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Posts Tagged ‘Globalization’

The Bogus Backlash to Globalization

Posted by hkarner - 11. November 2018

Date: 10-11-2018
Source: Foreign Affairs By Charles Kenny

Resentful Nativists Oppose Free Trade and Immigration—Don’t Appease Them

The last two years have seen an outbreak of self-abnegation among former advocates of globalization, who wonder if their cosmopolitan views on migration and free trade might have helped deliver the White House to U.S. President Donald Trump. In turn, longtime critics of globalization on the left have crowed at this apparent admission of defeat. Both camps have suggested that the backlash Trump represents is understandable and that internationalists should do more to accommodate an electorate that has turned against global engagement.

Yet both camps misunderstand Trump’s electoral success. The voters who were won over by his antiglobalist message were not legitimate victims of globalization. Many, if not most, were and are older white supporters of patriarchy who resent people with dark skin, especially those from other countries. Although it might be inexpedient to call this group deplorable, a program of appeasement toward their views is wrong—economically, politically, and morally. Globalization has been an overwhelmingly positive force for the United States and the rest of the world. Instead of apologizing for themselves, it is time for internationalists to take the fight to an aging minority of nativists and wall builders.

THE BLESSINGS OF GLOBALIZATION

Backlash appeasers have a number of thoughtful and influential voices on their side. Many are former champions of globalization who worry that it has moved too fast. The Financial Times commentator Edward Luce, for instance, suggested in his 2017 book, The Retreat of Western Liberalism, that by promoting globalization, “the world’s elites have helped provoke what they feared: a populist uprising against the world economy.” To save the liberal project, he argued, we must abandon “the drive to deep globalization.” Former U.S. Treasury Secretary Lawrence Summers has similarly warned of “a growing suspicion on the part of electorates that globalization is an elite project that primarily benefits elites.”

Other members of this chorus are liberals and left-wingers who have long been critical of free trade and who see Trump’s election as a vindication. In a March article for The American Prospect, the liberal journalist Robert Kuttner claimed that “elites of both parties won the policy debates on trade, but lost the people.” According to Kuttner, “the more that bien pensants double down on globalization, the more defections they invite and the more leaders like Trump we get.” The author John Judis took to The New York Times to criticize the left for ignoring the emotional appeal of nationalism, arguing that low-skilled immigration and China’s unfair trading practices had hurt American workers, helping to “create a new class of angry ‘left-behinds’” who were susceptible to Trump’s message.

These arguments are misguided. They severely overstate both the number of Americans hurt by globalization and the depth of the popular backlash to it. Regarding immigration, it is very hard to find evidence of a single demographic or regional grouping of U.S. citizens that has been harmed. In a 2015 paper, the economists Gaetano Basso and Giovanni Peri looked at 30 years of data on labor market outcomes in the United States and concluded that increases in immigrant labor, both in aggregate and by skill group, either increase native wages and employment or are simply uncorrelated with them. Conversely, Trump’s plan to end work permits for the spouses of H1-B visa holders could cost the U.S. economy $2.1 billion per year, according to the economists Ayoung Kim, Brigitte S. Waldorf, and Natasha T. Duncan.

On trade, there is reasonable analysis suggesting that increased competition arising from imports, for all of its overall benefits, can hurt employment in particular communities and sectors. In an influential series of papers, the economists David H. Autor, David Dorn, and Gordon H. Hanson argued that China’s accession to the World Trade Organization (WTO) in 2001 had a negative impact on local U.S. labor markets exposed to Chinese competition. For at least a full decade after the “China trade shock,” they claimed, these labor markets—many of which had depended on manufacturing—saw higher unemployment, lower wages, and depressed labor force participation rates.

But critics of the studies point out that their conclusions fail to account for a few important facts. First, increased trade with China allowed U.S. firms to import cheaper materials, lowering their own costs and enabling them to expand production; and second, China’s accession to the WTO increased U.S. exports to China, as well as other countries. Looking beyond just China, research by the economists Robert C. Feenstra and Akira Sasahara suggests that between 1995 and 2011, growth in U.S. exports worldwide led to 6.6 million new U.S. jobs, including 1.9 million jobs in manufacturing—more than the jobs lost owing to global import competition. And although an estimated two million U.S. jobs were lost because of competition from Chinese imports over those 15 years, the U.S. economy saw about 1.9 million layoffs and discharges each month during the first decade of the twenty-first century. Manufacturing job losses to China are in the headlines not because they are a major source of terminations but because they make a good story for those who oppose global engagement.

Furthermore, looking only at the production side of the economy ignores the considerable benefits that consumers—particularly poor consumers—derive from cheaper goods. According to a study by Pablo D. Fajgelbaum and Amit K. Khandelwal of the National Bureau of Economic Research, poor people spend more of their income on goods, while the rich spend more on services, which are less tradable; for this reason, if the United States moved to end imports, the poorest ten percent of American consumers would see their buying power decline by 82 percent, compared with a decline of only 50 percent for the median consumer.

Most Americans recognize the economic benefits of trade and migration to the country. Contrary to the backlash thesis, globalization is more popular now than ever before. Since 1992, Gallup has asked if trade is primarily an opportunity for economic growth or a threat to the economy. For 23 years, the proportion suggesting it was primarily an opportunity never rose above 56 percent; in 2017 and 2018, it exceeded 70 percent. And since 1965, Gallup has asked Americans if immigration should be increased, decreased, or kept at the present level. The proportion favoring an increase or sustained rate, at 68 percent, has never been higher, nor has the proportion calling for a decrease (29 percent) ever been lower.

WHITE FRIGHT
But if the economic benefits of globalization are widely understood, a minority sees it as a cultural threat. This is what explains the supposed backlash. Public opinion surveys from the Public Religion Research Institute (PRRI) suggest that 34 percent of all Americans feel that the growing number of immigrants threatens traditional American values and customs. But only 19 percent of those aged 18 to 29 feel that way, compared with 44 percent of those over the age of 65 and 53 percent of white evangelical Protestants of all ages. Similarly, the political scientists  Diana C. Mutz, Edward D. Mansfield, and Eunji Kim found that whites are consistently less supportive of trade deals than are members of other racial groups. They attribute this imbalance to whites’ “heightened sense of national superiority” and ethnocentrism. If markers of economic hardship—such as low education, skills, or wages—determined opinions on trade (or migration), minorities would be the ones opposed. In fact, the reverse is true.

Some evidence does suggest that migration and trade flows may influence communities to vote Republican. Autor, Dorn, and Hanson argue that between 2000 and 2016, areas in which employment was concentrated in the industries that faced the most competition from Chinese imports tended to shift toward the Republicans. And the economists Anna Maria Mayda, Giovanni Peri, and Walter Steingress analyzed county-level data, finding that between 1990 and 2010, high-skilled immigration to a county decreased the overall share of the Republican vote while low-skilled immigration increased it.

What is considerably harder to see is how such factors could explain Trump’s increased vote share relative to the Republicans’ 2012 presidential candidate, Mitt Romney. Survey evidence suggests the American electorate recognized that the 2016 presidential candidates, Trump and Hillary Clinton, presented them with a clearer choice on trade and migration policy than had Barack Obama and Romney four years earlier. But voters’ exposure to globalization was not related to the size of their swing toward the Republican candidate between 2012 and 2016. Cultural factors were.

The Gallup economists Jonathan T. Rothwell and Pablo Diego-Rosell, for instance, found “no link whatsoever” between greater exposure to trade competition or immigrant workers and greater support for Trump. They did find a particularly large swing to Trump in counties with a high share of old white residents with only a high school education. And Diana Mutz found that people who felt that “the American way of life is threatened,” or who believed whites and men were more oppressed than women or minorities, were significantly more likely to switch to Trump than those who did not. In short, the voters who bought Trump’s rhetoric on trade and migration were those who were culturally attuned to his message.

Indeed, a significant proportion of Republican partisans have decided that white Christian men are the new oppressed. A PRRI survey in February 2017 found that 43 percent of Republicans felt there was a lot of discrimination against whites, and 48 percent thought there was a lot of discrimination against Christians, compared with only 27 percent who thought there was a lot of discrimination against blacks. Given the gap between black and white families in terms of both median income and median wealth, such thinking is delusional. But many whites, Mutz notes, fear that they will soon become a minority within the United States and feel that the country as a whole is losing its global dominance. This sense of lost national status and persecution fueled support for Trump.

NO RETREAT, NO SURRENDER
When regretful internationalists talk about pausing globalization to save it, the group they cater to is not the “left-behind” but older, bigoted whites who are unreconciled to the cultural changes of recent decades. It would be both ethically repugnant and politically and economically unwise to pander to them.

Politically unwise because theirs is a minority view that is dying; economically suicidal because for all that old white men are delusional about facing discrimination at home, they are absolutely correct regarding the United States’ slipping status as a superpower. That is why it is particularly urgent for the country to lock in fair global regimes while it still has the leverage to do so. This means playing by the rules of the WTO and taking those immigrants who still want to come to the United States. Ironically, immigration is particularly important for aging whites themselves: although non-Hispanic whites will become a minority of the overall population within the next three decades, they will still make up 60 percent of people over the age of 65 in 2050. They will need young immigrant workers to keep Social Security and Medicare solvent. Add to these political and economic motives an ethical one: globalization has been the most powerful force ever for lifting humanity out of destitution.

Globalization has been imperfectly managed, and a new push for fairer global engagement should involve reforms, including better regulation of capital markets, limits on intellectual monopolies such as patents and copyrights, and cooperation on tax havens to ensure that corporations and rich individuals pay their share for public services. Strong international agreements are urgently needed on issues such as climate change and data privacy. And a raft of domestic measures could increase both equality and productivity in the United States: tightening lax controls on market concentration, slashing limits to affordable housing in job-rich areas, reducing the barrier to entry that unnecessary licensing imposes on small businesses, reforming a banking system that bails out irresponsible institutional investors, and doing more to help Americans who lose their jobs, for whatever reason.

But one thing that won’t help is for liberals to legitimize the backlash to globalization. Those who do so are useful patsies for Trump, allowing him to channel racial resentment into tax cuts for the rich. Responding to a group of people who think that white male Christians are discriminated against, or that the rest of the world getting richer is something for Americans to fear rather than celebrate, is admittedly hard. But whatever the reaction to the nativist rage of old white men, it cannot be appeasement.

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Grappling With Globalization 4.0

Posted by hkarner - 6. November 2018

Klaus Schwab

Klaus Schwab is Founder and Executive Chairman of the World Economic Forum.

The world is experiencing an economic and political upheaval that will not cease any time soon. The forces of the Fourth Industrial Revolution have ushered in a new economy and a new form of globalization, both of which demand new forms of governance to safeguard the public good.

GENEVA – After World War II, the international community came together to build a shared future. Now, it must do so again. Owing to the slow and uneven recovery in the decade since the global financial crisis, a substantial part of society has become disaffected and embittered, not only with politics and politicians, but also with globalization and the entire economic system it underpins. In an era of widespread insecurity and frustration, populism has become increasingly attractive as an alternative to the status quo.

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From Globalization to Regionalization

Posted by hkarner - 31. Oktober 2018

Date: 30-10-2018
Source: YaleGlobal by Joergen Oerstroem Moeller
Subject:

The United States was undisputed leader of economic globalization until the 2008 global financial crisis. The country’s moral and economic leadership has since gone into decline. The US share of global gross domestic product has dropped for more than 20 years, from 32 percent to 22 percent. This has reduced the benefits from economic globalization while global commitments remain unchanged. The Trump administration has started a realignment, scaling down commitments and suggesting that the United States can no longer afford to be a global power. “Another administration would have little choice but to do the same, albeit with another style and vocabulary,” explains author Joergen Oerstroem Moeller. Regionalization may fill the vacuum and demography, technology, regional supply chains, investment flows and trade/investment agreements are driving this seminal shift. Three regional blocks may emerge: the Western Hemisphere, East Asia plus Southeast Asia perhaps with South Asia, and Europe probably with part of Africa. – YaleGlobal

As globalization loses its allure and US global power declines, nation-states may turn to regionalization to safeguard interests Den Rest des Beitrags lesen »

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The tension between globalisation and democracy

Posted by hkarner - 28. Oktober 2018

Date: 25-10-2018
Source: The Economist: Charlemagne

Italy’s conflict with Brussels reveals a European trilemma

In his novel “The Year 3000: A Dream”, from 1897, the Italian writer Paolo Mantegazza proved a deft oracle. Citizens of his imagined future enjoy air-conditioning, clean energy, credit cards and virtual-reality entertainment. A giant war in Europe has been followed by peace, the continent’s integration and a single currency. Yet here the author’s imagination overshoots today’s reality. His United States of Europe is a paragon of democratic federalism. Power and consent flow smoothly from “cosmopolitical” citizens to the level of government where they are most appropriately exercised. Subsidiarity reigns. “How easy and straightforward it is to govern”, comments the narrator, “when men, families and communes are self-governing.” The capital of Mantegazza’s united Europe is Rome. And nowhere quite sums up the gap between these lofty ideals and today’s fractured continent as well as Rome does.

On October 23rd, for the first time, the European Commission rejected a euro-zone member’s budget. Italy’s government, a coalition of the anti-establishment Five Star Movement and the right-populist League, has a mandate from voters to enact tax cuts and spending increases. Its proposals would push Italy’s deficit to 2.4% of gdp—above the level the eu considers appropriate for a country with such high debt, at around 130% of gdp. Technocratic rules agreed on in Brussels are thus in collision with a democratic national government. Supranational discipline is up against the will of the people. Mantegazza would be dismayed. Den Rest des Beitrags lesen »

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The Powerlessness of the Most Powerful

Posted by hkarner - 22. Oktober 2018

Oct 20, 2018 Javier Solana, Project Syndicate

Javier Solana was EU High Representative for Foreign and Security Policy, Secretary-General of NATO, and Foreign Minister of Spain. He is currently President of the ESADE Center for Global Economy and Geopolitics, Distinguished Fellow at the Brookings Institution, and a member of the World Economic Forum’s Global Agenda Council on Europe.

The president of the leading global power has made it clear that he has no interest in getting involved in resolving any of the world’s shared problems, dressing up his foreign policy as one of „principled realism.“ But there is nothing principled or realistic about it.

MADRID – The annual General Debate of the United Nations General Assembly is one of the most notable events on the international diplomatic calendar. As usual, this year’s meeting, during the last week of September, brought together a long list of world leaders, although perhaps the term “world leader” should no longer be used so lightly. The president of the leading global power has made it clear that he has no interest in getting involved in resolving any of the world’s shared problems. Unfortunately, he is not alone.

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A Better Approach to Globalization

Posted by hkarner - 6. Oktober 2018

Date: 05-10-2018
Source: YaleGlobal by Koichi Hamada

Research repeatedly demonstrates that globalization delivers prosperity through trade and jobs, new technologies and ideas, cooperation and peace. But many individuals fear open societies, change and competition. Innovative technologies, especially robotics and artificial intelligence, compound the worries and some politicians heighten the anxieties even though resisting globalization actually hampers the competitiveness of their constituents. Koichi Hamada, professor emeritus of economics at Yale University, explains the dilemma: “If political leaders advance globalization, it may worsen the income-distribution problem that in turn triggers public dissatisfaction. The government may react to the dissatisfaction by restricting trade, not only impairing growth but endangering democracy as a result. On the other hand, political leaders that slow globalization in order to avoid political consequences may sacrifice long-term objectives such as human rights and worldwide liberty.” He urges world leaders to address inequality and failure to enforce laws ranging from immigration to taxation as well as encourage foreign investments that expose communities to diversity, innovation and new comforts. – YaleGlobal

Idealism and political realism must reach compromise on globalization, or the world can expect less wealth and more war

Koichi Hamada is professor emeritus of economics at Yale University and a special adviser to the prime minister of Japan. Den Rest des Beitrags lesen »

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Deutschlands Globalisierungsverlierer

Posted by hkarner - 14. Juli 2018

Date: 13-07-2018
Source: SPIEGEL Eine Kolumne von Thomas Fricke

Deutschland profitiert vom freien Handel. Doch vor lauter Lobhudelei über die Exportpotenz unterschätzt die Bundesregierung, dass es auch hierzulande viele Menschen gibt, die nicht zu den Gewinnern zählen. Viel zu viele.

Für die Kanzlerin scheint der Fall klar. Wenn es ein deutsches Interesse im gerade drohenden Handelskrieg gibt, dann offenbar das: alles dafür zu tun, dass möglichst viel und frei gehandelt wird – damit alle weiter „Made in Germany“ kaufen. Weil kaum ein Land in den vergangenen 20 Jahren so davon profitiert hat, überall auf der Welt Absatzmärkte auszubauen; und dabei so viel mehr exportiert als importiert hat. Anders als die Amerikaner, bei denen ganze Industrieregionen von chinesischer Billigkonkurrenz dahingerafft wurden – und die Leute in den betreffenden Regionen den Handelskrieger Trump gewählt haben.

Was auf den ersten Blick klar scheint, könnte sich als möglicherweise tückische Fehleinschätzung erweisen. Klar, die Deutschen haben sehr viel mehr exportiert als importiert, also mehr Geld im Ausland verdient als dort ausgegeben. Nur heißt das nicht, dass es hierzulande nur Globalisierungsgewinner gibt – ein Phänomen, das in der nächsten Krise zu einem ganz neuen politischen Schock zu führen droht. Den Rest des Beitrags lesen »

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Wer von der Globalisierung profitiert – und wer nicht

Posted by hkarner - 9. Juni 2018

Date: 08-06-2018
Source: DER SPIEGEL

US-Präsident Trump macht Stimmung gegen die Globalisierung. Auch hierzulande bereitet sie vielen Deutschen zunehmend Sorgen. Eine Studie zeigt jedoch: Vom vernetzten Weltmarkt profitieren vor allem die Industrieländer.

In den USA regiert ein protektionistischer Präsident, der Produkte von Amerikas wichtigsten Handelspartnern mit Zöllen belegt. Und in den EU und China reagieren Politiker mit Gegenmaßnahmen – die Antiglobalisierungsstimmung wird weltweit immer stärker spürbar. Zwischen den drei großen Handelsmächten droht ein Handelskrieg. Experten erwarten deshalb mit Spannung, wie ihre Gespräche beim G7-Treffen in Kanada an diesem Wochenende verlaufen werden.

Hinter dem zunehmenden Protektionismus steckt häufig die Annahme, dass die Globalisierung vor allem Verlierer produziert.

Der aktuelle Globalisierungsreport der Bertelsmann Stiftung zeigt nun aber, dass die Gewinner der Globalisierung häufig dort zu Hause sind, wo die Globalisierungskritik am lautesten ist: in den Industrieländern.

Der Untersuchung zufolge gehört zum Beispiel Deutschland zu den zehn Ländern, die am stärksten von der zunehmenden Globalisierung profitieren. Die Bundesrepublik liegt im Globalisierungsranking demnach auf Platz 6. Hierzulande hat sich das reale Bruttoinlandsprodukt (BIP) je Einwohner, also die Wirtschaftsleistung pro Kopf unabhängig von Preisschwankungen, zwischen 1990 und 2016 infolge einer voranschreitenden Globalisierung jährlich um rund 1150 Euro erhöht. Den Rest des Beitrags lesen »

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Globalization Is Not in Retreat

Posted by hkarner - 28. April 2018

Quite essential! (hfk)

Date: 28-04-2018
Source: Foreign Affairs By Susan Lund and Laura Tyson
Digital Technology and the Future of Trade

By many standard measures, globalization is in retreat. The 2008 financial crisis and the ensuing recession brought an end to three decades of rapid growth in the trade of goods and services. Cross-border financial flows have fallen by two-thirds. In many countries that have traditionally championed globalization, including the United States and the United Kingdom, the political conversation about trade has shifted from a focus on economic benefits to concerns about job loss, dislocation, deindustrialization, and inequality. A once solid consensus that trade is a win-win proposition has given way to zero-sum thinking and calls for higher barriers. Since November 2008, according to the research group Global Trade Alert, the G-20 countries have implemented more than 6,600 protectionist measures.

But that’s only part of the story. Even as its detractors erect new impediments and walk away from free-trade agreements, globalization is in fact continuing its forward march—but along new paths. In its previous incarnation, it was trade-based and Western-led. Today, globalization is being driven by digital technology and is increasingly led by China and other emerging economies. While trade predicated on global supply chains that take advantage of cheap labor is slowing, new digital technologies mean that more actors can participate in cross-border transactions than ever before, from small businesses to multinational corporations. And economic leadership is shifting east and south, as the United States turns inward and the EU and the United Kingdom negotiate a divorce. Den Rest des Beitrags lesen »

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The Santander experiment

Posted by hkarner - 25. Februar 2018

Date: 22-02-2018
Source: The Economist: Schumpeter

Europe’s banking champion took a unique approach to globalisation. Has it been vindicated?

TAKING a business onto the global stage is hard. Doing it with banks can be suicidal owing to their complexity and leverage. For over 100 years an assortment of adventurers and visionaries have almost always tried one of two approaches. Either they spread firms thinly over scores of countries and focus on servicing big companies and facilitating trade. This is the way of Citigroup and HSBC, and the path that China’s big lenders are racing down. Or they focus on investment banking from hubs; think of JPMorgan Chase or Deutsche Bank in New York, Hong Kong and London. Both blueprints have often resulted in buckets of tears.

In the 1990s a “third way” emerged from provincial Spain; creating a global retail bank with a deep presence in many countries, allowing true economies of scale. The pioneer was Santander, a middle-weight bank from the Bay of Biscay. Today it is the king of the euro zone: the bloc’s largest lender by market value, with 133m clients, mainly in Brazil, Britain, Mexico and Spain. Its lofty position in Europe’s league table demonstrates that its approach has, on balance, worked. Den Rest des Beitrags lesen »

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