Is the 2016 electoral backlash against globalization temporary or permanent? Brexit has so far been an ignominious failure. Donald Trump’s attempts to slap tariffs on imported goods, particularly from China, have not been successful, hurting American workers and farmers and quite likely slowing economic growth. His directive to American businessmen to leave China, aside from his lack of authority to do so, borders on the absurd.
While right-wing forces seem to encourage nationalism, nativism, and bigotry toward “the other,” left-wing forces are not cheerleaders for globalization either. In the US, Senator Elizabeth Warren (D-MA) is leading the charge for more stringent global standards. She would require that all countries that wish to trade with the US adhere to international labor and environmental standards, and protect human rights. Her standards are so high that some critics suggest she would dramatically reduce global trade.
It’s time for some perspective.
“Globalisation: the rise and fall of an idea that swept the world,” in The (UK) Guardian, 2017 noted that the globalized economy has caused job losses and depressed wages in some areas, with the headline. “Some Economists Who Swore By Free Trade Have Changed Their Minds.”
In a panel discussion titled Governing Globalisation at the World Economic Summit in Davos, Switzerland, economist Dambisa Moyo acknowledged that that “there have been significant losses” from globalization. “It is not clear to me that we are going to be able to remedy them under the current infrastructure,” she said.
Guardian author Nikil Saval wrote that globalization is a “notoriously imprecise term, but what it meant most often .”was making it cheaper to trade across borders – something that seemed to many at the time to be an unquestionable good. In practice, this often meant that industry would move from rich countries, where labour was expensive, to poor countries, where labour was cheaper. People in the rich countries would either have to accept lower wages to compete, or lose their jobs. But no matter what, the goods they formerly produced would now be imported, and be even cheaper. And the unemployed could get new, higher-skilled jobs (if they got the requisite training).”
Economists “long embraced the principle of comparative advantage – simply put, the idea countries will trade with each other in order to gain what each lacks, thereby benefiting both. In theory, then, the globalization of trade in goods and services would benefit consumers in rich countries by giving them access to inexpensive goods produced by cheaper labour in poorer countries, and this demand, in turn, would help grow the economies of those poorer countries,” Saval wrote.
While it is true that workers have experienced a drop in real wages since the 1970s, and a shift to less stable working hours, dismantling globalization does not appear to be an effective strategy.
From the point of view of a historian, “pursuing free trade has always produced displacement and inequality – and political chaos, populism and retrenchment to go with it. Every time the social consequences of free trade are overlooked, political backlash follows,” Saval wrote.
She concludes by quoting economists who believe the world is at a turning point. The initial benefits of globalization are known and have dissipated. China will be the main beneficiary for the foreseeable future, with globalization helping to expand its middle class. Western nations, particularly the US, may need to invest more in worker retraining and a stronger social safety net to help citizens navigate the economic instability that comes from increased automation and economic waves moving too fast for workers to adjust.
The whole piece is worth reading for an overview of globalization since the 1990s.