Globalization
has come too early in
humanity's history and
gone too far. It is
unsustainable with burdens
and benefits distributed too unevenly to provide a basis for global
stability. Globalization
of the market has
concentrated wealth in some places at the cost elsewhere
of erratic
consumer- and export-driven growth that distorts economic development
and entrenches poverty.
Free trade has meant
cross-border transfers
of jobs that have left
many
struggling to make ends
meet in the “new economy” while
helping others in low wage markets to enter the cycle. The
resultant distortions have thus both concentrated and generalized
inequality. Globalized
media greatly magnifies
the perception of inequality by delivering
clear images of what is available elsewhere thus
potentiating
large-scale population movements.
Globalization in the 21st
Century benefits only some at the cost of the many
who have been encouraged to believe that they too benefit from the
increased availability of cheaper goods that
they can't fix but must constantly buy anew.
The majority of humanity
still must
struggle to attain or maintain a decent living for themselves and
their families and a
future offering hope for
their children.
Within
countries, those who directly benefit from the various facets of
globalization face a rising
tide of political opposition. In
what may turn out to be a seminal offering,
Peggy Noonan in a
recent WSJ piece
outlines an
important
distinction between what she calls the "protected" and the
"unprotected." Taking this concept perhaps a little
further than she would, the protected
are those who make public policy or have purchased the people who do.
Through their decisions and predominant political power, the
protected impose mechanisms, processes and conditions that provide
them direct benefit. The unprotected are those who must survive in
the world that the protected make
for them. The protected
live the good life secure in their own communities. Because they are
mostly insulated from any negative effects of their policies, they
feel they can inflict
anything on the rest. The unprotected live with none of these
advantages and all of the fallout. Populist political movements from
the left and the right have arisen in may places as the unprotected
have lost their patience with traditional politics and politicians.
In the US that includes Trump and Bernie Sanders, in Europe populist
parties from France to
Poland threatening or
wresting political power from the
“centrists.”
The
root problem could be termed premature globalization. It might seem
that the tying together of the world's economies might have been the
result of some inevitable natural force. But the lowering of trade
barriers and opening of borders has been the result of a myriad of
political decisions by the protected. They have been able to move
jobs to places with lower labor costs and to “import” – through
legal and “illegal” migration – cheap labor to where they need
it. Free trade always means that jobs move from one place to
another. All those Chinese “lifted” out of poverty through years
of high growth have come directly from jobs moved from America and
elsewhere. The benefit to the unprotected – including the many in
the developing world not able to compete with China or the West –
has been slim and often fleeting. But as a friend has noted, free
trade is only Pareto-optimal
if the gains are broadly shared. The gains have not been broadly
shared but the costs have.
Who
benefits from free trade: the owners of capital and their public
servants. They reap the profits and gain extra from buying favored
treatment (openly or through corruption). Also, the local political
elites of developing countries who monopolize power and skim off what
comparatively little wealth trickles in from the global trade
channels. Some from supplying raw materials (often mined or grown in
ways wasteful and injurious to the environment and local
populations), some from importing those planned-obsolescence consumer
goods. (I freely admit to “benefitting” from the endless series
of iPhones.) In America, they use their advantage to win favorable
tax rates (or move operations elsewhere) while pushing to reduce
“wasteful” government expenditure on things like infrastructure,
healthcare or social welfare.
The
primary role of government should be to ensure that all citizens can
earn a basic living while helping them provide a suitable and
nurturing environment for their children. This means the economy
needs to provide a range of jobs from the highly skilled to the basic
to mirror the natural mix of abilities and interests. Taking just
the United States, over the last decades the Democrats and
Republicans both have failed to meet this test. They have pushed the
“benefits” of free trade at the cost of millions of jobs lost.
Their mantra has been the benefits of those cheaper consumer goods
and the possibility of newer jobs in the advanced economy. Even
before the 2008 financial tsunami, those newer jobs were hard to find
and most were lower pay.
When
I was a lad in the 1950s and 60s, my parents raised five children on
the salary of a truck driver plus the occasional factory employment
of my mother. Try raising five children today on a working stiff's
salary, even if both parents work. (How many political hacks rail
against abortion but don't care a whit about how to pay for raising
those children once they are born?) The protected also benefit from
cheap imported labor, often forced to work off the books or as
“contractors” without benefits. They do the jobs “Americans
won't do.” Translation, they do the jobs Americans won't do at
wages too low to allow a decent living.
Globalization
would work well in a world of less
pronounced inequality. But we have been pushed into it
prematurely. The world of the 21st
Century perhaps just
does not produce enough wealth to share sufficiently for most people
to have a decent life where they were born. Thus the wave of
refugees – who come from the ranks of the unprotected whether
because of conflict or poverty – overwhelming
the gates of Europe or trying to somehow get through Mexico to
the US. Maybe the only recourse is for societies that can afford to
go it alone to raise the walls, close the doors and pull those jobs
back to the homeland by ending free trade. Leave China to deal with
its population without the benefit of those jobs imported from
America. This is the appeal of the Trumps. It's hard to argue
against and certainly the same old refrains from the protected –
Democrats and Republicans – have lost their popular appeal. No
matter who wins the American presidency or how hard Europe tries to
prevent migrants from trying to cross, the unprotected are not likely
to be denied forever.
