The Yellow Vest Movement: Does What Happens in Paris Matter to America?

Joseph V. Micallef is a best-selling military history and world affairs author, and keynote speaker. Follow him on Twitter @JosephVMicallef.

Roughly 12 weeks ago, French citizens in Paris took to the streets to protest the imposition of sharp, new taxes on fuel. The protesters wore yellow plastic vests, similar to the kind traffic coordinators or construction workers often wear. In France, such vests are mandatory equipment in cars and must be worn by drivers if they are forced to stop because of a roadside emergency.

The movement was quickly dubbed the Yellow Vest Movement. Over the month of December, it grew to encompass several hundred thousand protesters, spread to France's major cities, and resulted in widespread damage and acts of vandalism along Paris's premier address, the Avenue des Champs-Élysées.

It also found an echo among supporters across some two dozen countries as far-flung as Canada, Australia, Iraq, Pakistan and Taiwan. Even Russia witnessed a demonstration by Muscovites wearing Yellow Vests in protest of proposed parking fee hikes.

After first ignoring the Yellow Vest Movement, French President Emmanuel Macron abruptly switched course, first suspending the proposed increase in gas taxes and then freezing fuel and auto taxes for six months. In addition, Macron promised an increase in the minimum wage, eliminated taxes on overtime and end-of-year bonuses, and pressured large French companies to issue end-of-year bonuses to take pressure off the government.

The protesters described themselves as working-class French men and women, many of whom earned monthly salaries of 2,000 euros ($2,300) or less. The movement was not associated with any political party, either from the left or the right, and caught France's cultural and political elites by surprise.

To date, the Yellow Vest Movement has issued 42 demands, ranging from the elimination of traffic control cameras and a decrease in fuel and auto taxes, to improved government services in rural areas and greater government accountability and transparency. About two-thirds of the policies advocated by the Yellow Vest Movement were associated with positions taken by France's radical leftist parties, while the balance was associated with positions taken by Marine Le Pen's far-right National Rally.

According to an opinion poll published by the Elabe Institute, 36 percent of the Yellow Vest participants voted for Marine Le Pen in the May 2017 presidential election, while 28 percent voted for far-left Socialist candidate Jean-Luc Mélenchon. Without question, support for the Yellow Vests cuts across the spectrum of French politics.

Is the Yellow Vest Movement just another example of the social unrest that has periodically gripped France or does it have far-ranging implications for the rest of the world? In particular, what are the strategic implications of the Yellow Vest movement for the U.S.?

The Yellow Vests and Globalism

Globalism has been a feature of the international economic system since the end of World War II. It took a dramatic leap forward over the last half century, however, as China and India, the two most populous countries in the world, opened themselves up to international trade and the capitalist economic system. The digital revolution; the emergence of global supply and distribution systems, from containers to overnight shipping; and unfettered capital flows kicked globalism into high gear.

The immediate consequences of globalism were a vastly expanded global economy. The emergence of a burgeoning middle class in China, India and elsewhere in emerging economies drove a growing appetite for Western consumer goods and services, from Johnnie Walker Scotch whisky to Nike shoes to Starbucks. Accelerating economic growth and rising standards of living around the world fueled demand from raw materials from soybeans to petroleum, while rapidly modernizing economies fueled demand for sophisticated capital goods from Caterpillar earth movers to Boeing passenger jets.

The globalism revolution lifted hundreds of millions of people above the poverty line and created a new, vibrant middle class from India and China to Brazil, Mexico and South Africa. It did so, however, by transferring millions of what used to be called working-class jobs from the industrial economies of Europe and North America to low-wage economies around the world. It's likely that ever-increasing levels of factory automation would, eventually, have eliminated many of these jobs anyway. Under globalism, however, the process was significantly speeded up.

One of the consequences of that change was an increasing disconnect between the world's great urban centers and the rural areas that surround them. Cities like London, Paris, New York and San Francisco thrived in the new globalist economy even as their peripheries suffered job losses, depopulation and disinvestment. Indeed, globalism and relentless urbanization became mirror images of the same coin.

The world's great cities continued to grow, becoming the engines of technological innovation and economic growth. Those cities had more in common with each other than they did with their stagnating peripheries.

Relentless urbanization steadily drove up the value of urban real estate. Block by block, cities became increasingly gentrified, driving up not just the cost of real estate but the cost of essential services as well. That process made multimillionaires of many urban home owners, while making it impossible for many working-class inhabitants to live in those cities. One of the primary complaints of the Yellow Vest Movement is that its members cannot afford to live in France's major cities and that the smaller towns and cities they can afford to live in are economic backwaters with no jobs.

The financial crisis of 2008 was, in many ways, the apex of globalism and its associated economic policies. What was significant about the 2008 economic crisis was that it reverberated around the world, creating a worldwide economic downturn. Across the globe, from Beijing to Washington to Brussels, governments responded to the economic downturn by massively hiking spending and accepting unprecedented levels of public debt.

By all accounts, the world's economy has bounced back nicely since the economic crisis of 2008. Financial markets in many countries, including the U.S., are at near-record levels. Many urban real estate markets in the world's major cities have recovered to the pre-2008 levels. In the U.S., the unemployment rate is at multi-decade low levels and, for the first time in half a century, middle-class incomes have started to trend upward.

Nonetheless, since 2010, there has been a growing anti-globalist protest movement around the world. That movement has often expressed itself as a reassertion of national sovereignty against global institutions and the "elites" that run them.

In the U.S., such sentiments are what propelled Donald Trump's America First campaign and his subsequent election victory in the 2016 presidential elections. It's what drove the Brexit movement in Great Britain and what has fueled anti-EU/Brussels protests from Italy to Poland.

The Strategic Consequences of Anti-Globalism

Globalist economic policies lead to higher levels of economic growth and wealth creation, but they do so at the expense of marginalizing a significant segment of Western societies. In the past, Western governments sought to address this worker obsolescence by offering extended safety nets of unemployment insurance, retraining programs and financial assistance to displaced workers. While such policies helped ameliorate the immediate consequences of industrial job losses, it did not solve the long-term social consequences of such policies.

Globalism isn't going to go away. Even at the heights of the Great Depression, there was a significant amount of international trade that still occurred, regardless of the tariff barriers that were imposed. But as the International Monetary Fund has continued to warn, anti-globalism/protectionist policies will reduce overall rates of economic growth worldwide.

Such reductions would occur at a time when most of the world's major economies are already experiencing lower growth and at a time when many governments around the world are experiencing large deficits and unprecedented levels of public indebtedness.

In the U.S., the federal government is already on track to experience trillion-dollar yearly deficits at a time of larger-than-average economic growth and historically low unemployment. An economic contraction, a foregone conclusion at some point in the next several years, will raise serious doubts about the nation's ability to continue to fund trillion-dollar-plus public deficits or 700-billion-dollar defense budgets.

Likewise, much of the EU is experiencing low-to-stagnant economic growth. Italy is officially in a recession. German retailers just experienced their worst fourth quarter in a decade with a significant year-over-year decline in retail sales. Without long-term structural reforms designed to spread European economic growth more evenly across the continent, it is hard to see how the EU -- and more importantly, the Euro, its common currency -- can survive. While the EU represents a formidable economic and technological competitor to the U.S., it is also a critical political partner and defense ally.

Political disarray in Europe, of which the Yellow Vests are simply one manifestation, has a direct consequence on NATO and on the defense organization's spending for defense and security. Such disarray also gives the Kremlin more opportunities to foster political dissension and chaos within the EU and NATO.

Lower levels of economic growth also have a direct bearing on the economic prosperity of major commodity producers such as Brazil, Canada and Australia. More importantly, they have a direct bearing on the long-term prices of petroleum products. The U.S. is now the world's largest producer of petroleum, with an output greater than the combined output of Saudi Arabia and Russia, the next two largest producers. America's petroleum exports are now up to 2 million barrels a day, roughly the equivalent of pre-sanction Iran. It is Midland, Texas, rather than Riyadh, that now determines long-term petroleum prices.

For Washington, oil prices are a double-edged sword. Lower oil prices are the equivalent of a tax cut for many Americans and a boost to consumer spending. On the other hand, lower oil prices negatively impact a key American industrial sector. Internationally, low oil prices cripple the Russian economy, a consequence that paradoxically both limits and encourages Russian adventurism. More importantly, low oil prices are a major factor of potential political instability in the Middle East.

Economic competition between China and the U.S. is just one aspect of a broader geopolitical and military competition between the two countries. The U.S.-China economic and trade relationship is at the heart of the globalist economy. While the Trump administration has focused on the U.S.-China trade balance and claims that Chinese companies routinely steal American intellectual property, the issues between Washington and Beijing go beyond economic ones.

Lower global growth will drive economic weakness in China and will go hand in hand with Beijing's renewed emphasis on Chinese nationalist aspirations in the South China Sea, and elsewhere in the Indo-Pacific region. Beijing often responds to slowdowns in China's economy by ratcheting up nationalist and especially anti-Japanese and anti-American sentiments. Such policies will further strain Beijing's relationship with Washington and with its immediate neighbors. It is likely to manifest itself as a more bellicose Chinese foreign and military policy.

The Yellow Vest Movement has been described as the proverbial canary in the coal mine, the Western equivalent of the Arab Spring. It is simply the most recent evidence that the globalist economic system that has developed since the end of World War II, and which sharply accelerated from the 1980s on, is in need of long-term structural reforms. That doesn't mean that globalism will end, but it does mean that economic policies whose inadvertent consequences decimate the working class in Europe and North America are simply not sustainable over the long term.

The consequences of reforming the current globalist system will likely lead to a reduction in overall economic growth at a time when Western governments are already operating under unprecedented deficits and levels of public debt that leave them ill-equipped to deal with an extended period of economic weakness. The consequences of that weakness on U.S. security and America's global posture is unavoidable.

So yes, what happens on the streets of Paris matters to America.

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