Last week was a busy one, two days in Copenhagen for the excellent Fund Forum, then through Dublin on Wednesday to present ‘Opportunities and Challenges for a small, advanced economy’ at the Irish state’s ‘National Economic Dialogue’ and finally to London for the UK launch of ‘The Levelling’. Appearances on CNBC, Sky and a lecture at the London School of Economics were amongst the highlights.
In other media one input I would like to flag is a feature in The Economist (https://www.economist.com/open-future/2019/06/28/globalisation-is-dead-and-we-need-to-invent-a-new-world-order). The interview reflected a question that I get on a recurring basis which is how we ‘lost globalization’?
There are several strands to the response here. First, globalization has been a force for good but is now receding, trade flows are the most obvious example. Second, as globalization retreats we become more aware of its perceived side effects, such as inequality, the changes in our lifestyles and our diets, and generally “the way we live now,” to borrow Anthony Trollope’s words. Relatedly, the aftermath of the global financial crisis and the responses to it have left a range of im- balances in place.
Third, people are now reacting to these imbalances and side effects. This is manifest in growing political volatility, which in my view will bring about a revolution in politics as people search for more accountable and responsible forms of governance, rather than less democratic forms of government.
As it stands, many people like blame the ills of specific countries at the door of globalization. Radical political leaders—such as Nigel Farage, formerly of the United Kingdom Independence Party (UKIP); Marine Le Pen, formerly of France’s National Front; and the Five Star Movement in Italy—and media pundits like Sean Hannity of Fox News have spoken out loudly against globalization. The notion that everything is the fault of globalization is very convenient. It makes for an expedient culprit, and it is so pervasive that we have lost sight of its meaning and implications.
Globalization has few defenders, as it is now unfashionable and po- litically unprofitable to show support for it. It has no outright owner, though some international research bodies and thought leaders like the Organisation for Economic Cooperation and Development (OECD) and the World Economic Forum (WEF) are closely associated with it.
Similarly, many economic, political, and social stresses, such as inequality, poverty, and the decline of agriculture, are ascribed to the evils of globalization, regardless of the true origins of those stresses (in fact, during globalization the world poverty level has collapsed from 35 percent of the world population in 1990 to 11 percent in 2013). In addition, the public understanding of globalization is not strong.
Understandably, few people take the trouble to sift through trade reports or examine the flow of labor around the world. Thus, as with the issue of “Europe” in British politics, where few politicians have said or can say anything positive about Europe, globalization is vulnerable to becoming a catchall for the negative aspects of economic growth and so functions as a sort of political doormat.
There is, however, a strong case to be made that globalization, the most powerful economic force the world has witnessed in the past twenty years, has been a force for good. It is now so pervasive in its effects and has produced so many startling outcomes—for example, the rise of Dubai, the successes of small states like Singapore, growing wealth in emerging economies (from 2000 to 2010 wealth per adult in Indonesia increased sixfold), the emerging-market consumer, and fast-changing consumer tastes—that we risk taking it for granted.
With the G20 meeting in Osaka now over, there was not in my view sufficient urgency on the demise of globalization and what might take its place.
In particular, the Russian leader’s comments that liberalism is obsolete opens up a new avenue of attack in the debate on globalization, and one that will delight Mr Putin’s admirers. His remarks which I feel are just a demonstration of ‘maskirovka’ (the Russian military doctrine that is centred around deceiving and destabilizing opponents). That the American President did not upbraid Putin is striking, but not surprising. It teaches us that the idea of liberal democracy needs to be defended, and its benefits more clearly elucidated.
Hong Kong, Latin America and Eastern Europe are the battlegrounds here, and ongoing contests between ‘liberal’ and ‘managed’ versions of democracy in countries like the Czech Republic, Hungary and Poland help to uncover the motivation for Mr Putin’s remarks.
The immediate challenge here is for the new leader of the EU, whomever he or she is, to take up the case for liberal democracy. In my view, this is a core value of the EU and it is high time that countries who wilfully slip towards corrupt and mendacious approaches to governance should be asked to take sides.
Have a great week ahead,
Mike
The Levelling 