We can't fight the rising tide of globalization
Despite mounting skepticism about globalization, nobody can turn back the tide of history.
This is a message voiced by panelists who attended a recent forum at Fudan University’s School of Management.
A retired British diplomat, Lord Charles Powell of Bayswater argued that there is a belief among ever more people in Europe and America that globalization works well for multinational companies, financial institutions and the wealthy.
But it neglects the interests of those who are shut out from the benefits of that growth, he said.
While resentment of the EU appears to be the main dynamics behind Brexit, Powell explained there are far deeper reasons for Britain’s shocking referendum outcome.
“Brexit is part of a wider revolt against the concept of globalization, or globalism, that one sees in the election of President Trump in America and the rise of so-called populism across Europe,” he noted.
Critics of globalization often feel left behind because they see multinational corporations maximize profits, while in the meantime avoiding, or minimizing, the taxes they pay.
As a result of growing income disparity, many tend to consider globalization as a game rigged against them, or as a trend that entrenches inequality or even poverty.
This is to some extent true, for instance, in the US, where Powell said 10 percent of the population takes home half the national income.
But in his opinion, the belief that globalization, in the form of international trade, is primarily responsible for job losses and for depressing income levels is patently wrong.
In fact, the advance of technology plays a greater part than trade, as evidenced by the fact that 85 percent of lost jobs in US manufacturing from 2000 to 2010 were eliminated by technology, and only 13 percent were lost to international trade, said Powell.
“This is yet another example of how perception and reality are often out of sync,” he noted.
He went on to argue that globalization has its winners and losers and apparently the former outnumber the latter.
For countries like China, globalization has benefited them by expanding access to international markets.
In view of the rising protectionist tide in Western economies, in particular the US, Powell believed that “President Trump cannot stop globalization any more than Britain’s king (Canute) could stop the tide rising in the sea.”
The correct way to deal with the downside and disadvantages of globalization is not to try to stop it, but to make its results more equitable by addressing problems such as inequality and unemployment, he observed.
China, as arguably one of globalization’s biggest beneficiaries, is often a scapegoat for, among other woes, the high rate of unemployment in developed economies.
Ken Wilcox, chairman emeritus of SPD Silicon Valley Bank, a US-China joint venture, said in his speech that American working class had little idea of the destructive power of automation, so they chose to blame it all on China for “stealing” their jobs.
Nonetheless, the American public is divided on the impact of trading with China, and people’s judgment is often highly influenced by their individual politics and standpoints.
For example, companies with business interests in China are naturally supportive of encouraging trade and investment between China and the US.
Of course there are long-standing concerns about what Wilcox said is “selective enforcement” of intellectual property rights laws in China.
And with a bigger influx of Chinese investment in the high-tech sector of the Silicon Valley, the Pentagon is increasingly engaged in its own share of fear-mongering over China, convinced that acquisition of US technology might strengthen China’s military might.
“As people in the Pentagon see it, technology leads to weaponry,” said Wilcox.
With the recent US announcement to slap a 25 percent tariff on US$50 billion worth of imports from China, the ghost of a trade war between China and the US appears to have been resurrected.
In anticipation of a tug-of-war to redress their trade imbalances, Wilcox believes that the two sides need to learn to live with each other and manage their differences.
For their relationship to improve, he cautioned decision-makers from both sides against assigning blame for certain disputes. Instead, he suggested regarding the relationship as a marriage, in which arguments about who is right and who is wrong will do nobody any good.
“My recommendation is that both sides of the table should engage in what we call ‘soul-searching’,” said Wilcox.
He concluded by saying that both China and the US should try harder to make it easier for the other side to succeed, rather than to demand and threaten.