Tackling the trends behind Trump

British economist Philippe Legrain says Donald Trump is "a giant wrecking ball" laying waste to the established world order. Photo: Sam Sachdeva.

Donald Trump and Brexit have given many people cause for concern about the future of the current world order. British economist Philippe Legrain spoke to Sam Sachdeva about tackling the public pessimism behind the rise of protectionism - and why there should be greater optimism about employing refugees.

As Donald Trump draws the world closer to a trade war and the United Kingdom tears itself apart over Brexit, it’s easy to feel bleak about the future.

British economist and writer Philippe Legrain, in New Zealand for a week-long tour, argues we shouldn’t give in to “the politics of pessimism” .

Speaking to Newsroom , Legrain draws a distinction between the negativity which drove voters to support nationalist causes like Trump or Brexit, and the “justifiable pessimism” of those fearing the consequences of that support.

He describes the US President as “a giant wrecking ball”, laying waste to the established rules and norms which have governed the modern world for decades.

“We’re in a really worrying period in world history where the liberal international order that was created after World War II is basically over, and we don’t know what is going to take its place.”

Legrain says Trump may win re-election despite his disastrous presidency so far, thanks to the strong economy he inherited, and even if he is booted out it’s unclear how much can be unwound.

“It’s much easier to break things than it is to create them - a lot of damage done will be hard to repair.”

Legrain suggests we may see “sons of Trump” pursuing elements of his agenda, but with greater competence.

While that may seem a terrifying thought to some, he argues pessimism shouldn’t give rise to defeatism when it comes to fixing the root causes that have propelled Trump and others to power.

“If you basically buy into the fact that, ‘Well, things are rubbish...but there’s nothing we can do about it’, then you open the door to people who say, ‘Let’s shake things up because it can't get any worse’, and that’s just not true.”

New Zealand is in a better situation than the US or UK, Legrain says, having avoided the full brunt of the global financial crisis, but could still be hit by the consequences of dysfunction elsewhere.

“If we are going to preserve something of the benefits of openness, we need ordinary voters in the United States and Europe to be feeling the economic system works for them, so they are not in their fear and rage tempted to vote for people like Trump who are catastrophically dangerous.”

Moving from 'value extraction' to productivity

During her New Zealand visit this week, EU politician Federica Mogherini spoke about the symbolic value of greater cooperation between partners such as the EU and New Zealand, showing there were some fighting to save the rules-based system.

Legrain agrees coalitions of like-minded countries can preserve some parts of the system, but says the US still has overarching importance.

So what needs to change?

While he doesn’t see automation as posing the existential threat to workers that some claim, Legrain says governments must ensure people have the skills to reap the benefits of technology rather than suffer from it (he has previously suggested every child should learn coding).

More broadly, he talks about the increasing share of the economy devoted to “zero-sum rent extraction activities” such as property speculation.

“That means on the one hand people who happen to work in those privileged sectors do well at the expense of other sectors, and second of all because they’re not really productive industries, overall productivity tends to be low, and that double impact on equity and productivity tends to be a really serious problem.”

Legrain says governments should do more to boost productivity growth while also cracking down on value extraction in industries like financial services, which he calls “giant gambling...which doesn’t serve a social purpose”.

Business benefits of refugees

Another positive policy move, Legrain argues, would be encouraging businesses to hire more refugees as employees.

His thinktank, OPEN, has produced research suggesting investing one dollar in welcoming refugees can return nearly two dollars of benefits within five years.

“Refugees are often seen as a burden and that’s just simply not true - refugees have a hell of a lot to contribute to New Zealand society and the organisations that employ them,” Legrain says.

“They are incredibly resilient people who have gone through a tragedy that could befall any of us of being forced out of their homes and countries and they’ve made it out the other end, they’ve made it to a country on the other side of the world, and they’re desperate to rebuild their lives and contribute to their new home.”

Many have professional qualifications which can help with skills shortages, while others are willing to do work which Kiwis won’t and move to regions in need of revitalisation.

Part of the battle is changing the public perception of refugees, seeing them not as a burden but an opportunity, while there are more mundane issues such as providing practical measures to help suitable candidates find employment.

Internships and work experience programmes are one way of easing employers’ concerns about hiring someone with a lack of local experience, while language and cultural issues can also be dealt with through classes.

“If you’re a small business, you might look at hiring a refugee as somehow a risk, but I think with suitable help and support a it’s risk worth taking as you’ll be richly rewarded with a hardworking, local, motivated employee.”

NZ approach under the microscope

While New Zealand’s refugee resettlement programme has won praise in the past, the number we take - even per capita - pales in comparison to other countries. The Government is planning to double the refugee quota to 1500 per year, but is reportedly holding off due to a current lack of housing.

Legrain says refugees in New Zealand he has spoken to mention “a very welcoming attitude”, but he believes more can be done to help them find employment more quickly.

As for the concerns about a strain on infrastructure from increased numbers of refugees, and migrants more generally, he says international evidence shows any cost is “more than paid for by their contribution”.

Solving the housing problem is simple: “Build more houses.” New Zealand is a relatively empty country, he says, and can build both up and out if it wants.

As for the “fear of the other” which drives some opposition, Legrain says research shows that encouraging people to mix dispels prejudice as people build friendships and a greater understanding of other cultures.

With Prime Minister Jacinda Ardern this week reconfirming the Government’s commitment to increase the quota, New Zealand may soon reap the benefits of more refugees here.