Editorials, GS-1, Uncategorized

Is globalism dead?

Whether you love Donald Trump or you hate him, you cannot deny that he has a knack for capturing the zeitgeist. At his acceptance speech at the recently concluded Republican National Convention in Cleveland, the newly anointed presidential candidate declared in no uncertain terms: “Americanism, not globalism, will be our credo.” Trump, presumably, was speaking not only for himself and his campaign, but presumptively for the American populace, whom he hopes to lead into a brave new world come January 2017.

Is globalism dead, buried at the hands of a resurgent provincialism, parochialism, and even xenophobia in some of the major advanced economies? The rise of Trump and former Democratic presidential candidate, Bernie Sanders, as well as the recent decision by British voters to exit the European Union, seem to suggest the alarming possibility. In the US case, even though Sanders has exited the race, in the end gracefully, his shadow hangs over the successful Democratic candidate, Hillary Clinton, who has opportunistically lurched to the left to try to capture Sanders supporters—exactly as Trump courted them in his acceptance speech.

The defensive crouch and inward turn into which the US, the UK and other advanced economies appear to be descending has, of course, many parents. It would be presumptuous of economists to discount the role played by the sense which seems to pervade a section of the old stock populations in places such as the US and the UK, that the dominant Anglo-Saxon culture is beleaguered by a new and threatening (to them) polyglot multiculturalism, and one can certainly read the rise of Trump and the success of the Brexiteers in this light. (Canada is the one major Anglo-Saxon nation which, at least thus far, seems to have bucked this trend, with an assertive embrace of its plural identity by a large swathe of the political and intellectual elite.)

Yet, a defence of traditional culture and an aggressive assertion of national interest, as opposed to the global good, whether or not it is merely masking garden variety racism and xenophobia, is not the whole story. Many, although not all, of Trump’s and Sanders’ most ardent supporters, and the most fervent Brexiteers, comprise white, blue-collar workers, mostly men, who have seen their wages and employment opportunities stagnate, or worsen, in the past quarter-century or more: exactly the period we associate with the rise of globalization. These individuals are not wrong to believe that increasing integration into the global economy, through reduced trade barriers, outsourcing and the rest, bear some responsibility for their current plight. The putative new protectionists thus have a receptive audience.

It is right and proper to point out that the proposed remedies—measures which, in effect, involve turning inward and retreating from the global economy—would do more harm than good, which is the standard, and correct, received wisdom from economics. But this amounts to locking the barn door after the proverbial protectionist horse has bolted.

A signal failure of globally minded politicians and policymakers in the advanced economies in the current era has been to make an intellectually honest and politically robust case for globalization in general, and the freeing of trade in particular. Trade liberalization, under the aegis of the World Trade Organization, has been an elite-driven exercise, in which decisions taken in smoke-filled backrooms in Geneva by bureaucrats and trade lawyers are presented as a fait accompli to (what was seen to be) a docile populace back home, with no serious attempt to explain the benefits and the costs.

Rather than trying to explain that the freeing of trade creates both winners and losers, but that the losers can be compensated while the winners continue to gain—in other words, that freer trade is Pareto improving, in the jargon of economics—politicians would simply duck the issue, or use lazy and misleading locutions such as “free and fair” trade, without explaining exactly why plain old free trade was somehow unfair on its own.

Regrettably, it is not just politicians, but right-leaning economists, with some important exceptions, who have failed to articulate an intellectually coherent, while at the same time politically acceptable, case for the freeing of the economy, including for free trade. The notable exceptions, of course, include first and foremost my own great teacher, economist Jagdish Bhagwati, but, alas, his has been one of relatively few prominent voices articulating the case and fighting the good fight.

This kept the field wide open for left-leaning economists such as the Nobel winner Joseph Stiglitz. His pronouncements on the ills of globalization are music to the ears of political parties, non-governmental organizations and other assorted left-wing foes of globalization and the freeing of trade.

Forging common cause with right-wing xenophobic and nativist elements, the centrist core of support for globalism has been squeezed from both wings of the ideological spectrum. It is no coincidence that supposed polar opposites Trump and Sanders have almost identical views on the imagined ills of the global trade regime, something I pointed out in these pages and which has now become a commonplace observation.

If globalism is threatened, its supposed advocates, thus, bear at least part of the burden.

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