Here at the annual Milken Institute Global Conference, what do I wake up to this morning? A big, page-one story in The Wall Street Journal entitled "Rising Nationalism Frays Global Ties."
The global economy appears to be entering an epoch in which governments are reasserting their role in the lives of individuals and businesses. Once again, barriers are rising. Call it the new nationalism.
From barriers to the free movement of financial capital (investment) and human capital (immigration) to new restrictions on the Internet, reporter Bob Davis recounts the troubling protectionist trends and finds numerous analysts who say we may be in for a long retrenchment of the global economy.
"The era of easy globalization is certainly over," says Pulitzer Prize-winning author Daniel Yergin, whose 1998 book, "The Commanding Heights," detailed the triumph of markets over nations, starting with British deregulation under Margaret Thatcher. "The power of the state is reasserting itself."
Just a decade ago, Asia, Latin America and Russia were on financial life support from the International Monetary Fund and World Bank. The U.S. was planning yet another round of global trade negotiations. The European Union was writing a constitution to shift power to Brussels from member nations.
Now borrowers shun the IMF and World Bank. Trade talks are shelved. Barriers to foreign investment are rising around the world. State-owned companies are expanding, particularly in oil and gas. Public support of immigration restrictions is growing in countries from the U.S. to India.
This is why PFF launched our new Center for Global Innovation. To combat these trends by highlighting the abundance of the world economy and the deep, dark consequences of protectionism. See our self-description which presages many of the themes in Davis's article.
As we here from Nobel economists, entrepreneurs, financiers, and policymakers at the Milken Conference, we'll have more to say. Although we agree with Davis's article that nationalism is rising and ties are fraying, we are not so convinced a new balkanized world is our inevitable fate.
New nationalism could play out over a lengthy span, says Michael Klein, chief economist at the World Bank's private-sector arm, the International Finance Corp. "Disparate national interests may pull [countries] in different directions and render global actions more difficult," Mr. Klein says. "We're in for several decades of these centrifugal forces."
It will take herculean efforts, but with enough like-minded leaders, we hope CGI will help block this illiberal tide and point the path toward more, not less, global freedom and innovation.