The 21st century has gotten off to a bad start.

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The 1980s and 1990s were some of the best decades in human history, and the good times continued into the early 2000s. But in recent years things have gone steadily downhill. In the 1980s and 1990s, most of the news in the financial papers was good news. Now it’s almost all bad news. Mostly self inflicted wounds.

While there are many factors in play, including the aftereffects of COVID, the underlying problem is rising nationalism. Consider the following Bloomberg headline, discussing the effects of the US moves to restrict technology transfer to China:

Chipmaker Rout Engulfs TSMC, Samsung With $240 Billion Wiped Out

• Markets in Korea, Japan and Taiwan return from Monday holiday
• Selloff extended to currency markets, with Korean won falling

That’s all caused by nationalism in the US and China.

Other headlines point to problems with the UK economy. Once again, many factors are at work. But it’s worth noting that ever since 2016 the UK has been doing poorly even relative to other developed countries. Some of us warned that Brexit would reduce the UK’s GDP, and it has. Once again, the fruits of nationalism.

Growth in the US has been slowed by a labor shortage, mostly due to a crackdown on immigration. Again, that’s nationalism.

The global economy has been severely impacted by the war in Ukraine—the result of Russian nationalism.

Trump’s trade war with China, which Biden has continued, is also reflective of nationalism.

Biden’s recent IRA bill has major weaknesses due to various buy America provisions, which will limit their effectiveness in addressing global warming. That’s nationalism.

There has always been a certain amount of bad news. But it used to be offset by occasional good news, such as international trade agreements, deregulation, and privatization. Now we get the bad news without the good.

I actually view these problems as fairly minor. The developed world is pretty rich, and it doesn’t much matter if we lose a few points of GDP growth. The more worrisome effects of rising nationalism will come later, in the form of increased war. There was also a rise of nationalism during the early 20th century, and we all know how that played out.

PS. A while back I recall some pundits complaining about the effects of globalization. Well, how are you guys enjoying the alternative? Have you checked you investment accounts recently?

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