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Opinion

February 17, 2017

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Globalisation: a defence

Globalisation: a defence

Globalisation has become a much despised word today, thanks to the rise of the right in the US and Europe as well as growing sentiment against immigrants and refugees.

Not long ago though, pundits, especially those from the West, prescribed globalisation as the panacea to all the problems of the world. Open borders and free trade were endlessly showcased as the be-all and end-all solution for the struggling economies of the developing world. Capitalism was the ultimate road to salvation and deliverance from poverty and all the attending afflictions.

It was largely due to that long and concerted campaign, aided by the persuasive Bretton Woods twins, the World Bank and the International Monetary Fund, that two of the biggest state-controlled economies India and China chucked the ideals of their founding fathers to embrace the glorious laissez-faire capitalism.

If it were not for their enthusiastic adoption of free trade, unleashing their immense economic potential, it is hard to imagine the Asian neighbours as the world’s fastest growing economies today.

It is not just India and China; following the collapse of Soviet Union and defeat of socialist worldview, most countries around the world today more or less follow, or are forced to follow, the same Western model of capitalism.

After all, the world economy is dominated and run by the US, the world’s largest economy, and its allies. In other words, this is the success and celebration of globalisation, long preached and promoted by the West.

So why is it being increasingly panned in the West today? It seems globalisation was great as long as it opened the doors to Western multinationals and their products in big, billion-plus markets. However, with China becoming the factory floor of the world, thanks to its cheap and enterprising human capital, this trend inevitably began to reverse.

Now if China has flooded world markets, including those in the West, with its cheap products and Japanese cars are pushing out those made in the US and Europe, India offers cheap IT solutions and bright, hardworking young men to run top US companies.

It’s not just the Gulf Arab states that are dependent on the humble South Asian workers, whose blood and toil have spawned the so-called petrodollar economies; top Ivy League universities are also being increasingly peopled by the same modest men and women. And it does not end there. Thanks to the political and economic upheavals brought on by wars and conflicts, incidentally started by the empire, and one-sided, unfair trade practices, impoverished multitudes from the global South have been migrating up north.

This is something that the champions of free markets had not clearly seen coming. For them globalisation has always meant a one-way street the monopolisation and exploitation of Third world markets and their cheap human resource. All they want is their money sans their problems.

It has become cool and immensely rewarding for political and economic elites in the West to rail against immigrants and refugees, blaming them for taking away their jobs and creating all sorts of problems including terrorism, crime and violence etc. But whose policies created these political and economic refugees?

Besides, if the Western economies are struggling and their population growth rate is stagnating, the new arrivals are hardly to blame. Most immigrants take up jobs as has been the case in the Gulf that no one in the West wants. They slog for long hours for relatively low pay. Indeed, if it were not for the immigrants, the average age in America would be even lower than that of Europe, making it even harder to compete with the emerging Asian economies. 

It is just as well that it took someone from China to hold the mirror to the West. Speaking at the recent World Economic Forum in Davos, Jack Ma, the billionaire founder of e-commerce giant Alibaba, pointed out that over the last three decades the US had spent $14.2 trillion fighting 13 wars abroad. That money could easily have been invested at home, building infrastructure and creating jobs.

“You’re supposed to spend money on your own people,” he said. “It’s not [that] the other countries steal jobs from you guys it is your (own) strategy (that is responsible for this mess).”

Ma also pointed out that the US had benefited the most from globalisation which produced massive profits for the American economy. Much of that money, however, ended up on Wall Street. “And what happened? Year 2008. The financial crisis wiped out $19.2 trillion in the US alone. What if that money had been spent on the US Midwest, developing the industry there?”

Indeed, as yours truly has argued before, more than anything it was the catastrophic US wars in Middle East cooked up by Bush, Blair and Company against the wishes of the international community that fuelled the 2008 financial meltdown, wiping out Wall Street, not to mention the destruction of an entire country and loss of more than a million innocent lives.

Poor Obama! He had to spend most of his eight years in White House putting out the fires started by his predecessor. And now his successor is trying hard to undo all that good work when he is not busy blaming the rest of the world for Uncle Sam’s woes.

Coming back to the debate; now that the poor and dispossessed of the Third World or the global South are beginning to reach out for the fruits of globalisation, it has suddenly become a big, bad bogey and is being painted as inequitable and unfair. This when the world economy is still dominated by the US with at least 134 of Fortune 500 companies being American.   

As Fareed Zakaria argues, if you look at those in cutting-edge industries today, the vast majority are American: “These companies have benefited enormously by having global supply chains that can source goods and services around the world, either to lower labour costs or to be close to the markets in which they sell.”

But this is changing, with the balance of global economy slowly and surely shifting eastwards. In December 2016, for the first time since the fall of the Mughal empire, when India had been the world’s largest economy, Indian economy surpassed that of our erstwhile colonial masters. It wouldn’t be long before China overtakes the US as the world’s largest economy.

This week, ISRO (Indian Space Research Organization) launched an unbelievable 104 satellites setting a new world record and in a triumph of Indian scientists’ enterprising spirit. And at least 96 of those satellites belonged to the US.     

It’s not just India and China who are leading this proud pageant of Asian power. Some of the finest fabrics and international designer brands are today being produced in a poor country like Bangladesh.    

So as you can see, while globalisation has had some adverse effects especially on indigenous cultures in the developing world it has also benefited enterprising and hardworking communities and nations, pushing hundreds of millions out of poverty. It has generated immense wealth and huge economic opportunities where none existed.        

Having long pontificated to the rest of the world about the virtues of the free market and pushing it to adopt its model of growth, the West cannot cry now about the effects of globalisation. This is a natural progression of things you win some, you lose some. The future should eventually be decided by market forces.

The writer is a Middle East based columnist.

Email: [email protected]

 

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