The gap between winners and losers will also grow within individual countries, both developed and developing, as work that demands complex technical skills makes access to better schools and training more important than ever before. But we’ll also see a reversal of globalization’s great convergence as better schools and universities, more technically skilled citizens, stronger social safety nets, and stronger governing institutions will help wealthier countries cope much more effectively with these challenges. That’s a problem for all twelve of these countries—and, therefore, for everybody else.

  People and governments have demonstrated resilience throughout history, but the accelerating pace of technological change and its direct impact on so many lives and families around the world is driving the current international system headlong toward a reckoning.

  Whether with creativity or by force, the state will build walls.

  CHAPTER 4

  WALLS

  The future is already here. It’s just not evenly distributed yet.

  —ATTRIBUTED TO WILLIAM GIBSON

  Will walls kill democracy? Not for everyone. “Do walls work? Just ask Israel about walls,” said Donald Trump in February 2017 in a reference to that country’s four-hundred-mile security barrier on its border with the West Bank. Israel has also built walls and fences along part of its border with Egypt. Its Iron Dome, Arrow, and David’s Sling missile defense systems add a ceiling to these walls by protecting citizens from incoming aerial attacks. It has invested in a floor in the form of a system designed to detect and destroy underground tunnels. Its security services have exceptional ability to track threatening communications and dangerous people through cyberspace, even in the occupied territories, where the risk of terrorist attack might otherwise be among the highest in the world.

  Today, Israel appears more secure than at any time since its founding in 1948. It’s the only truly stable democracy in the Middle East, one blessed with a free (often rambunctious) press, a world-class education system, rule of law, and independent governing institutions. Inside the walls, about 18 percent of Israeli citizens are Muslims, and they have the right to vote under Israeli law. Five of 120 members of the Knesset, Israel’s parliament, are Sunni Muslims. Today, Israel’s left struggles to rally its political base with calls for a peace settlement based on a “two-state solution,” because arguments that Israel’s long-term security depends on it have become more difficult to make.

  In other words, Israel’s walls work, if you’re lucky enough to live inside them. The walls that separate Israel from Gaza and the West Bank make all the difference for quality of life. Outside them, per capita income is about $4,300. Inside, it’s above $35,000. Unemployment is just under 18 percent in the West Bank and just over 42 percent in Gaza.1 Inside the walls, it’s just over 4 percent.2 Youth unemployment outside the walls is 41 percent, but it’s just 8.6 percent inside.3 The infant mortality rate is 14.6 per 1,000 live births in the West Bank, 17.1 in Gaza, and 3.5 inside the walls. Less than 58 percent have Internet access outside the walls vs. nearly 80 percent inside.

  Walls don’t kill democracy. They protect democracy for “us” by denying it to “them.” That’s the argument that some will be making more openly in coming years in countries around the world. Walls are satisfying, and they make for good politics. They’re not hard to explain, and they offer a visible (if sometimes illusory) sign of security.

  In many ways, we’re talking about attempts to reverse the flow of globalization. To create the appearance of protecting jobs and industries, we’ll see a continuing increase in garden-variety protectionism. We’ll see more censorship—more restrictions, both old school and more innovative, on the transmission of information and politically resonant ideas. There will also be new barriers to the movement of people. The newest kinds of walls are those that will separate people within societies.

  Some of these walls will be designed to protect “national interests,” an idea that will be defined ever more broadly. Others will be built to protect the interests of a ruling party or even an individual leader and his family, friends, and clients. Some will be thrown up as quickly and haphazardly as the Berlin Wall, a barrier made of cheap cement and pebbles that divided East and West for twenty-eight years. Others will be digital-age barricades that are much more difficult to climb over or tunnel under.

  PROTECTIONISM—IN ALL ITS FORMS

  As governments try to safeguard the lives and livelihoods of citizens—and to protect themselves against public anger when their safeguards don’t work—we can expect both old and new forms of economic protectionism. This is true even in wealthier countries, where citizens worry more about protecting existing prosperity than escaping poverty. The Depression-era policies of U.S. Presidents Herbert Hoover and Franklin Roosevelt reveal what becomes possible when economic desperation spills over into the politics of even a powerful and once self-confident country.

  U.S. tariffs were already at historically high levels before Hoover responded to the 1929 stock market crash by signing the infamous Smoot-Hawley bill into law in June 1930. In the process, and over the public objections of hundreds of economists, the former commerce secretary approved a law that increased nearly nine hundred import duties.4 Economists and politicians still debate the true importance of this step. Some say it deepened the Depression. Others say the impact of this single law has always been exaggerated. But Smoot-Hawley’s biggest impact was in poisoning trade relations with other countries, provoking large-scale retaliation from Europe and Canada, and producing economic knots that took decades to untangle. According to Dartmouth economics professor Douglas Irwin, “When Congress was considering Smoot-Hawley in the 1930s, they didn’t consider what other countries might do in reaction. They thought other countries would remain passive. But other countries don’t remain passive.”5 Protectionism is contagious.

  The 1930s offer other lessons as well. Roosevelt’s career underlines dangers created by even the most well-meaning attempts to provide immediate help for desperate people. At the height of World War I, President Woodrow Wilson used the Trading with the Enemy Act of 1917 to expand the president’s wartime economic powers. A generation later, Franklin Roosevelt expanded these capabilities to include peacetime “national economic emergencies.” Congress quickly followed suit with the Emergency Banking Act, which gave government extraordinary powers to save the U.S. banking sector. Roosevelt used the National Recovery Administration, and its “Blue Eagle” program in particular, to name and shame private-sector companies that failed to follow government directives on everything from setting prices in line with government decree to hiring more people to reduce unemployment.6 The government’s official message wasn’t subtle: “When every American housewife understands that the Blue Eagle [packaging logo] on everything that she permits into her home is a symbol of its restoration to security, may God have mercy on the man or group of men who attempt to trifle with this bird.”7

  The Blue Eagle program also required businesses to pay living wages, set limits on work hours, and end child labor—policies that were long overdue. But Roosevelt set a dangerous precedent for future presidents to declare states of economic emergency, giving them potent new powers that expand human suffering instead of easing it. Presidents can use these powers to force private companies into line with the policy of the moment, even when the plan is intended mainly to win votes rather than to restore long-term economic stability.

  Franklin Roosevelt lifted American spirits with optimistic leadership and a sunny disposition through a dark period in U.S. history. In many ways, his New Deal alleviated the human misery of the Great Depression, and as democracies fell across Europe, we shouldn’t underestimate the role that Roosevelt and his policies played in avoiding catastrophic political and social unrest in the United States. But it was World War II, not the New Deal, that brought economic stagnation to an end. U.S. unemployment was still at 19 percent during the recession of 1937–1938.8

  More important, his overreach set dangerous peacetime precedents that future U.S. leaders might well use to score political wins in tough times.9 This is a lesson from the United States, traditional champion of free enterprise, free trade, and political checks and balances—and a country where the story of Smoot-Hawley remains a cautionary tale. In other countries, both developed and developing, citizens are much less hostile to the idea of a heavy government hand in commerce and the construction of walls that restrict the flow of a modern economy’s lifeblood.

  Other walls are not as obvious. Where it’s politically unpalatable or impossible to impose tariffs designed to boost the sale of domestic goods by making foreign products more expensive, lawmakers create nontariff barriers. They impose import quotas or strict product safety standards. They provide subsidies for domestic industries. To protect their affluence and advantages, wealthier countries treat science and technology as “strategic” economic sectors, restricting the export of new intellectual property. That leaves less innovative countries with fewer paths to boost growth. It’s not just that poorer countries will get smaller pieces of the global economic pie. As protectionism lowers longer-term growth in rich countries, there is a risk the pie itself will get smaller, creating a vicious cycle as slowdowns increase demand for tough-talking populists in both rich and poor countries, leaders who will rise to power with promises of higher and thicker walls.

  Many U.S. politicians have boosted their popularity with promises to oppose this or that trade deal, but no president since the 1930s has done more than Donald Trump to undermine the U.S. position on trade. His decision to withdraw the United States from leadership of the Trans-Pacific Partnership and promises to renegotiate the North American Free Trade Agreement and other existing deals have added momentum for antitrade politics in both parties. Trade barriers in developed markets hurt living standards in middle-income countries like Mexico, Brazil, and South Africa that are heavily dependent on exports for revenue, at least as they try to shift strategies. The poorest countries will have a harder time borrowing in international markets. They’ll face falling incomes, falling living standards, rising public anger, and political upheaval.

  There are, of course, many examples of protectionism in developing countries themselves. As in wealthier countries, trade protectionism includes many nontariff restrictions. The fastest-growing economies of Southeast Asia, for example, have cut tariffs in half since 2000, but they’re now more likely to use export bans, price controls, quality and health standards, and other strategies to protect local businesses and jobs. According to the UN Conference on Trade and Development, the number of nontariff barriers in place among the ten members of ASEAN jumped from 1,634 in 2000 to nearly 6,000 in 2015.10 In short, both rich and would-be rich countries have signed trade agreements while still finding creative ways to protect local interests.

  INFORMATION

  In the twenty-first century, questions of trade and protectionism aren’t limited to goods and services. Data has become an increasingly valuable and strategically important asset. The EU’s General Data Protection Regulation, in effect from May 2018, requires that all companies that process personal data in the European Union follow strict rules on data privacy. Developing countries have gone further with restrictions on government procurement of both software and hardware from foreign companies. Data localization laws in these countries mandate that personal data generated in the country must be stored in the country. In this case, as elsewhere, risk-averse China is leading the way and countries like India, Brazil, Indonesia, Nigeria, and Russia are following, each for its own reasons. In some cases, these laws are intended to bolster national security, prevent espionage, and protect consumers from online criminals. But these rules and laws also restrict the free flow of information across borders and undermine the efficiency of global supply chains just like more traditional forms of protectionism.11

  Governments will also build more walls to try to control the flow of more traditional forms of information across and within borders. In Egypt, China, and Turkey, the use of walls is literal, because these three countries imprison more journalists than any other. According to the Committee to Protect Journalists, Egypt jailed 25 journalists in 2016. China imprisoned 38, and Turkey incarcerated 81.12 Around the world, there were 259 journalists in jail at the end of 2016, the highest number since 1990.13 As the supply of bad news rises in line with the inability of governments to cope with looming economic, technological, and cultural changes, we can expect a lot more reporters to end up behind bars. To avoid this fate, many reporters will self-censor.

  Instead of imprisoning individual journalists, it’s often much more efficient to simply shut down the growing number of media outlets that report the news in ways that state officials don’t like. To choose one of dozens of possible examples, in May 2017 the Egyptian government abruptly announced it had shut down twenty-one news websites that had been critical of the government. These websites were accused, predictably, of “spreading lies” and “supporting terrorism.”14 Among these websites was Al-Jazeera, a state-dominated news network based in Qatar that had frightened and angered governments across North Africa and the Middle East in 2011, first with coverage of the story of Tunisian vegetable vendor Mohammed Bouazizi and then of the advance across the region of the Arab Spring. Less than two weeks after Egypt banned these twenty-one sites, Saudi Arabia, the United Arab Emirates, Egypt, and Bahrain took the unprecedented step of severing all ties with Qatar, which they accused of supporting terrorist groups. Quarantine the reporter, quarantine the media outlet he works for, and, if possible, quarantine the government that backs them.

  But journalists and websites are far from the only sources of information that the state might consider dangerous. Nongovernmental organizations that champion political, economic, and social reform have been shuttered in Russia, China, and even India. Among right-wing activists in the United States, George Soros, founder of the Open Society Foundations, a champion of freedom of expression, rule of law, and liberal democracy, has become a hated figure. The government of his native Hungary, led by the distinctly illiberal Viktor Orbán, has tried more than once to close Central European University, a school Soros founded. These sorts of walls will only become more common in a world where paranoid state officials fail to meet the most basic needs of citizens. As with more traditional forms of protectionism, these are (often hastily) improvised efforts to restore political stability at the expense of investment in long-term growth—economic, political, and intellectual.

  Why attack individual sources of information when you can wall off the entire Internet? Of course, the fastest-shifting arena in the battle between the state and the flow of information is now in cyberspace, and the crudest tool that government can use to manage content is simply to shut down the Internet. During the Arab Spring, Hosni Mubarak’s government became the first to disconnect the Internet across an entire country, a move made easier by the fact that Egypt, though it’s home to more than 90 million people, has just a handful of Internet service providers.

  To avoid major unrest and limit protests during politically sensitive events, India has shut down the Internet so often that it has itself become the focal point of a protest movement.15 In response to riots in English-speaking regions of the West African nation of Cameroon, the government blacked out the Internet for three months—but only in regions that are home to most of the country’s Anglophone minority. In response, Afrinic, the nonprofit that manages IP addresses for Africa, threatened to impose sanctions on governments that take these kinds of actions.16 But at a time when both developed and developing states, democracies and dictatorships, face threats from terrorists and cybercriminals, sanctions against governments intensify debates over “Internet sovereignty,” the right of lawmakers to regulate and police the Internet as they see fit. Are China and its imitators using censorship to protect their own political and economic power? Or are they simply taking steps that even the most open of democracies will have to follow in order to protect their citizens from terrorists, anarchists, and thieves? That’s not an easy question. In the age of walls, the answer is both.

  In Turkey, President Erdogan’s government has become much more sophisticated in recent years in how it manages the Internet. Erdogan, like other thin-skinned leaders, has sometimes blocked Facebook, Twitter, and other social media tools that amplify the words of his critics, but some who use these sites have evaded these barriers by simply turning to virtual private networks (VPNs) and Tor, a tool that allows users to remain anonymous. In December 2016, however, the Turkish government began a crackdown on VPNs and Tor, according to Turkey Blocks, an Internet censorship watchdog.17 According to a report issued by the group, “Partial or total blocking of VPN, Tor and similar services will shift Turkey’s Internet censorship regime from moderate to severe in character, allowing the state fine-grained control of the flow of information in a ‘walled garden’ model of Internet access” to a degree comparable to state Internet management in China.18

  Iran, another government intent on walling off information, announced plans several years ago to create a “Halal Internet,” another form of information quarantine. In August 2016, Iran announced the opening of the “National Information Network,” a move accompanied by the shutdown of a number of press agencies and news websites—and the arrest of more than a hundred Internet users, according to Reporters Without Borders (RSF), a freedom of information advocacy group. Iran’s Committee for Determining Content that Supports Internet Crime launched this crackdown against individuals and organizations who had posted documents on corruption in city government in Tehran. According to RSF, “This National Information Network can be likened to a big Intranet, in which content is controlled and all users are identified, an Intranet that can be completely disconnected from the World Wide Web when the authorities so decide. It is a personal Internet or ‘Halal Internet’ based on ‘intelligent filtering.’”19

 

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