Farok J. Contractor :
Nationalistic politicians rising around the globe, in varying degrees, espouse an “our country first” mentality displaying skepticism or outright hostility toward globalisation.
Globalisation’s ills can be described not only in terms of loss of jobs through imports and multinational companies, but also the transmission and blending of ideas, lifestyles, cultures and phobias communicated by the internet. In 2017, 3.5 billion humans access the internet. Bandwidth, less than 4.5 terabits per second in 2005, has escalated to 400 terabits per second.
Humankind is developing an emerging “global consciousness” – a collective sensitivity to noble thoughts as well as to phobias and ignoble protectionism. The same channels that transmit the latest décolleté styles from Milan or Gangnam music from Seoul to farm families outside Bombay or Basra also relay cultural unease or ambiguity.
Anti-globalisation sentiment springs from varying sources. In developing nations, the reaction stems from threats to tradition due to an influx of foreign products and ideas. Valentine’s Day is an example. Valentine, 226-278 CE, of Italy was relatively obscure among the more than 10,000 Catholic saints until the 1850s, when American entrepreneurs began marketing greeting cards. In the mid-20th century, Valentine’s Day was unknown outside the United States or Britain.
Nowadays, every February 14, crowds throng malls in Asian cities, book restaurants and shows, and loosely celebrate a near mythical figure from centuries ago and a continent away.
Middle-class Asians like additional holidays, but not all. Demonstrations against Valentine’s Day in India involve vandalism of shops and harassment of couples. Hindu fundamentalist groups protest the incursion of foreign practices as eroding traditional culture. A few generations ago, markers of identity in India and other developing nations were based on local religion, traditions and familial relationships. Today, children squint at small screens, and “all the world’s a stage.”
In richer nations, laid-off workers in the rust belts of Ohio or France blame globalisation for misfortunes, job losses and economic stagnation. An analysis by the McKinsey Global Institute concludes that in six industrialized nations, the majority of households over the last 15 years saw a flattening or drop in their wages and investment income, a legitimate concern that some politicians latch onto and magnify.
Employees in the US and Europe work harder and are more apprehensive because of greater competition in the labor market, aided by a relentless drive for productivity gains.
There is a psychological letdown because after two centuries of economic progress, generations can no longer assume they will be better off than their parents.
The angst is real, though politicians grossly overstate diagnoses by blaming international trade, offshoring of production and immigrants taking jobs. For every one US job lost through international trade from 1980 to 2016, researchers conclude that about four jobs have been lost because of automation, robotics, information technology and other productivity boosters.
Automation more than international trade has boosted US productivity, and three groups benefit most from these gains: consumers who pay lower prices, managers who earn higher salaries and shareholders enriched by dividends and equity growth. Labor has not benefited; union membership in the US and France, for example, has fallen to less than 10 per cent of the workforce. The most workers now hope for is to keep jobs at the same pay levels as before.
Globalisation is not in retreat regardless of such trends and though trade growth has slowed since 2005. Increasing nationalism may result in greater protectionism for some categories of products. Immigration may level off or decline in certain countries. But nations welcome incoming foreign investment.
Cross-border data and communication flows grow rapidly. While sections of America and Europe engage in bouts of angst, many developing nations optimistically forge ahead. China’s and India’s giant domestic markets are far from a saturation point for foreign products and ideas. China’s One Belt, One Road, designed to connect China with Europe and Southeast Asia, adds thousands of kilometers of rail and road along with a string of ports along the Pacific and Indian oceans.
Globalisation is accused of causing job losses, culture shocks and xenophobia, but modernisation of lifestyles and industries alter work and life patterns more fundamentally. Politicians who blame globalisation are really alluding to larger socioeconomic issues – 25 years of hyper-competition, with intense focus on company stock values and profits.
The power of unions has shrunk – tilting the social balance in favour of capital investors, managers and consumers who demand better products at low prices. Globalisation is a symptom of human desire and ambition leading to ever-increasing connections that brings prosperity, but also pain and opposition. The focus on only negative consequences amounts to throwing the baby out with the bathwater.
(Farok J. Contractor is a professor in the Management and Global Business Department at Rutgers Business School, Yale University).
