Economic globalization faces a clear and present danger.
The grumblings about the adverse consequences of globalization, the despair about not sharing in its economic benefits, and the disaffection with the global political and social tensions it has created are real.
The cacophony of voices raised in anger against globalization have been getting louder every year. The disconnect in responding to those concerns may derail the future course of globalization.
All these concerns should be addressed in a direct and purposeful manner.
Asking the right questions is a good start toward solutions.
The economic, social and political malaise that feeds the narrative for the globalization dissidents consists of a fairly long list of grievances and concerns.
They start with the current slow or stagnant economic growth. The persistent downturn still lingers after the global financial crisis of 2008 and the Great Recession. The recovery that followed was anemic at best.
In fact, globalization has revealed an international financial system that’s inadequate for the economy of the 21st century. It has spotlighted the fault lines and the structural weakness in the machinery of economic governance. That architecture can’t prevent or withstand the financial shocks of today’s economy.
One of globalization’s most pervasive consequences has been a tidal wave of unemployment. In great part, technology is to blame. These advances have replaced human labour and made whole occupations obsolete.
Globalization has widened the chasm in income and wealth disparity. In great part, that’s because new technology has slowed the wage gains of the middle class.
In economics, one thing leads to another. Globalization has created a chain reaction of political and social polarization. The economic governance system has failed to deliver inclusive prosperity in the face of massive change.
Free-trade agreements are under attack. This disaffection comes from both emerging economies and some developed economies. The critics feel they’ve been shortchanged by the rules of economic engagement and contemporary supply chains. Even the world’s supreme economic powerhouse, the United States, has raised its voice against free trade.
And we can’t forget climate change. Its causes are country specific but its consequences are global. And it requires global action.
Last summer, I went to my favourite beach, on the Greek island of Rhodes. Unfortunately, the beach was under two feet of water and the waves were lapping on the cliffs. Sea levels are on the rise as global warming melts glaciers and icebergs.
Climate change’s economic impact is a fact of life and it will only become more severe.
Globalization has also unleashed the unprecedented movement of economic migrants and refugees. And that has resulted in dismay and despair among many people who feel pressured by the presence of newcomers. Look no further than the political tribulations of German Chancellor Angela Merkel. She opened the door to almost a million Syrian refugees and is now suffering the political consequences: she can’t form a coalition government and her own party is biting at her heels.
In such circumstances, many citizens feel they’re no longer masters of their own house and that government policies don’t reflect their desire for personal safety and collective well-being.
So globalization takes the blame for the world’s many failures. These include economic and political disruptions, government policies that are out of sync with citizens, high unemployment, unprotected borders, the failure of the middle class to improve its economic prospects and climate change.
But the solution isn’t to dismantle globalization. Rather, we need to work together to improve globalization. Globalization carries great benefits. It can be the great economic equalizer.
Globalization requires a course correction to fulfil its promise.
Dr. Constantine Passaris is a professor of economics at the University of New Brunswick and a national research affiliate of the Prentice Institute for Global Population and Economy at the University of Lethbridge.