Restoring Faith in Globalization
I must confess that I am a firm believer in the benefits of globalization. To my mind, the gradual interlinking of regions, countries, and people is the most profoundly positive development of our time.
But a populist has now assumed the United States presidency by campaigning on a platform of stark economic nationalism and protectionism. And in many countries, public discourse is dominated by talk of globalization’s alleged “losers,” and the perceived need for new policies to stem the rise of populist discontent.
When I was born, the world’s population was 2.5 billion. I vividly recall a time in my life when many people feared that starvation would soon run rampant, gaps between the rich and poor would grow ever wider, and everything would eventually come crashing down.
We now live in a world with 7.5 billion people, and yet the share of people living in absolute poverty has declined rapidly, while the gap between rich and poor countries has steadily closed. Around the world, average life expectancy has increased from 48 to 71 years – albeit with significant differences between countries – and overall per capita income has grown by 500%.
Just looking back at the last 25 years, one could argue that humanity has had its best quarter-century ever. Since 1990, the share of people living in extreme poverty in the developing world has fallen from 47% to 14%, and child mortality – a critical indicator – has been halved. The world has never seen anything like this before.
A similarly bright picture emerges from other indicators. Fewer people are dying on battlefields than during previous periods for which we have data; and, at least until a few years ago, the share of people living under more or less representative governments was gradually increasing.
This spectacular progress has been driven partly by advances in science and technology. But it owes at least as much to increased economic interaction through trade and investment, and to the overarching liberal order that has enabled these positive developments. In short, globalization has been the single most important force behind decades of progress.
These days, trade is often wrongly blamed for shuttering factories and displacing workers in developed countries. But, in reality, the disappearance of older industries stems primarily from new technologies that have improved productivity and expanded the wealth of our societies. Likewise, rising inequality, real or imagined, has far more to do with technology than with trade.
To be sure, there are not as many farmers today as in past decades or centuries; Lancashire’s cotton mills, Pittsburgh’s steel plants, and Duisburg’s coal mines have closed; and there are far fewer workers in Northern Sweden’s vast forests. The children of those employed in these industries now often head for the lights of rapidly expanding cities, where they fill jobs that could scarcely have been imagined just a few decades ago.
For most people around the world, life before globalization was poor, brutal, and short. And yet today’s anti-globalists have turned nostalgia into a rallying cry. They want to make America – or Russia, or Islam – “great again.” Each may be rallying against the others; but all are rallying against globalization.
Economic conditions were certainly less favorable in the years following the 2008 financial crisis, but now employment and economic growth are rebounding pretty much everywhere. Real (inflation-adjusted) GDP has been rising for 15 consecutive quarters in the eurozone, and all European Union economies are expected to grow in the next few years. Meanwhile, the US economy is already doing well – unemployment is below 5% and real incomes are rising.
Of course, many societies are undeniably experiencing a growing sense of cultural insecurity, not least because many people have been led to believe that external forces such as migration are eroding traditional sources of peace and stability. They are told that a return to tribalism in one form or another is a readily available coping mechanism. Their mythical tribe was great in some mythical past, so why not try to recreate it?
Such thinking poses a serious threat to the world’s most vulnerable people. The United Nations Sustainable Development Goal to eliminate extreme poverty worldwide by 2030 is entirely dependent on continued economic growth through trade, technological innovation, and international cooperation. Erecting trade barriers, engaging in digital mercantilism, and generally undermining the liberal world order will severely harm the extreme poor in Africa and other underdeveloped regions, while doing nothing to help coal miners in West Virginia.
The strong will always manage, but the weak will bear the burden of a nostalgic protectionism that erodes the benefits of globalization. At the World Economic Forum’s Annual Meeting in Davos this year, Chinese President Xi Jinping was the one extolling the virtues of globalization, while many Western business leaders wandered the halls trying to sound concerned for the supposed losers of the process.
The communists are keeping the globalization faith; but the capitalists seem to have lost theirs. This is bizarre – and entirely out of sync with past performance and current facts. We have every reason to be confident in a process that has delivered more prosperity to more people than anyone could have dreamed of just a few decades ago. We must not be shy in defending globalization and combating reactionary nostalgia.
We can have a brighter future – but only if we don’t seek it in the past.