How Britain can address the end of globalization – today’s Times

Moving on through the end of globalization

Note this oped was published in today’s Times, https://www.thetimes.co.uk/edition/business/britain-needs-to-find-its-place-in-the-era-of-post-globalisation-f20sjksvn

Most Britons have had enough of Brexit, many will think it can’t get any worse. They may be wrong. Once the Tory leadership contest is over the Brexit circus will start over again. When it does, the risk is that any forbearance the EU showed Theresa May evaporates, and that it takes a tougher line on financial services for example. This will come as little comfort to business people, workers and the Treasury.

There is a glimmer of hope however, which is that in the Dante’s inferno that is world politics, Britain is not alone. Many other countries are suffering political or even democratic recessions, and a good number of others are at the wrong end of an accelerated cycle in the rise and fall of nations. In this context, Brexit is not an event, or the event, but rather part of a global process.  

This ‘levelling’ process is the end phase of the period of globalization that has carried so much with it over the past thirty years, and the fallow period that will follow as a new ‘order’ is built up. It is no surprise that the most acute political debates today relate to aspects of globalization – wealth inequality, migration and the role of technology in our societies for instance.

Neither is it a surprise that the two countries that have delivered the most significant political shocks in recent years (Brexit and the election of Donald Trump) are those that have been in the vanguard of globalization.  

In this respect Westminster, and much of the British media, need to look up and string together the many strands of change occurring in economics, foreign policy and politics around the world. Brexit has allowed many politicians a ‘policy holiday’ in that it has permitted them to engage in parlour games while neglecting both domestic policy and what can be described as a paradigm shift in world affairs.

This paradigm shift may offer some avenues for a post-Brexit Britain, though it may well be that the next generation of politicians, rather than the current one, makes this journey. Several trends are worth flagging.

One is that globalization is ceding to a multipolar world, made up of three large regions – the US, EU and China each of whom have increasingly distinct approaches to things like technology, democracy, war, economics and politics. These ‘poles’ will increasingly do business with each other, to the detriment of twentieth century institutions like the IMF and World Trade organization. The opportunity for mid-sized nations like Britain is to first arbitrage the differences between these large regions in say law and finance, and to become more distinctive in terms of national identity.

A second trend relates to economics. The world is replete with economic imbalances like record indebtedness, very high inequality and inordinately powerful central banks. Like climate change these represent growing, though unchallenged risks in terms of the policy response. There is a potential advantage to countries who tackle these issues early rather than in the midst of a crisis. Britain should act here, and where possible lead other countries.

The other aspect of economics that is vital is the need for countries like Britain, most of Europe and increasingly the emerging world, to rediscover the ingredients of organic growth. In the last decade economic growth has become heavily financialized, and this creates obvious risks. The majority of the non-London UK economy is in bad need of a framework that will focus on increasingly Britain’s economic potential, and coherently drawing together areas like taxation, education and finance. This is the kind of response that Brexit requires.

Michael O’Sullivan is the author of The Levelling (PublicAffairs),

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