The neo-liberal consensus is coming apart

he global Covid response was the turning point in public trust, economic vitality, citizen health, free speech, literacy, religious and travel freedom, elite credibility, demographic longevity, and so much more. Now five years following the initial spread of the virus that provoked the largest-scale despotisms of our lives, something else seems to be biting the dust: the postwar neo-liberal consensus itself.

The world as we knew it only a decade ago is on fire, precisely as Henry Kissinger warned in one of his last published articles. Nations are erecting new trade barriers and dealing with citizen uprisings like we've never seen before, some peaceful, some violent, and most that could go either way. On the other side of this upheaval lies the answer to the great question: what does political revolution look like in advanced industrial economies with democratic institutions? We are in the process of finding out.

Let's take a quick march through modern history through the lens of US-China relations. From the time of China's opening in the 1980s to the election of Donald Trump in 2016, the volume of trade imports from China only grew, decade after decade. It was the most conspicuous sign of a general trajectory toward globalism that began following the Second World War and accelerated with the end of the Cold War. Tariffs and trade barriers fell ever more, as dollars as the world reserve currency filled the coffers of world central banks. The US was the global source of liquidity that made it all possible.

It came at a huge cost, however, as the US through the decades lost its manufacturing advantages in dozens of industries that once defined the American commercial experience. Watches and clocks, pianos, furniture, textiles, clothing, steel, tools, shipbuilding, toys, household appliances, home electronics, and semiconductors all left US shores while other industries are on the rocks, most especially cars. Today, the much-celebrated "green energy" industries seem fated to be outcompeted as well.

These industries came to be largely replaced by debt-financed financial products, the explosion of the government-backed medical sector, information systems, entertainment, and government-funded education, while the primary exports of the US became debt and petroleum products.

Many forces combined to sweep Donald Trump into office in 2016 but resentment against the internationalization of manufacturing was high among them. As financialization replaced domestic manufacturing, and class mobility stagnated, a political alignment took shape in the US that stunned the elites. Trump got busy on his pet issue, namely erecting trade barriers against countries with whom the US was running trade deficits, primarily China.

By 2018, and in response to new tariffs, the volume of trade with China took its first huge hit, reversing not only a 40-year trajectory of growth but also dealing the first the biggest blow against the 70-year postwar consensus of the neo-liberal world. Trump was doing it largely on his own initiative and against the wishes of many generations of statesmen, diplomats, academics, and corporate elites.

Then something happened to reverse the reversal. That something was the Covid response. In Jared Kushner's telling (Breaking History), he went to his father-in-law following the lockdowns and said:

We're scrambling to find supplies all over the world. Right now, we have enough to get through the next week-maybe two-but after that it could get really ugly really fast. The only way to solve the immediate problem is to get the supplies from China. Would you be willing to speak to President Xi to de-escalate the situation?

"Now is not a time to be proud," said Trump. "I hate that we are in this position, but let's set it up."

It's impossible to imagine the pain that decision must have caused Trump because this move meant a repudiation of all that he believed in foundationally and all that he set out to accomplish as president.

Kushner writes: