Carl Sacklen     Freelance Portfolio     Blog

The Danger of Scapegoating Globalisation

It seems, in the era of Trump and Brexit, that the term “globalisation” has become a dirty word that even the establishment has started distancing themselves from. It is a dangerous game, however, to pass the buck and put all economic ills on the door of globalisation.

It is widely agreed that Brexit and Trump were a vote against the era of globalisation. Yes, some on the Brexit side wooed internationalists with the promise of even freer trade with Commonwealth partners and the rest of the world but it can hardly be argued that Brexit wasn’t a vote against institutionalised globalism. Meanwhile, Trump was an obvious outright rejection of globalisation and the “Chinese competition” that came with it.

And these stances, although not in the long term interest of economies nor ones I agree with, are justifiable. Steelworkers in the rust belt did, in fact, lose their jobs to more efficient Chinese competition, and their vote for Trump was a vote in their own interests. There’s no hiding that.

The issue, however, is when people campaign to combat globalisation “in the name of the people” as if ending the G-word will solve every problem voters may face both now and in the future. It’s an easy stance for politicians to take, but it’s also a lazy and perilous one. Lazy because it discourages proper politics with effective policies, and perilous because when people ultimately realise the promises were based on hollow rhetoric, there will almost certainly be a backlash. And by that time it may already be too late.

Lazy statesmanship is not the answer. Sure, globalisation has caused some of the problems people such as Trump and far-right nationalists Geert Wilders and Marine Le-Pen claim to be fighting. In the US election season, even Hillary Clinton distanced herself from international trade when she withdrew backing for TPP. The danger is when the consensus shifts from globalism. This is because the truth is far more delicate, and blanket policies will only worsen the situation.

The anti-trade rhetoric we’re witnessing across the West has several flaws. Notably, only the disadvantages of trade have been highlighted. It’s easier to argue against free trade when emotional issues such as some job losses are on your side than it is to defend abstract and seemingly distant trade theories. However, in America, the buying power of all Americans (especially those with lower incomes) would be significantly worse were it not for cheaper imports. Global trade, then, has actually boosted living standards in that regard.

Abandoning global free trade will make economies less efficient, goods of a lower quality and worse still for the consumer, goods more expensive. Living standards will plummet and many of those who work in the manufacturing industry will lose their jobs as raw material import costs rise and international demand for their good falls. By isolating an economy to only one country, the market shrinks and firms can no longer achieve economies of scale. The only solution then is cutting jobs.

Globalisation is not perfect, and that is a harsh truth many internationalists are now facing. They can’t however, abandon global trade. It may need fixing, but certainly not removing. Likewise, politicians cannot fall into the trap of explaining every single problem with the faults of globalisation. This replacing of logic with emotion is short sighted and will make everyone worse off.