For my parents’ and grandparents’ generations, globalisation meant the ability to travel to the US, the UK, Canada and Australia to seek employment as the first half of the 20th century saw Europe struggling to employ a growing population. Younger generations associate globalisation with cheap electronic goods, but also loss of security for those who lost their jobs as their workplaces were exported to developing countries.
The current medical and economic crisis could bring about changes that may reshape the current globalisation model. Those who are enthusiasts of globalisation think that today’s global order benefits both developed and developing countries. But the pandemic has shown how global cooperation and governance on trade has not been extended to other areas that affect most people’s well-being.
This weak basis of globalisation was exposed when US President Donald Trump branded the disease as a “Chinese virus”. He went further and withdrew support to the World Health Organisation at a time when this organisation has the critical task of guiding countries on how to deal with the pandemic. The Chinese political authorities were initially reluctant to share information on the outbreak of the pandemic, thus preventing early intervention by other countries. When the pandemic became a global crisis, we also saw countries scrambling for ventilators, sanitisers and face masks that led to unilateral export restrictions of these items.
At present, there is little indication of global harmony. Even if US voters decide to elect a different president in November, there will still be many other politicians wanting to spin globalisation in reverse. It must be acknowledged that present-day globalisation has not, and never will be, the only, or the best, way forward for serving the economic and other interests of the vast majority of global communities.
French President Emmanuel Macron, in an interview with The Financial Times, argued that amid the context of climate change, inequality, and weakening democracy, “we already had the feeling that the established mode of globalisation was coming towards the end of its life” even before the pandemic erupted. He proposes a new “grammar of multilateralism”.
The present model of globalisation was built on two pillars: the interest of consumers and multinational banks. Improvements in transportation and communications technology made global supply chains and cross-border finance a reality that encouraged globalisation in the manufacturing of goods that consumers in Western societies wanted.
This globalisation model has impoverished millions of workers in Western economies
A few decades ago, global political leaders saw globalisation as a win-win formula. But they did not give much importance to other dimensions of global interdependence.
The World Trade Organisation and the International Monetary Fund were considered to be of greater importance for the wellbeing of global societies than the World Health Organisation. No wonder that the enormous global environmental challenges are left mostly unaddressed. The little effort made by some countries to slow down climate change and manage its consequences are not coordinated at a global level.
Dani Rodrik is the Ford Foundation Professor of International Political Economy at Harvard’s John F. Kennedy School of Government. He argues that the broader agenda of hyper-globalisation has been set by multinational corporations and big banks, with labour and environmental and civil society groups typically on the defensive. Tackling governance failures or concentrating on public goods or beggar-thy-neighbour rivalry were low political priorities.
This globalisation model has impoverished millions of workers in Western economies as they lost their jobs. At the same time, it failed to protect the health and general wellbeing of the vast majority in all societies.
Some of Rodrik’s solutions to fix the globalisation model will not be digested well by most global political and business leaders who are well served by the present model.
Promoting inward-looking trade strategies as President Trump wants is undoubtedly not the solution. Neither is the closure of national borders going to address the challenges the world is facing.
Uncontrolled migration is creating immense problems for the weakest in Western societies. But Rodrick argues that a “controlled expansion of work visas, particularly for lower-skill work, paired with the appropriate redistribution of the gains, is an effective way of enhancing global incomes”.
Rodrik’s second strategy is even more thought-provoking. He argues: “Global action against tax havens is an obvious priority since tax havens are a clear and costly instance of beggar-thy-neighbour policy”.
In the last few months, political leaders did the previously unthinkable when they closed down society and much of the economy.
Will this radical mode of acting bring about change in the globalisation model for the next two decades?