Will the year 2016 go down in history as the beginning of the end of globalization?
The British -- almost 52% of their voters -- voted in favor of "Brexit;" apparently, according to the story, largely because of the negative effects that globalization has had on them. So, they voted to leave the European Union, an organization they see as a leading proponent of globalization.
Donald J. Trump is the Republican Party's presidential nominee, propelled to that position by a tide of popular Republican resentment at changes those people feel have been to their disadvantage. They believe that many, perhaps most, of those changes are caused by globalization.
Hillary Clinton is the Democratic Party's presidential nominee, in part because she has positioned herself as opposing the TransPacific Partnership (TPP) agreement recently negotiated by the Obama Administration, now awaiting an increasingly-unlikely Senate ratification. Bernie Sanders competed well in the Democratic primary contests largely on the strength of his opposition to both the TPP and NAFTA (North American Free Trade Agreement), maintaining that those and other similar agreements have decreased well-paying American manufacturing jobs.
The outlook for globalization is dim. Or not. It depends on who is doing the globalizing.
The United States and the United Kingdom have for decades been the world's leading proponents of so-called "liberal economics." But time passes and things change. Now, "liberal economics" has become synonymous with "globalization."
With good reason, because those who benefit the most from liberal economics -- businesses, both large and small, that can exploit expanded opportunities; the employees, whether numerous or few, of those businesses; fraternal organizations, guilds and unions that encompass those same businesses and employees; and, of course, the governments that can, plainly speaking, impose taxes upon all the economic activities enjoyed by those people and entities -- have for the last half-century or so been increasingly using globalization as a tool to achieve the goals of liberal economics.
Some of those goals are altruistic, some are miserly; most are a blend of those characteristics and perhaps others, too. In any case, the benefits that come from achieving those goals -- in other words, the wealth and incomes -- have not been fairly distributed among the populations. Too much has gone to too few; too little has gone to too many.
And so, politics in America and Great Britain now seem to bode poorly for the prospects of increasing globalization. If anything, the Brexit vote and the American presidential election imply that both countries will start to limit their participation in globalization agreements. In the United States, NAFTA and the TPP (and other agreements) are at risk; withdrawal from them would dramatically reduce American participation in globalization. In Britain, all international trade and business agreements are at risk, since those that are in existence now are naturally a product of the U.K. membership in the European Union.
On the other hand, China is energetically building a free-trade zone with other Asian countries. Recently, the newly-launched Asian Infrastructure Investment Bank (headquartered in Beijing) has made loans for development projects in at least four Asian nations. The Association of Southeast Asian Nations (ASEAN) is making progress in realizing its long-desired goal of having an international economic community consisting of its ten member nations.
In addition, the African Union has announced that it will begin issuing passports that will be recognized throughout that continent's nations. (The Washington Post article provides background and analysis, as well as contrast with Brexit.) South America's Mercosur is perennially underwhelming in its performance, but nonetheless it continues to function and to be persistent in its attempts at international economic integration.
The emerging and developing economies of Asia, Africa and South America have the momentum to continue their globalization projects. In the absence of American leadership, China will probably be successful -- through targeted use of its ample cash reserves, and the lure of its growing economy as a market for those things that can be provided by the other developing economies -- in channeling that momentum by setting developmental guidelines and rules. The benefits resulting from those guidelines and rules, of course, will flow more to China than to the United States.
Could politics in the United States and the United Kingdom change as this year closes out and 2017 begins? Once elected, could a President Clinton revert to her internationalist tendencies and eventually find approval for a revised TPP? Could a President Trump, when confronted with the likelihood of Chinese supremacy (China = "winner") in international relations, relent on his predilections for punitive tariffs and duties simply to avoid looking like a loser? Either is possible. But in both cases, Congress is not likely to be cooperative. The political pressures caused by the popular feelings about stagnating mid-level incomes and employment opportunities are powerful.
Brexit might happen, but then again, it might not. Last month's vote was a referendum, and therefore not binding on Parliament. As a member of the European Union, the U.K. has not negotiated much of anything by itself for decades, and so it finds itself now in the position of hiring hundreds of lawyers and negotiators to accomplish the exit milestones set forth in its current agreements with the E.U.
What all of this adds up to, I believe, is that globalization will continue, but with diminished leadership and involvement from the United States and Great Britain. My guess is that there is a 90% chance that inside of five years the world's national economies will be more globalized than they are now, even if there is less participation in that event by the U.S. and the U.K.
The irony of the American and British anti-globalization arguments is that they make the case for the benefits of globalization. Those arguments assert that wealth and economic opportunity are flowing from the developed national economies to the developing economies. ("Those people are taking our jobs!")
If that is so, then why would the developing nations of Asia, Africa and South America not want to have further globalization? After all, they will continue to benefit from it because their manufactured goods and natural resources will remain in demand by the populations of the developed nations, thus providing continued employment for the populations of the emerging economies. For those countries, that is a compelling case in favor of continued globalization.
The fears of economic insecurity that are the foundation of the anti-globalization forces in the United States and Britain are understandable. What I do not understand is the proposed actions and policies that would replace that insecurity with economic security. Perhaps manufacturing could be forced to return (Trump) or encouraged to return (Clinton), but even if that were to happen in a wildly-successful way (doubtful) it would not mean millions of recovered jobs (Trump again) because of the cost advantages of automation. If that makes for broadly-improved incomes and more equitably distributed wealth, and therefore a compelling case to withdraw from globalization, then it is news to me.
You would think that the historically-innovative and forward-looking economies and societies of America and Britain could figure out how to benefit from global changes that will happen with or without them, wouldn't you? They probably can. But is it better to do that from a leading position or from a following position? I think the answer is obvious. (Hint: China seems to have figured out the obvious answer to that question.)
