By Gary A. Grappo -- First published in Fair Observer --
Visiting Senior Scholar at Center for Global & Area Studies, University of Wyoming
Globalization has become bad word of late.
It has been the punch line for the "Leave" supporters of Brexit, a campaign platform—if indeed he has such a thing—for US presidential candidate Donald Trump, a Bernie Sanders throw line to stir followers, a rallying cry for anti-free traders, a justification for those opposing “American hegemony” and the scapegoat for just about anyone who wants to “take back” their country, sovereignty, way of life, values or jobs.
The anti-globalization mood is ascendant in the United States where its supporters assert the phenomenon has robbed Americans of their jobs and livelihoods, opened their borders to too many immigrants—a curious claim in a country made up almost entirely of immigrants and their descendants—and diluted America’s culture and values.
However, America may have lost sight of the many benefits that have accrued to the country and the whole world as a result of globalization. What may also surprise them is that the version of globalization seen today in America and around the world was made in the good, ole USA.
That’s right. The globalization we see spreading about the world in all its forms—trade, investment, technology diffusion, the diversity stemming from the mixing of previously isolated people and cultures, the arts and sciences, international cooperation in climate change, counterterrorism, arms control and human rights—was designed and made in America. So, why are Americans turning against their own creation?
It may be true that few opponents of globalization could define what it really is and what it has come to mean for the world. Definitions do vary, but most come down to theincreasing interaction, interdependence and integration of people, societies, governments, businesses and institutions around the world. While typically seen for its commercial and trade benefits, which are formidable, it has also facilitated technology exchange, the movement of people and capital, economic development—especially in less developed countries—and cultural awareness and understanding.
Globalization’s detractors cite the downside of globalization. These typically refer to the loss of manufacturing jobs in more developed nations to lesser developed ones, largely due to lower labor rates or taxes in the latter. But others have also claimed that globalization—which can also encompass greater immigration, multiculturalism and tolerance of non-traditional lifestyles—has diluted, or even polluted, the traditional cultures of a nation or society.
But globalization is not a new phenomenon. In fact, it has been around as long as mankind. Primitive tribes, often even rivals, were known to have traded for centuries, sometimes across great distances. Kingdoms and states were often founded on the basis of trade and increased interaction, from the Babylonians, Nabateans, Romans, Abbasids of Baghdad and Venetians, to the 18th– and 19th-century British Empire and post-World War II America. All incorporated globalization—more formally in its commercial guise—into its governing philosophies and structures. Often, technology and even religious concepts were adopted by one group from an unrelated group or tribe, e.g., the Romans and the Greeks.
Such interaction brought with it greater communication and new ways to live, prosper and grow. It also sometimes led to war. But it never stopped. Humanity has always understood that human interaction, especially across tribal, religious, ethnic, cultural and national boundaries, was a net positive for human survival and prosperity. Had it been otherwise, it would have ceased long ago.
Modern Globalization Gets Going
It wasn’t until the end of the Second World War, however, that nations decided that they would formally adopt globalization in its now almost infinite varieties into their strategies for security and prosperity. It would become the blueprint for the world’s modus vivendi. Leading that effort was the United States, the only large, major country to exit that war with its economic structures and society intact and relatively unharmed.
An enlightened and progressive leadership of Harry Truman, George Marshall and Dwight Eisenhower was joined by an extraordinary group of experts and advisers—Dean Acheson, Charles Bohlen, George Kennan, John McCloy, Robert Lovett, Dean Rusk—aka “The Wise Men” in Walter Isaacson and Evan Thomas’ seminal work of the period. These men wanted to craft what would become not only America’s strategy in the postwar period but a global strategy that has endured to the present day. It should be noted that such terms as “enlightened and progressive” and “experts and advisors” have also come under much criticism and disparagement, today, from the anti-globalization gang.
These men and their many allies throughout the West and the world purposely set out to create an interdependent network of institutions, alliances, agreements and relationships to prevent not just America but the entire world from experiencing the catastrophes that had twice rained mayhem upon humanity in the first half of the 20th century.
They wisely reasoned that the best way to avoid such conflicts, especially in an era of nuclear weapons, would be to create this global structure that would preserve stability, ensure security and advance prosperity and human dignity.
Whether they could actually see 70 years into the future is unknown. But the fruits of their wisdom and genius are undeniable today. Organizations such as the United Nations (UN), the Bretton Woods System (the World Bank and International Monetary Fund), International Court of Justice (ICJ), World Trade Organization (WTO), Food and Agricultural Organization, World Health Organization (WHO), International Civil Aviation Organization (ICAO), International Atomic Energy Agency (IAEA) and so many others were created in the post-World War II years to ensure security, facilitate commerce, promote economic growth and improve human health and well-being.
The North Atlantic Treaty Organization (NATO) helped to unify the formerly warring nations in Europe in the continent’s defense and proved indispensable in ending the Cold War and the Balkan conflict peacefully.
UN resolutions and international treaties addressing global challenges—in such diverse areas as human rights, the rights and health of women and children, non-proliferation, counterterrorism, chemical and biological weapons, drug enforcement, space and sea exploration, climate change and environmental protection, to name only a few—all came about in the postwar period as a result of the creation of international institutions. And most often they came on the initiative of or with strong backing from the United States.
Nor should we forget the many regional institutions that grew out of the postwar globalization effort. The European Union (EU), Organization of the American States (OAS), Association of South East Asia Nations (ASEAN), the African Union (AU), the Arab League and the Asian, Latin American and African development banks and numerous others all complimented the efforts of their international counterparts to address specific challenges of peace and prosperity in their respective regions.
The Mechanism for Global Transformation
The achievements of globalization are undeniable. In every field of endeavor, humanity is better off today than at any other time in human history.
The world still has experienced far too many conflicts since the end of the last world war. However, major powers, most especially those armed with nuclear weapons, have steered clear of face-to-face confrontation. Undeniably, the Cold War was responsible for its share of fatalities in Latin America, Africa and Asia—mostly in the form of civil wars in which the opposing sides were often backed by the superpowers.
But shockingly, the end of one superpower—the Soviet Union in 1991—came without the loss of a single Russian or American soldier. The structures put in place after the Second World War that allowed for effective communication and interaction between the two enemies, such as the UN, Conference for Security and Cooperation in Europe, arms treaties and a process of formal talks at senior levels between the two powers—also allowed the two governments’ leaders to talk and thereby diminish the potential for conflict. The fact that one superpower could have been transformed in such a manner without a shot being fired may be the greatest tribute to the postwar globalization structure.
War deaths in absolute numbers and in per 100,000 have declined steadily since 1945. The worst year, 1950, which coincided with the deadliest year of the Korean War, saw over a half a million deaths. The second worst, 1970, the height of the Vietnam War, saw over 350,000. Fatality rates in subsequent wars in the Balkans, Afghanistan and Iraq never approached such levels. Moreover, the deadliness of wars—battle deaths per conflict averaged over each decade—declined from the post-World War II period high of about 100,000 to fewer than 5,000 by the end of the first decade of the 2000s.
Deaths for the two world wars of the 20th century total between 78 million and 90 million. Civil wars in Russia (1918-1922) and Spain (1936-1939) and the Mexican Revolution (1901-1916) account for another 14-plus million. That averages an astonishing 2-2.3 million wars death every year in the first 45 years of the 20th century. By the end of the next 65 years (1945-2010), the yearly average had declined by nearly 75%, still a tragic toll but far removed from what can be described as the deadliest 45 years in human history.
Clearly, these declines may also be attributed to better and more sophisticated weapons, improved tactics that reduced civilian casualties and improved battlefield injury treatment. But we cannot dismiss the globalization strategies that brought peacemaking and conflict reduction and conflict-ending measures to bear on conflicts to end them or lessen their losses.
The great human catastrophes of the early 20th century—the Holocaust and the Armenian genocide—which were responsible for the deaths of no fewer than 6 million Jews and nearly 1 million Armenians, respectively, saw their latter 20th century equivalents in Cambodia, the Balkans and Rwanda. Globalization may not be the remedy for all of humanity’s depravities. But it has within it the outlines for preventive measures and solutions.
Richer, Better, Healthier
The benefits of globalization are not measured by grim death figures alone. Economic conditions have improved dramatically since the end of World War II, per World Bank statistics. The number of extremely poor people—those earning less than $1 or $1.25 a day—rose consistently until the middle of the 20th century, then roughly stabilized for a few decades.
Since then, however, it has fallen, dropping more slowly through the 1980s but then precipitously since the 1990s, from nearly 2 billion in 1981 to under 900 million people in 2012. According to the World Bank data, that’s from 44.3% of world population to less than 13%. It was projected to fall to below 10% by the end of 2015—a startling achievement. Compare it with where the world stood at the end of 1945 when over half the world’s estimated 2.4 billion people lived in poverty.
Life expectancy has made similar gains. According to the WHO, life expectancyworldwide at birth in 2015 was 71.4 years (73.8 years for females and 69.1 years for males), ranging from 60.0 years in the WHO African region to 76.8 years in the WHO European region. That’s up from a global average for both genders of 48 years in 1945.
Global trade today has dramatically improved since the protectionist pre- and postwar eras. This came about as a result of an attitudinal change about trade and commerce and the vital roles they play in both national economies and international security. Countries that trade and do business with one another are less inclined to go to war with one another.
The movement to break down trade barriers was spearheaded in the post-World War II period by the United States, first with the creation of the General Agreement on Trade and Tariffs (GATT) and then with creation of organizations like the WTO and World Intellectual Property Organization (WIPO), to the many free-trade agreements it has signed with neighbors nearby as well as allies and friends around the world. Other nations wisely followed suit.
Led largely by then superpower Great Britain, worldwide trade in the 19th century and until 1913 grew by more than 3% annually. It was spurred by technological advances, especially in communication and transportation, as well as by political and economic liberalization. It was the world’s first exposure to globalization and its opportunities.
But in the lead-up to the First World War, the bane of globalization—nationalism—crept into national political and economic policies, which in turn led to protectionism. War—or wars, to be correct—not surprisingly followed. From 1925 to 1945, total trade as a percentage of GDP in Europe fell from 40 percentage to just over 15. The lack of global economic leadership and cooperation were perhaps the biggest obstacles to interwar years’ recovery. America’s Great Depression likely prevented it from stepping in to replace Britain. Nationalism—and the protectionism it spawned—sadly ruled the day.
The lesson was not lost on the post-World War II leaders in America and elsewhere. The structures and agreements that followed produced the greatest economic expansion ever witnessed in human history. And trade was pivotal to that prosperity.
In 1913, the year preceding the First World War, world exports comprised 7.9% of global GDP, according to a WTO world trade report. By 1950, five years after the end of World War II, it had fallen to just 5.5%. By 1998, it had risen to 22.8% and reached almost 30% by 2014.
Predictably, world GDP growth paralleled the growth in trade, according to World Bankdata, from a post-World War II high of 6.4% in 1964 to a low of -2.1% in 2009. (In the period from 1960 to 2014, GDP growth was negative only twice, in 2008 and 2009, the “Great Recession.”) In general, global economic growth throughout this 65-year period largely kept within a band of 2% to 5%.
The data cited above all attest to the benefits of globalization. In fact, it would be hard to identify any element of life on a national or individual level that has not improved since World War II as result of some aspect of globalization.
So why America’s—and perhaps Britain’s as well—apparent turn toward nationalism, nativism and even isolationism? How could the nation most responsible for leading this great and grand strategy to move mankind out of insularity to such unprecedented prosperity now wish to effectively take a wrecking ball to the whole lot?
Former US Treasury Secretary, Hank Paulson, attributes it to America’s Republican Party’s endorsement of Donald Trump, who campaigns on “a brand of populism rooted in ignorance, prejudice, fear and isolationism.” That may explain in large measure the motivation of many of those attacking globalization.
One of the principal architects of this extraordinary post-World War II effort to bring the world closer together to ensure stability, Harry Truman, once confidently asserted: “No nation on this globe should be more internationally minded than America because it was built by all nations.” Truman uttered those words when faced with similar challenges posed by the isolationists of his period.
The wisdom of Truman, a great student of history, might also apply when he remarked that “The only thing new in the world is the history you don’t know.” Do Americans today understand what the world had gone through in the first half of the last century? More importantly, do they understand the extraordinary impact their nation and its farsighted leadership have had on the world and the potential for even greater progress?
Globalization has brought all markets, both America’s and other countries’, practically to the front door of everyone. Internet commerce—something else introduced to the world by the US—has opened new frontiers to innovators, of which America has a great many, who create business, wealth and prosperity. It has also exposed the world to much greater understanding as humans anywhere can now communicate with nearly anyone anywhere at any time.
Globalization’s detractors make some relevant arguments that governments and societies need to address. The first of these is the growing income disparity between the so-called one percent and the rest of the country. As reported by University of California Berkeley economist Emmanuel Saez, “Six years after the end of the Great Recession, incomes of families in the lower 99 percent have recovered only about sixty percent of their losses due to that severe economic downturn.”
Incomes of the top 1% of families, according to Professor Saez, grew from $990,000 in 2009 to $1,360,000 in 2015, a growth of 37%. In contrast, the incomes of the bottom 99% of families grew only by 7.6%–from $45,300 in 2009 to $48,800 in 2015. The upshot is that the one-percenters are collecting a greater share of total real income growth, about 52%, in the US than the lower 99-percenters.
Detractors argue that their jobs are going overseas or being replaced by robotization and that they are left with lower paying ones, often in the low-skill service industry. Many of those “exported” jobs were in the manufacturing industry. While manufacturing output in the US has risen from about $400 billion in 1947 to $2.1 trillion in 2014, employment in that sector has fallen from a postwar high of 17.2 million in 1979 to 12.2 million in 2015, according to the Federal Reserve and Bureau of Labor Statistics. That translates to productivity (output per hour of work) gains of 250%, a good thing for any economy. But the percentage of the American workforce in manufacturing has declined from 32% in 1953 to under 10% today.
These developments, in fact, speak to the challenges as opposed to disadvantages of globalization. With technological advancement, developed countries innovate to produce the same or newer products faster, better and less expensively. Meanwhile, with economic development and the improved health, education and investment that come with it, lesser developed countries learn to produce less expensively products previously made in the more developed countries because of lower wages or taxes.
These two phenomena are an inevitable outcome of economics as well as globalization. They are also an inescapable reality of human progress, as unstoppable as is human innovation, where developed nations like the US still have the upper hand.
A New Face of Globalization
So, perhaps what the driver economies of globalization, especially the US, should be seeking is adopting a new perspective on globalization as opposed to jettisoning globalization. Governments need to recognize the significant displacement that often occurs as a result and then adopt policies and measures to mitigate or soften its sometimes harsh effects.
These ideas have included some of the following:
Education: Promoting and offering newer forms of education or re-education for greater numbers of the adult population, perhaps also providing salary subsidies while undergoing training, would allow those on the losing end of globalization to move more easily to up-and-coming trades in manufacturing and services.
Salary: Given the increasing importance of services in developed economies, offering more competitive salaries and other benefits would facilitate the movement of workers into those fields, e.g., healthcare, education, social well-being, etc. That might mean government action. However, government must be wary of doing the work that the market is far better able to do.
Mobility: Globalization favors the mobile, and not just phones. People must be able to move with markets. This is hard for many people more accustomed to remaining close to their original communities. However, mobility within the country must be encouraged, perhaps by providing government incentives to individuals and businesses and even requiring businesses to offer assistance to workers and their families who must relocate.
Infrastructure: No nation can expect to become economically progressive and competitive without adequate infrastructure. Even the most modern and developed economies need to maintain and improve their infrastructure. Nowhere is this more evident than in the US, where neglected highway and other transportation, communication and public service systems have not kept up with the population growth or demand. Private capital will follow public capital, and the latter today needs to be directed toward the country’s infrastructure. In turn, that will generate not only the needed private capital into innovative industries but also greater employment opportunities for professional, skilled and semi-skilled labor. Such an undertaking is entirely consistent with globalization and can also effectively address the nation’s overall welfare and competitiveness.
There are other policy areas where action is needed to soften the sharper edges of globalization. Taxation, fiscal policy, research and development, environmental and agricultural policies, and others should be evaluated in the context of globalization and their ability not only to advance globalization but also diminish the repercussions on certain parts of society.
No Turning Back
Any political candidate advocating a retreat from globalization ought to be asked to explain how less—or the elimination—of its most vital components will advance the general welfare. The candidate should be able to explain how it was that the post-World War II period was somehow not in the interest of the country and not better than what citizens saw in the pre-World War I and interwar years. A candidate must be able to answer how a self-marginalized country would protect and advance all of its interests in a less interdependent world.
For political candidates in America advocating a retreat from globalization, there is an additional and even more acute question: In such a scenario, how would the country maintain its position of global leadership? It is rationally inconceivable that the US or any major world power can simultaneously maintain such a role and turn its back on an interdependent world?
In fact, globalization is now a force unto its own. Progress in every field of human endeavor and the imperative to continue have made it essential that peoples and countries borrow from, take advantage of, trade with, learn from, compete with and ultimately find ways to live cooperatively and tranquilly with one other.
There is no turning back from it because the world has embraced it. The great movement initiated by the United States to benefit the global collective interest as well as its own is here to stay.
Source: Fair Observer