April 8, 2008
Column: The political threats to globalisation
If you had to define “globalisation” with an image, what would it be? A container ship from China stuffed with toys and T-shirts? A programmer tapping at a keyboard in Bangalore? A plane circling gloomily over Heathrow airport?
Most people’s pictures of globalisation are to do with economics, technology and business. But before markets, modems and manufacturers could do their work, political changes had to take place. The foundations of the globalised business world are political – and so are the biggest threats to the system.
The challenge to the globalisation consensus comes from below. Political elites in the US, Asia and Europe are struggling to convince citizens that globalisation is not just a game that benefits the rich. If the argument is lost in any of the major world economies, the political consensus that underpins globalisation could unravel.
The remainder of this column can be read here. Please post comments below.
What voters in the US (and probably the UK) are less willing to tolerate is not globalisation but income inequality. Somehow the two have become entwined. One does not cause the other: cheap goods benefit low income families proportionally more than they do medium and high income cohorts. Yet the groups that have suffered due to competition from cheap foreign labour have protested the loudest.
And if cheap foreign labour in foreign countries is not bad enough, the authorities have been unable to prevent cheap foreign labour moving *next door*. Throw in a terrorist atrocity or two, soaring commodities and you have a perfect storm. Or an evil mix: bubble, bubble, oil and trouble.
Posted by: MaryCunningham | April 8th, 2008 at 4:46 pm | Report this commentExactly, Mary. It’s the fact that globalisation has, like industrialisation, meant a lurching increase in income inequality that sticks in peoples’ throats.
Posted by: Richard | April 8th, 2008 at 5:39 pm | Report this commentThe World is in the longest period of prosperity in history: the highest World´s income per capita; the highest life expectancy in history…and in a great part of the World the longest period of Peace, just broken by wars of agression like Iraq (with all the suffering that it has caused), revenge like Afghanistan (after 911), secession (Yugoslavia, Chechennya, Sudan) or civil war (Congo-Kinshasa)
It is true many economist can point out that this prosperity is fake, built on credit as today both the husband and the wife has to work out of home and even cars are bought by the Banks….
Posted by: Enrique | April 8th, 2008 at 7:55 pm | Report this commentGR:The foundations of the globalised business world are political – and so are the biggest threats to the system.
Very true. However, like it or not, globalisation is here. I could never define it by an “image”. To me it is more like a “life form.” Human beings, as well as countries, have to adapt to it or disappear. Our political leaders should be easing the way for the adaption and acceptance of total change. They are not doing that. And because they are not doing that, this allows “globalisation” which is a mechanism of change, to be unfortunately manipulated by special interests, both in the the market and/or the state, and yes, even terrorists.
Posted by: Lisa-Helene Lawson | April 9th, 2008 at 1:19 am | Report this commentGlobalisation is not the problem. It is a good thing and benefits all of society. The problem is that the benefits are unequal. The most obvious cases are in emerging markets where the class disparity is getting even bigger than what we see in the developed world because our standard of living is so much higher…..How does this happen? predominantly corruption!. the owners of capital are basically using their political and economic advantages to suck most of the value created from globalisation at the detriiment of the owners of labour. Again, this is most evident in emerging markets. But countries like the US are not immune. Look at the Bush administration….most of the people around Bush have interests in military contracts, banking, and international trade. Never mind that they stole 50 billion of taxpayer money from the vaults of the central bank of Iraq, they are also using american political and economic power purely for their own private enterprise while the average american joe can barey afford to make his house payment. I guess thats the way it has always been in politics, from banana republics in central africa all the way to the great USA
Posted by: Reza | April 9th, 2008 at 2:44 am | Report this comment“adaption” in my above post should read: adaptation…(sorry my typing fingers have never adapted to how fast my mind thinks!)
Posted by: Lisa-Helene Lawson | April 9th, 2008 at 3:03 am | Report this commentI don’t think globalization itself is in such deep trouble, but rather the “Anglo-Saxon” version of it.
Read yesterday’s “Mind the Gap” in the FT:
http://www.ft.com/cms/s/0/1de12fde-0505-11dd-a2f0-000077b07658.html
The United States is involved in executing a decline and fall in only a few years, that it took Britain about 50 years to pull off.
Posted by: David Seaton | April 9th, 2008 at 8:34 am | Report this commenthttp://seaton-newslinks.blogspot.com/
Reza has a good point. It is also worth reading “The China Price” by former FT correspondent Alexandra Harney. I agree with GR that we need to be a little more precise in clarifying what we mean by “globalization”. Does it mean only free movement of capital? Or, as Ms. Harney graphically describes, does it also mean free movement of sweatshops, to which one could add child labor and a host of other abuses?
Supporters of globalization argue that “a rising tide lifts all boats”. But, at least in the perception of those who are not members of the political, industrial and financial elites who have benefited the most from globalization, most of the boats being lifted are yachts.
Posted by: algasema | April 9th, 2008 at 10:17 am | Report this commentOn the the political decision to bail out of Bear Stearns, Martin Wolf wrote last week: “The Fed has provided a valuable form of insurance to the investment banks. Indeed, that is already evident from what has happened in the stock market since the rescue: the other big investment banks have enjoyed sizeable jumps in their share prices.”
Whether national public purses should be used to bail out broken financial - as distinct from other - businesses is a real dilemma for globalisation.
Posted by: Slightly Optimistic | April 9th, 2008 at 12:50 pm | Report this commentI think that Europeans are going to be surprised by how much power is going to come their way in the next few months and years, for the simple reason that the EU exists to regulate. The “faceless bureaucrats” in Brussels believe in regulation and know how to write good ones; regulations that can fit a Bulgarian or a Dane.
It seems that a great part the problems we are seeing have to do with the Americans ideological reluctance to regulate. “Deregulation” has become an Anglo-Saxon religion, bureaucracy bad, market good.
I simply think that Americans will not be able to write suitable regulations quickly enough to stabilize globalization and the only shop that produces them in quantity and quality and quickly enough is the EU. On a massive scale, something like what happened with cellphones.
The United States seems to only offer military power, but no practical solutions for governance.
Posted by: David Seaton | April 9th, 2008 at 5:33 pm | Report this comment[…] Rachman has an interesting column in today’s FT on the “political threats to globalisation.” (registration required to read the whole column). His argument is quite simple, quite […]
Posted by: CIPE Development Blog » Blog Archive » Politics of Economics | April 9th, 2008 at 10:48 pm | Report this comment.
The identification of food as a critical factor is the bad news ,
a whole raft of countries have put restrictions on grain trading , it is political dynamite.
there is a clear threat to the world wheat harvest , the spread of a new type or rust disease called Ug99 , it is virulent and has escaped from Africa to Yemen now to Iran and is on its way to the grain baskets of the Indian subcontinent , its eventual spread world wide is only a matter of time and bad luck , helped by global transports .
While remedies will be found , it could disrupt the largest food input of the world for a decade or so , stocks are low , consumption is exceeding production most years now .
Posted by: jeannick | April 13th, 2008 at 3:18 am | Report this commentprognostics are uncertain , they range from bad to scary
Food security and energy security are the the two sides of the same coin , globalism can function only when both those needs are fulfilled .
Reza got the point. Globalization have been proved an undisputably good stuff for the whole world. It brings peace, brings positive gains to the world. However, there’s a path issue in the way. Since globalization, in essence, is a process in which resources are globally reallocated, redistributed and reorganized, then what may hinder the process from going on? No doubt it’s the previous organizational forms like nation states, tribal sysem. Since there are societies like Europe’s which has, after hundreds of years’disintegration and integration, unmistakably clarified their own place in the global economic chain, or America’s which has immuned itself from influence from outside and forcibly, self-reliantly taken the upper stream of the chain, but there are also societies like China’s which are still in a disintegration process in which dozens of sub-societies are struggling to identify themselves. I believe it’s this discrepancy which makes this globalization specially difficult, because this time it’s touching upon the bottom line of every society of nation state. Then the latter, preparing to fight against this trend,unleashed another wave of consolidation,in form of Sovereign Wealth Fund in some countries,intent on spinning off its “less efficient” component. Theoretically this “left-out” component will be managed by social security system, but the social security system up to now has only designed for those most sophisticated societies or the part of it, what about the rest? Maybe that is what we really need to ponder in terms of every specific society if we want to avoid a major global crisis.
Posted by: alan | April 15th, 2008 at 8:55 am | Report this comment