 387-415.

https://e-edu.nbu.bg/pluginfile.php/138807/mod_resource/content/0/pol-222Wallerstein.pdf

The unlikely domino

Ahmed Ouyahia, "The Eradicator" - Prime Minister of Algeria. (Wikicommons: Magharebia). "We are the kings of our home!"

When political change comes to a world-system, does it begin near the center and then spread outward? That seems to be the common view. Karl Marx predicted that communism would first triumph in the U.K., France, and Germany, yet he was proven wrong. In 17th century England the "Levellers" called for giving all men the right to vote, an aim first achieved in the United States and only much later in England. Similarly, the late 19th century saw women gain voting rights in Scandinavia, some Australian colonies, and some western U.S. states. Not until 1928 were the same rights recognized in the U.K. 

The center is an interesting place for new ideas, but it's terrible for getting them implemented. It’s the place where power is concentrated, where resistance to change is strongest, where the elite has been established the longest, and where the elite has diverged the most from ordinary people in terms of self-interest and social distance. So the center is where new ideas have the most trouble spreading through all social strata and gaining acceptance. 

The situation is different farther out on the periphery of a world-system. Social distances are generally shorter and the elites less entrenched. This is partly because peripheral societies tend to be more recent—often beginning as colonies of central societies—and partly because weaker control by the center and greater contact with other world-systems may make them the scene of war, rebellion, and social upheaval, which in turn means replacement of local elites. New ideas can thus percolate more easily throughout the whole of a peripheral society

These are tendencies to be sure and, as such, may not always hold true. The periphery may be a quiet backwater where elites stay put and become more distant from the people. Furthermore, a new idea may face hostility not only from the elite but also from ordinary people. Communism, for instance, was admired in the Muslim world for its opposition to Western imperialism, but its atheism made support impossible among the working people it targeted.

In writing this series I'm simply arguing that public sympathy isn't the only factor in the spread and acceptance of new ideas. There is also elite hostility, and that factor tends to be more formidable at the center than at the periphery.

The next two to three years

A nationalist bloc of European nations has formed on the periphery of the Western world—Poland, Czechia, Slovakia, Austria, and Hungary. This has happened not only because public sympathy for nationalism is stronger there but also because elite hostility is weaker. The elites are less differentiated from the rest of society; consequently, there is more social cohesion and commonality of purpose. Finally, the language of the Western world being above all English, the centre has trouble maintaining ideological conformity in those countries where English is poorly understood and where ideology, like culture in general, tends to be locally produced.

In my previous posts I’ve argued that the nationalist bloc will spread outward into culturally similar countries, as well as into countries where post-national elites are unpopular and weakly entrenched. By the year 2021 this bloc will cover a much larger area: almost all of central and eastern Europe, plus Italy. 

It will also include a seemingly unlikely area that isn't European at all, an area that is, in fact, African and Muslim.  

Background to the migrant crisis

Population pressure has been mounting in sub-Saharan Africa for some time. While fertility rates have fallen throughout most of the world, often dramatically, the picture is different in this world region. Fertility declines have at best been modest, and in some countries, like Somalia, fertility has actually risen. The current pace of population growth will continue even if fertility rates fall dramatically:

Rapid population growth in Africa is anticipated even assuming that there will be a substantial reduction of fertility levels in the near future. The medium-variant projection assumes that fertility in Africa will fall from around 4.7 births per woman in 2010-2015 to 3.1 in 2045-2050, reaching a level slightly above 2.1 in 2095-2100. After 2050, it is expected that Africa will be the only region still experiencing substantial population growth. As a result, Africa's share of global population, which is projected to grow from roughly 17 per cent in 2017 to around 26 per cent in 2050, could reach 40 per cent by 2100.

[...] It should be noted that the population of Africa will continue to increase in future decades even if the number of births per woman falls instantly to the level required for stabilization of population size in the long run, known also as "replacement-level fertility". Growth continues in that scenario thanks to the age structure of the population, which is currently quite youthful. The large numbers of children and youth in Africa today will reach adulthood in future decades. Because of their large numbers, their childbearing will contribute to a further increase of population even assuming that they will bear fewer children on average than their parents' generation. In all plausible scenarios of future trends, Africa will play a central role in shaping the size and distribution of the world's population over the next few decades. (United Nations, 2017, p. xxii)

Meanwhile, the inevitable has begun. When the slave trade ended in the early 19th century there began a long period when relatively few people left sub-Saharan Africa. Some did, but their numbers were relatively small—Senegalese riflemen, Somali seamen and, later, university students. This hiatus came to an end in the early 1970s. To fill insecure, low-paying jobs, French employers extended their zone of recruitment to sub-Saharan Africa, and this example was followed by employers elsewhere. Even Greece began to recruit African labor for jobs in construction, agriculture, and shipping (Pteroudis 1996).

The stream of migrants continued despite the economic slowdown that set in with the Oil Crisis of 1973 and the 1982-1983 recession. They came for the most part on temporary visas and then overstayed. Large-scale illegal entry did not begin until the early 2000s, via a route across the Sahara to Libya and then across the Mediterranean to Italy by boat (De Haas 2008). In 2008, Silvio Berlusconi, signed a treaty with Muammar Gaddafi to block this route, but enforcement collapsed with Gaddafi's overthrow and murder in 2011. The result was a surge in African migration.

Yet this surge is only the tip of the iceberg:

[...] it is a misconception that all or most migrants crossing the Sahara are "in transit" to Europe. There are possibly more sub-Saharan Africans living in the Maghreb than in Europe. An estimated 65,000 and 120,000 sub-Saharan Africans enter the Maghreb yearly overland, of which only 20 to 38 per cent are estimated to enter Europe. While Libya is an important destination country in its own right, many migrants failing or not venturing to enter Europe prefer to stay in North Africa as a second-best option (De Haas 2008).

African migrants currently take three routes to Europe: a western route via Morocco and Spain; a central one via Libya and Italy, and an eastern one via Egypt and Greece. Given the chaos in Libya, the central route is shifting to Algeria, and that country is increasingly becoming their final destination. "Our studies revealed that more than half of the migrants in Algeria actually live there," explains MDM. [Médecins du Monde]" Even if this was not their plan at the beginning, they end up finding a job and settling in one place." (Matarese 2016)

A changing response

Until recently, the official Algerian response has been similar to that of Western countries. Last July, the government announced plans to grant at least some of them residency rights and job permits. These measures were announced in a sympathetic tone:

"The presence of our African brothers in our country will be regulated and the Ministry of the Interior is using the police and the gendarmerie to take a census of all the displaced people," said Tebboune, who was replying to the concerns of deputies of the National Popular Assembly during debate over the government's action plan.

[...] "There are parties who wish to tarnish Algeria's image and label it as a racist country,' said Tebboune, who added: "We are not racists. We are African, Maghrebin, and Mediterranean."

"Africa and the Arab world are the natural extension of Algeria and the space in which it has evolved and developed," said Tebboune, underscoring "the moral and human duty that requires us to provide assistance to our brothers who are forced to flee their lands because of poverty and the torment of war." (Huffpost 2017)

Other members of the government, however, were less sympathetic. Also last July, the Minister of State, Ahmed Ouyahia, condemned the growing numbers of African migrants:

The African community that illegally resides in Algeria brings drugs, delinquency, and other scourges. One cannot say to the authorities: "Throw them into the sea" but one must live in Algeria legally.  [...] People will say to me "human rights!" but we are the kings of our home! (RT 2017)

Public opinion has also turned sour. In June of this year, an anti-migrant campaign was launched on the Algerian social media via the hashtag No to Africans in Algeria! This slogan may sound strange in a country that is, in fact, in Africa, but the reality is that the average Algerian feels more in common with Europe or the Middle East.

Anti-migrant discourse is summed up by this comment:

[...] these Africans from all over the Sahel think they're in conquered territory, being arrogant and threatening. They forcefully demand money and not food. They're everywhere and present a sorry picture of what a human being should be. Begging, nothing but begging from these hefty guys who are more athletic than Cristiano Ronaldo and who refuse to roll up their shirtsleeves and work. Now they're no longer content to be in southern Algeria; that's no longer their fine seigneury. They're moving into the coastal cities. There are hundreds of thousands of them, and more come every day. (RT 2017)

Threatening behavior might work in Europe, where the average citizen feels that only the police are entitled to respond to threats with violence. In Algeria, however, the police are a relatively recent institution, as is State authority in general, and every adult male feels entitled to use violence if threatened or even insulted. An exchange of insults can quickly escalate into fighting by both parties:

Kader, an Ivorian who has been in Algeria for six years, said there was a growing number of Guineans in Algiers. "They don't know the country, and they react very badly the minute an Algerian is rude to them or insults them. It ends up in a fight, and people get hurt." (Chenaoui 2017)

A single incident may become a riot. In March 2016 more than a hundred residents of a small town south of Algiers showed up at an abandoned shopping center where migrants were living and assaulted dozens of them in retaliation for an alleged rape (The Observers 2016). At about the same time in another town, some 300 local inhabitants surrounded and attacked a refugee reception center after a migrant from Niger murdered a local resident during a break-in (Huffpost 2016)

Last August, Ahmed Ouyahia was appointed Prime Minister, and migrant policy has grown increasingly hardline. Since August 25, more than 3,000 migrants have been summarily deported to Niger, including many from other African countries (HRW 2017). There is a striking similarity here to Israel’s response when African migrants began pouring into that country. It, too, initially responded like Western states but did an about-face partly because of the magnitude of the problem and partly because of pressure from public opinion. Whatever one thinks of either country, they are both fundamentally democratic, more so in fact than most Western countries. The elites cannot defy public opinion because they’re too close to the public and because they lack the firm ideological control that makes defiance possible.

Algeria, like Israel, will have to adopt harsher measures against the migrant influx. Unlike Israel, the migrant population is much larger and will continue to grow through natural increase alone. Meanwhile, public opinion is radicalizing. The situation may become like what we see in Greece, but without the external coercion that comes with being an EU member.

The migrant issue will loom large in Algeria's 2019 presidential election. Ahmed Ouyahia may run as a Trump-like populist candidate. He may even, à la Trump, call for construction of a fence along the southern border. And like Trump he has already been condemned by human rights groups, notably for his role in the "eradicator" faction that pushed for all-out war against the Islamist insurgency in the 1990s.

References

Chenaoui, Z. (2017). Adrift in Algiers: African migrants marooned in a new transit bottleneck, The Guardian, October 31

https://www.theguardian.com/world/2017/oct/31/algeria-african-migrants-libya-civil-war-europe

De Haas, H. (2008). Irregular Migration from West Africa to the Maghreb and the European Union: An Overview of Recent Trends, International Organization for Migration, Geneva

https://pdfs.semanticscholar.org/14f2/ff491b6e9e0f66ad69ab58444bf3f3330708.pdf

HRW (2017). Algeria: Surge in Deportations of Migrants. Apparent Racial Profiling, Summary Expulsion of Sub-Saharan Africans, Human Rights Watch, October 30

https://www.hrw.org/news/2017/10/30/algeria-surge-deportations-migrants

Huffpost (2016). Après les affrontements de Ouargla, 700 migrants subsahariens transférés à Tamanrasset (Wali), March 3

http://www.huffpostmaghreb.com/2016/03/03/affrontements-ouargla-migrants_n_9371888.html

Huffpost (2017). Abdelmadjid Tebboune : La présence des migrants subsahariens sur le territoire algérien sera réglementée, June 24

http://www.huffpostmaghreb.com/2017/06/24/tebboune-migrants-subsaha_n_17281390.html

Matarese, M. (2016). Migrants in Algeria struggle for acceptance, Middle East Eye, January 6

http://www.middleeasteye.net/news/taboo-migrants-algeria-707071868

Pteroudis, E. (1996). Emigrations et immigrations en Grèce, évolutions récentes et questions politiques, Revue européenne de migrations internationales, 12, 159-189 (Espagne, Portugal, Grèce, pays d'immigration).

RT (2017). L'Algérie raciste ? Une directive anti-migrants, finalement retirée, fait polémique dans le pays. RT en français, October 3

https://francais.rt.com/france/44118-algerie-raciste-politique-anti-migrants

The Observers (2016). Police watch as locals attack migrants in Algeria, March 29

http://observers.france24.com/en/20160329-video-algeria-migrants-attack-african

United Nations (2017). World Population Prospects. The 2017 Revision, Department of Economic and Social Affairs, Population Division, Volume 1, Comprehensive Tables

https://esa.un.org/unpd/wpp/Publications/Files/WPP2017_Volume-I_Comprehensive-Tables.pdf