Politicians must stand up for the glories of globalisation

Published by CapX (27th October, 2016)

The Belgian region of Wallonia was once called the crossroads of Europe. It sent arms to Spain in medieval times, then became the first place on the continent’s mainland to have an Industrial Revolution, aided by an influx of English industrialists.

Wallonia was famous for making fine lace and chocolate, using cocoa imported from colonial holdings in central Africa. Yet now, following the collapse of its smokestack industries, this historic hub of international trade stands as a symbol of the sudden shift against globalisation.

To the dismay of those involved in seven years of complicated discussions, this region of 3.6 million people has been holding hostage a multi-billion-euro free trade deal between Canada and the 28 nations currently comprising the European Union.

Partly, this shows the nightmare ahead for Britain in trying to extricate itself from the web of Brussels. But it also reveals how the West is turning against globalisation, despite its astonishing record in alleviating poverty across the world and transforming the lives of billions for the better.

This seems the dawn of a corrosive new consensus, with both left and right turning on free trade as they flail around in response to revived nationalism from Austria to the United States. Even in the exporting powerhouse of Germany, there were huge protests against transatlantic trade deals last month.

We see politicians on all sides preaching the jaded sermons of isolation and protection, ignoring the lessons of history as they struggle to meet challenges posed by disenchanted electorates.

Behind their words lie dark forces of fear and division, whipped up by populists and opportunists – and the impact could be damaging, especially for the planet’s poorest people.

When Wallonia voted to block the deal, its leaders’ objections were largely driven by feather-bedded farmers fearing competition. Their stance underscored how the left sees Europe and the concept of free-trade as the enforcement of raw capitalism.

What a contrast to Britain, where Brexit was driven by conservatives seeking to regain (spurious) control from a supposed bureaucratic monster imposing a barrage of left-wing regulations. The actual result looks set to be our potential removal from a massive single market – threatening firms whose production chains can cross many borders – alongside a foolish reimposition of borders and tariffs.

Even more alarming are events in the United States. Donald Trump threatens to rip up free trade deals and start a trade war with China, while waging war on immigrants who helped build the world’s biggest economy.

So we see a billionaire businessman representing Republicans promoting anti-competitive ideas that would lead to less choice and higher prices for his fellow citizens. Yet we also see Hillary Clinton playing to the left by turning on the Trans-Pacific Partnership that she helped negotiate.

Privately, Hillary says something rather different. According to documents posted by Wikileaks, she told bankers and financiers listening to well-paid speeches that she dreams of “open trade and open borders” across the Western Hemisphere. Quite right too.

Yet she also muses about having a private and public position on contentious issues – even though this type of double-talk is precisely why so many voters have such contempt for politicians. And it is this very distrust of distant elites that drives voters into the arms of populists preaching snake-oil solutions to modern problems of rising inequality and rapacious multinationals.

The result is that few politicians are prepared to stand up for the glories of globalisation, just as they cower before cartels and corporate behemoths that stymie markets and undermine democracies.

Yet globalisation, aided by market liberalisation and urbanisation, has revolutionised our world in the half-century of my lifetime. For a start, it has lifted hundreds of millions of people, predominantly in Asia, out of poverty at a faster rate than ever before in history.

The statistics are incredible: despite soaring populations, the proportion of the world’s population grinding out their lives in extreme poverty fell from half to one-fifth in just three decades. World poverty fell more in the past 50 years than in the preceding 500 years.

But it is not just about economics. Even those still struggling in poverty are living healthier and longer lives as astonishing medical advances seep across the world. They are better nourished, thanks to agricultural innovations and improved food supplies; the number dying from major famines has more than halved since the 1990s and fallen fiftyfold in a century.

And many of the poor, like the rest of us, embrace the benefits of the technology revolution, as can be seen so obviously in Africa with the prevalence of cheap Chinese smartphones.

Indeed, few things are more ironic than anti-globalisation rants hammered out on the ever-evolving computers that symbolise so strongly the transformative dynamism of market forces – and then get distributed on social media that underscores the futility of seeking separation in such an inter-connected world.

This is not to ignore the fact that there are losers as well as winners from disruptive change. But we should welcome the fact that we are witnessing an unprecedented levelling off in living standards as prosperity spreads across the planet. One development economist called it ‘the greatest reshuffle of incomes since the Industrial Revolution.’

The job of national politicians, in such circumstances, is to assist largely unskilled workers suffering consequences within their borders. Instead, Europe’s bumbling leaders ignored the evidence of rising anger.

It was seen more than a decade ago in 2005, with the shock rejection of a constitutional treaty in a French referendum. But the voters were bypassed as a new package was forced through. Now we witness a resurgence of the far-right National Front, while as in other European nations the toxic rhetoric of populists has poisoned the mainstream.

Meanwhile in Britain, as elsewhere, politicians casually allowed foreigners to be blamed for their own ineptitude, whether from shortcomings in public services or a failure to assist the worst-afflicted regions.

The legacy of this corrosive political failure is barriers going up, borders reasserted and a backlash against the free trade that has fuelled the most extraordinary transformation for humanity.

The first great age of globalisation in Victorian times saw people and goods flow across the world on railways and steamships, until it ended with the Great War. Are we now witnessing the end of the second great period of globalisation?

Or will politicians come to their senses, stop pandering to prejudice and start fighting the corrosive forces of division that threaten future prosperity – not least for the poor?

Categorised in: Aid & development, Business & economics, home page