The current hyperglobalization model has followed its course. It is time to rethink and do something real before the whole building collapses.
In 2018, my colleague David Boyle and I wrote a book entitled Backlash: Saving Globalization of ITELF. We argue that the current form of hyperglobalization was unsustainable political. That China that leads to a coach and horses through the alleged system ‘based on rules’ had been tolerated for too long. Than persistently highly high commercial imbalances. As Lord Andrew Lansley expressed it in his support: “Politicians, who also have the inevitability of globalization, and with it the benefits of free trade, now need to read this and think fresh, although about the trahts, the obeghtst trays, the democracies, not too much.”
Nothing changed.
Then Covid came and constant interruption in trade. We all talk about the importance of changing a unique approach to efficiency, cost savings and a penny for resilience and national security consultations. We all promised to “build better again.”
We did it. All we did was going as quickly as possible to status quo.
Now President Trump has launched a grenade of hand to the system.
We may not like their methods. But it is not clear that any other method, any other crisis, is finally substitute to rebuild a commercial system that is out of control and harmful.
Obtain is adjusted to binary
One of the problems with any discussion about globalization and international trade is that the world quickly divides into two irreconcilable camps. Those who argue that open trade is evil without cheese and those who argue that it is a good without alloy and should be preserved at all costs.
Both are wrong. As in all areas of politics, trade repains a series of compensation.
What is quite remarkable is that, still today, many still trot the same old line as globalized trade produces a “net profit.” It is how one thinks of the world of mathematical economy and the commercial logic dissociated of the social and political realities of life, provided that the final number is positive, it is not not that it cannot not?
Mechanistic thinking by spreadsheet. The type of thought that allows economists for example, to change the employment from one sector to another in economic models when the reality is that such changes are, in the best, difficult cases, in the worst cases impossible to achieve in real life.
Let’s take NAFTA as an example.
“A multisectoral analysis of multiple countries concludes that NAFTA increased the ‘well -being’ of the United States by 0.08 percent [in itself, hardly stellar]. But half or this gain did not cause an increase in efficiency, but from the United States, to be able to use is muscle to improve its terms of trade (achieved at the expense of other countries, mainly Mexico).
The analysis of NAFTA distribution impacts shows effects of very acute advertisers for certain groups of workers. For example, the abandonments of the high school that worked in industries that were strongly protected by tariffs on Mexican exports before NAFTA experienced a salary growth drop of up to 17 percentage points in relation to salary growth in unabled industries.
The question, therefore, is not whether the agreement was an absolute good or an absolute bathroom. The question is whether compensation (and there are more compensation than only the salary growth mentioned above) is worth it. If such compensation are politically sustainable. And, by the way, what do we mean exactly with ‘well -being’?
There is also a lot of discussion about the separation between the trade of goods and the trade of services. Many argue that the trade of goods is becoming marginal importance as the world advances towards an economy led by the service. Again, simplistic thinking. The reality is that many high -value services are linked to the production of goods. Financial services make money flow to manufacturing investment. If Rolls Royce sells an aircraft engine or Lockheed Martin sells an F-35 combat plane, both build future income flows to serve these products. In such situations, and there are many, does it make a lot of sense to separate trade from trade services?
Commerce as a peace project
The countries that trade with each other go to war.
This is another Stopper of the Pro-Trade lobby. The problem is that there is little evidence that this is the case. Before World War, international trade was at its highest point compared to the previous periods. Margaret Macmillan, Emerita Professor of International History at Oxford University expresses it as follows:
“The outbreak [of WWI] It was a shock for many Europeans, but is visible before 1914. The work for qualified workers in Europe were disappearing, or their wages lost, since production moved to areas of the world where work was cheaper. Populist leaders aroused resentment against minorities: Jews, immigrants, elites. The revolutionaries condemned the entire system as unequal and unfair and requested the creation of a new order. At the same time, the will of the great powers of working with each other, as they had done in the first half of the century in the concert of Europe, evaporated. “II
Does it sound terrifyingly familiar?
The world has changed
When discussing trade, we routinely give ourselves with the wisdom of economists of the nineteenth century and the thirteenth century, the famous slaves of some missing economists. Today’s world is unrecognizable in the world in which such wisdom remained true. Taking only one example between a crowd: “The contemporary world, unlike the nineteenth century, the political economy is not well adjusted to such persistent commercial imbalances with its consequent effects. If that is another way of putting the Pont, Put Put Put Put Put Put PUT PUT PUT PUT PUT PUT PUT PUT PUT PUT PUT PUT PUT PUT PUT IS MUCH.
Today’s world is different from the world of fabric and wine from Ricardo. Ricardo did not have to give that transfer of technology in a matter of months. Not a world where the competitive advantage of the brand could be created in the week. Nor the broad tax arbitration and regulators of multinational corporations. Nor the flow at the speed of the Ray of hot money worldwide.
Ricardo’s theory also had a clear approach to the opportunity cost. The trade specifically excluded on the basis of the lower cost of production. However, the latter is based on a significant portion, not everything, or current international trade.
Where now?
“The bureaucracy defends the long status quo conforms to the moment when the quo has lost its condition.” The Canadian writer Lawrence J Peters wrote once. Like those who have built their career when they are at an ideology and a particular argument line.
That China, with its about $ 1 billion in annual commercial surpluses and decades of the rules, is now presented as the defender of an open trade system allegedly based on rules is not surprising and is not credible. The reality is that the world of hyperglobalization and almost purely driven competition have reached a point where it is no longer tolerable. It is no longer politically viable for domestic economies or for a world with increased geopolitical tensions.
Many will feel that the demolition ball approach of President Trump for the issue is unreasonable, dangerous and destructive. That may well be so. Until now, we have not found other routes to get people out of a comfortable complacency with the obsolete status quo. What other routes are there to save the globalization of itself? Welcome suggestions.
Written by Dr. Joe Zammit-Lucia.
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