Treasury secretary Gabriel Makhlouf argues if 'mood of uncertainty' about the value of globalisation & free trade spreads this would be a big risk to NZ’s living standards

Treasury secretary Gabriel Makhlouf argues if 'mood of uncertainty' about the value of globalisation & free trade spreads this would be a big risk to NZ’s living standards

The case for globalisation, in a world where protectionism is experiencing a resurgence, needs to be made loudly, clearly, regularly and persuasively, says Secretary to the Treasury Gabriel Makhlouf.

In a speech to the NZ Institute of International Affairs Conference in Wellington, Makhlouf argued free trade and globalisation have "undoubtedly" been good overall, but haven’t been good for everyone all of the time. He said evidence of the advantages of free trade, interconnectedness and of globalisation, are on our doorstep through New Zealand's trade and economic relationship with Australia.

The business community in particular needs to be making the case for free trade "loudly, clearly and regularly," said Makhlouf.

"With the anti-globalisation movement getting so much air-time, the public need the chance to hear clear and compelling reasons why international connectedness is good for the community at large, especially in a post-truth world facing the modern challenge of so-called ‘fake news’," Makhlouf added.

Makhlouf's full speech is below

Hello everyone, and thank you for the opportunity to join you for this conference. Today I want to talk about how we can best guard the interests of New Zealand and the Asia-Pacific region by strengthening our international connections, not by building protectionist barriers.

Without question, protectionism has been a word that has had a resurgence in 2016. You know what I’m talking about. You’ve read it or heard it. It largely stems from the US and parts of Europe, and reflects a view – misguided from my perspective – that prosperity comes from putting up barriers rather than building connections.

I have to say that I’m neither reading nor hearing similar sentiments from the Asia-Pacific, where most of the world’s people live, the fastest-growing part of the world and the region that we are based in. Asia has seen first-hand the incredible benefits that greater connectedness can bring. According to World Bank data, back in 1990 there were just under a billion people living in absolute poverty (less than US$1.90 per day in 2011 dollars) in the East Asia and Pacific region, more than the rest of the world’s people living in absolute poverty combined. By 2013 that number had fallen to 71 million, a drop of around 93 percent in a single generation. 

In the words of economist Max Roser, “The number of people in extreme poverty fell by 130,000 since yesterday’ should have been the headline every day in the last two decades.” A connected, open, global economy helped make that happen. By contrast, protectionism is a recipe for perpetuating poverty. 

But there’s undoubtedly been a mood of uncertainty about the value of globalisation and the value of free trade that we haven’t seen for some time. And if it spreads it would be a big risk for New Zealand’s living standards. A small open economy like ours can’t get rich by just selling to itself. We need to be connected with others, to trade, invest and exchange ideas. We’ve learned from experience. 

Over the last twenty to thirty years barriers have come down – although we do need to address the issue of non-trade barriers – and New Zealand exporters have gained greater access to markets around the globe. Trade has undoubtedly prospered. If some of our major trading partners move towards greater protectionism, it will hamper our ability to export and compete for markets. 

A world closing in on itself could hit New Zealand hard. So what can we, and other nations in the Asia-Pacific region, do to push back against protectionism? 

I suppose that, for a start, we shouldn’t jump to the conclusion that the triumph of protectionism has somehow been sealed by events over the past year. It hasn’t. Let’s look at some examples that many point to as evidence supporting the end of international connectedness: 

• The UK has indeed decided to leave the largest single market in the world. But I’ve also heard UK Ministers talk about free trade in terms that all of us in New Zealand would recognise.  

• The FTA between the EU and Canada did indeed almost fall at the last minute but in the end the two parties did sign an agreement. 

• The TPP – in its current form anyway – does look as if it will not proceed but there are many free trade agreements in existence around the world and also many that are being explored or negotiated. The EU, for one, is actively engaged in free trade negotiations. 

And take the Regional Comprehensive Economic Partnership (RCEP) as an example. It’s an FTA that’s being negotiated between the 10 ASEAN members and Australia, China, India, Japan, South Korea and New Zealand. These countries have a total population of more than 3 billion, a total GDP of around $US23 trillion and account for about 27% of global trade and 55% of our goods exports. 

So the international connectedness that we’ve seen grow over the last century – what we call globalisation – appears to have some life left in it. In my view, it’s here to stay. 

On the other hand, ignoring the debate that’s happening in some parts of the world would be mistake. I suggest that we need to do four things.

First, we need to recognise that while free trade and globalisation have undoubtedly been good overall, they haven’t been good for everyone all of the time. 

For example, across countries and regions, industries have changed dramatically or disappeared or new ones created. That may have happened anyway, whether or not the world was as connected as it is now. But globalisation has accelerated the pace of change and that has led to dislocation as well as opportunity. In some advanced economies low and middle-income earners have seen their incomes stagnate; they believe the benefits of globalisation have accumulated to other people and to other countries while leaving them behind. 

The impacts of globalisation – real or perceived – have to be recognised and addressed head-on. 

How that’s done will vary from country to country, and industry to industry. For one thing, we see it as important that New Zealanders have skills that are adaptable and transferable. People need to be able to move from industries that may be affected by competition to those that are growing, taking up new opportunities that openness actually creates. 

Second, with the anti-globalisation movement getting so much air-time, the public need the chance to hear clear and compelling reasons why international connectedness is good for the community at large, especially in a post-truth world facing the modern challenge of so-called ‘fake news’.

We need to get better at both explaining the benefits of free trade and greater connectedness as well as listening to the valid concerns of people. And it isn’t just the government or thinktanks who need to do this. The business community in particular needs to be making the case for free trade, loudly, clearly and regularly. 

Third, let’s make that case tangible. Having an internationally connected and competitive economy helps to create jobs, and free trade has given New Zealanders fantastic access to goods and services that would otherwise be hard to get and hard to afford. 

It’s not only about our links across the distant corners of the world; just consider the benefits of our links across the Tasman. 

Our trade and economic relationship with Australia helps drive the New Zealand economy. Rather than have a market of four and a half million people, we have one of 29 million.

Australia is our biggest market for goods and services exports ($13 billion in exports in the year to June 2016, 18.3% of total exports), our biggest source of capital (51% of the foreign direct investment stock) and our biggest destination for overseas investment ($60 billion). We are each other’s largest source of inbound visitors, with over 2.5 million trips across the Tasman every year. 

So if you want to see evidence of the advantages of free trade, of interconnectedness and of globalisation, well it’s on our doorstep. 

Yet some people are attracted to protectionism in the belief it will mean more jobs and higher incomes. A recent study of 40 countries suggests that what they could get instead is a big drop in their purchasing power. A closing off of cross-border trade is projected to knock 28 percent off the purchasing power of the highest decile of consumers, and a massive 63 percent off the purchasing power of the poorest decile. 

And incidentally, don’t assume that new tariffs between other countries don’t matter to us. Tariffs on imports from Mexico – to pick an example out of the air – would impact New Zealand businesses who export from there as much as a Mexican or any other business. 

Fourth, let’s seize the opportunities in front of us. Globalisation is alive and well in our region and across most of the rest of the world. In Asia the debate isn’t about closing up; it’s about how to grow, how to improve infrastructure, how to connect with trade partners in the region and beyond and how to enjoy increased prosperity. 

New Zealand is closer to the driving force of global economic activity than ever before, and we must take advantage of this if we are to keep raising our living standards. 

There is a growing middle class not just in China but in India, Vietnam, the Philippines, Malaysia, Indonesia and elsewhere in the Asia-Pacific region. One estimate is for the Chinese, Indian and Southeast Asian middle classes to be almost 2 billion people by 2020. That is a vast group of markets for New Zealand tourism, for our export education, for the high quality agricultural commodities that we produce now and the new products and services we will develop in the future. 

Sinking more roots in the ground in Asia – and indeed elsewhere – will help New Zealand’s economy to grow in the good times and be more resilient in the bad times. 

Of course the flow of trade is a critical factor but it’s not the only one. 

The international flow of capital helps bring in financial resources that enable our businesses to grow, as well as enable New Zealanders to pursue opportunities to invest beyond our shores. Flows of people and ideas have the potential to lift the skills of our workforce, raise our productivity, improve our cultural literacy and open up deeper links to overseas markets.

In summary, we need to strengthen our international connections, not sever them. We need to continue to embrace globalisation, not look toward protectionism. Let New Zealand and our Asia-Pacific neighbours keep our doors open to each other and work together for the sake of our current and future prosperity. Let’s make the case loudly, clearly, regularly and persuasively.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

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Mr Makhlouf talks of 'making the case' but perhaps he should also try 'listening'. Case in point. The transport industry talks of importing drivers because they can't get any. While, cough cough, don't seem to recognise they could pay locals more - silence on that one is resounding .
Has he done the analysis of what that extra cash would do to our economy, and more importantly the interests of their employees. Perhaps he should do the sums. Or is it perhaps the interests of these locals would not be included in his equation.
Does what he proposes actually raise our skills as he suggests. Seems to me the actual result has been a race to the bottom on skills, incomes and security. No sign of building a high income economy, rather it's been the reverse.

Isn't your example about immigration policy rather than free trade?

it's about walls.

Makhlouf's article is all about convincing Kiwis to accept unrestricted immigration into NZ.

as Britain's difficulty about negotiating a deal with the EU post their referendum shows: free trade usually includes free movement of people.
Hard to separate, and counterproductive if you try to,

what is shortsighted is the lack of the transport industry to train, cheaper, quicker to import.
second in ten years when long haul drivers are starting to be replaced with driverless trucks, will we be sending them back

Not going to happen, not when its cheaper to put a person in it driving it on minimum wage. Robots have replaced people but only in certain industries. Not only because they are cheaper but because they are faster and more consistent and produce a better end product than a person can. We do not have those volume large scale industries in New Zealand, never have and its only getting worse here in terms of manufacturing not better.

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He is perpetuating the denial that most economists and politicians have over Trump and Brexit. Perhaps he should be explaining to the people where they will be able to get secure jobs that pay at a level to enable a reasonable standard of living. After the pollies work for the people. His energies would be better spent telling people how goods manufacture can be widely distributed around the world so every one gets a piece of the pie, instead of multi-nationals just finding the cheapest place, with the least labour laws (and taxes) and driving their labour costs further down, recreating slavery, and perpetuating poverty.

But what do you propose they do about it?
Ask China to please not produce cheap stuff so local labour can compete?
Or put tariffs on - knowing that they will get retaliation tariffs?
Are you happy for China to cut off NZ's cheap milk trade and produce their own - or is it different when we do it?

china restrict our exports when ever they see fit, many times the only way around it is to let locals import and hand over control and profit margins, i.e take a much smaller profit knowing you can export without authorities stopping your shipment

Jimbo take a look at Globalisation and see who has benefited. The multi-nationals, those countries who maintained a level of protectionism despite it (china and America) and no one else! The ordinary people everywhere else suffered under globalisation. It doesn't work.

The evidence doesn't support that at all. The vast majority of people have not "suffered" and are not worse off under globalisation. Even in New Zealand. (Especially in New Zealand.)

Globally, millions have been lifted from poverty. In fact poverty is at its lowest level ever. An interconnected world has a lot to be proud of and is the basis we can now claim that any poverty is now unacceptable. Go back a few decades and it was 'just accepted'. (And btw, where are the regular famines anymore?)

Sure, there have been those that lost out. As there will be in the future given the rapid change. Those that feel they are 'losers' are generally in the rich West and are often those who didn't retrain to the new circumstances. In the future, that could also be a stress the newly-employed in the developing world face as well. Updating skills and re-training will be a permanent requirement in the new world pushed along by the "new machine age" and the "fourth industrial revolution".

The alternative to 'globalisation' would have been to discard billions to permanent poverty - just so a few in the West could retain their protected lifestyles. That would have been morally bankrupt in my view.

As trade moves to 'services', and software-based products all built with clever and minimal materials, it will be impossible to return to the protected, insular world some of us have as a recovered memory.

We are better to own the advantages, and provide for those that miss out as part of our social safety net. Otherwise we will get sidelined and be materially worse off as a community. Personally, I want to see a much bigger focus on skills retraining, not only officially, but in the minds of those in the workforce.

there is really a lot of B.S about the 'retraining' thing DC. One of the definitions of a third world country these days is having masses of unemployed graduates.
A common misconception is the idea the multi -national enterprises seek efficiency. No evidence for that at all. Mostly they seek advantage by increasing control. Give them the choice between efficiency and control, they will go for control anytime. 'Post Truth' have been the words of the week. But actually the concept that what this is all about is efficiency seeking has been 'Post Truth' for many years.
Think through that globalisation as a movement has what they say they are trying to do, but what they are actually trying to do is very different. (Expressed strategy as versus emergent strategy)
You an I agree that we are better to own the advantages. Actually I think that is the only way. But I think you will find David that if you promoted that one you would find what the globalisers were really about. It would be like poking a sleeping tiger with a stick.

"One of the definitions of a third world country these days is having masses of unemployed graduates."
Are you serious?
That is a crazy notion. Poverty does not incentivise higher education.
In western cultures, yes, it is the case. In third world countries, no.

There is ample evidence that all business in a competitive environment pursues efficiency. Naturally this is ever more evident as globalisation increases.
Can you name one company who has a completely inelastic demand in their customer base?
If there was not requirement for efficiency, why doesn't every person produce each and every good that they require? Why do we not have an equal amount of businesses and consumers? Why do organisations ever close down/cease to do business?

"There is ample evidence that all business in a competitive environment pursues efficiency." Really Nymad, in my actual experience the "efficiency" you are talking about is driving down wages, so lest cost per unit, work the staff harder; not improving productivity. And that is my point. I've read a number of reports that have identified that living standards have steadily declined since the 1980's, and this is because wages have either literally declined or at least not kept pace with inflation. An DC's point about secure jobs, people having to work multiple part time jobs just to break even is an acceptable outcome from globalisation? As for retraining, what about the averagely talented, educated unskilled job seeker? Getting new skills by attending tertiary education is both expensive and produces no guarantee of more or better work. I am not against globalisation per se, but there does need to be some level of protectionism to support the ordinary people of any country by ensuring they have opportunities. Take F&P Appliances for example. Selling the company to Haier will see most jobs and technological developments exported to China - globalisation at work. How is that good for the people of NZ?

Yes, efficiency can be achieved by driving down wages. Is it an issue, no. If someone is prepared to work for that rate, who am I or you to say that they shouldn't?
Regardless, the greater social welfare is continuously being increased. It is not morally acceptable to say, as you already have, that you or I deserve the highest standard of living on the basis of country of birth.

"Take F&P Appliances for example. Selling the company to Haier will see most jobs and technological developments exported to China - globalisation at work. How is that good for the people of NZ?"
It is the people of NZ that are demanding this!
They are not happy to pay the prices of goods to be produced in New Zealand. The day they are is the day that manufacturing will come back on shore.

At the end of the day, sure, advocate protectionism. However, you can't also advocate it as a higher standard of universal living.

What you are talking about Nymad is the point of the report out about a week ago(?) that talked about the basis of productivity in NZ. But it is also about the level of profit demanded by companies. They do this in the name of their shareholders but they are corrupting and skewing the principle, which is actually about growth and adapting to a changing world, as well as opportunities. For years now it has been identified that NZ companies have always taken the easy route to productivity, rather than a genuine investment in it. We even have our own company (Scott Technology) which has the expertise and capability to deliver the systems to do it. As for buying the products of F&P, I always bought their products because they were good quality, robust and lasted, but I did not buy a Haier one this time around. Also people not buying them at the cost they can be produced here is a possible consequence of the declining wages and living standards?

So, what's your point?
You are saying that NZ is a low productivity nation? I agree, it is.
Thus, we should be punished for it. If we don't have a comparative advantage in the production of labour, why should we try and fruitlessly try to compete in that realm?
You attack globalisation when you should be criticising New Zealand's inability to facilitate industry in which it can maintain comparative advantage.

"Also people not buying them at the cost they can be produced here is a possible consequence of the declining wages and living standards?"
No. It is a function of competition. It is one company offering a product of equal or better utility at an equal or lower cost. Back to the comparative advantage thing.

*Please no Henry Ford anecdote to follow*

Not hard to think examples Nymad. Lets look at telephone companies. Happy to spend vast amounts to buy out competitors. You been reading the paper and believe the stuff about efficiency. I read the same papers, and see the drive is for control.
Read the investment advisors. They love companies that have control.

Which telephone company has no competition?
They are happy to buy out competitors where they can realise efficiency.

You read the papers - do you also wear a tin foil hat when you go outside?

Have a look at chart in the ourworldindata.org on telecommunication costs. Globalisation has been awesome for efficiency. Another example of poor benefiting more than the rich.

https://ourworldindata.org/grapher/real-transport-and-communication-costs

Question Nymad. Third world countries who have lots of unemployed graduates. Phillipines, India, New Zealand (trolling with that last one maybe - but think about it) Lots of Africa I'm told.

Evidence?
Indonesia, China and South Africa have tertiary educated rates of less than 10%. I would have thought educated people in these regions would have been in significant demand, given those rates of tertiary qualified..

Are not worse off - But they/we aren't better off either. The top 5% are the winners in globalisation.

Is lifting people out of "poverty" such a good thing. Urbanising people, taking them away from rural village/family life to work for the man. Sure they have more money, but has that ever created a wealthier life ? Morally bankrupt is believing that western society has it right, and our values are worthy.

Are you serious?
Genuinely serious with the line "Is lifting people out of "poverty" such a good thing."?
Have you ever been forced into sustenance living?
I doubt any of the the people who have would wish for it ad infinitum. Additionally, it isn't about changing culture; it is about providing the wealth to enable a change of personal situation - essentially enable the freedom of choice to continue sustenance living or more productive enterprise.

You complain about the 'corporations', but genuine poverty is a far greater forced servitude than anything they could ever construct.

"Morally bankrupt is believing that western society has it right, and our values are worthy." - uh, no, that's known as taking a position on the subject of morality, the accuracy of which can be debated (usually ad nauseum). Morally bankrupt is asserting that all systems of moral thought are baseless and the various respective merits/shortcomings irrelevant, which given most moral systems advocate some concern for human welfare/ those less fortunate would need to be tacitly supported by the subjects of DC's comment.
For the record, I'm not saying that's what you're doing in this instance...

Twenty years ago now I was in the Solomon Islands for a short period of time. Travelling to the village I was staying at out of Honiara there was a substantial road bridge over a huge river bed. Pretty much dry. I asked if it just fills up in the wet season. No, it used to be full all the time, but when they started logging inland the river slowly died. I'm not sure what the point of this little anecdote of one little corner of the world, with only a small population of humans that many people will never see is......

Sure, there have been those that lost out. As there will be in the future given the rapid change. Those that feel they are 'losers' are generally in the rich West and are often those who didn't retrain to the new circumstances. In the future, that could also be a stress the newly-employed in the developing world face as well.

Those financing past, possibly irrational transfer of goods across borders have only reaped rich rewards.

Globalisation is a highly capital intensive economic set-up due to the sheer amount of working capital needed to make it work. It’s not necessarily optimum in a more equal world.

The beneficiary consuming states (the ones with the capacity to create hard currencies to fund the working capital and run trade deficits) effectively provide the rest of the world with the hard currency credit they need to source the global commodities and resources required to fabricate the end-products they themselves mostly end up consuming.

This credit is squared off with repayments in hard currencies once the manufactured goods arrive at location, with enough of a respective hard currency payoff to keep the manufacturing countries incentivised to keep the set-up going. Read more

Asia Is About to Face a Significant Dollar Stress Test

A perfect storm of macro and market forces could generate a dollar crunch next year, Deutsche Bank AG analysts warn

The alternative to 'globalisation' would have been to discard billions to permanent poverty - just so a few in the West could retain their protected lifestyles. That would have been morally bankrupt in my view.
This is a straw man, no alternative sort of argument. The best counter to it was a great interview by Charlie Rose with Sir James Goldsmith.
https://www.youtube.com/watch?v=wwmOkaKh3-s
In it he lays out actual options and pretty much told us our future.

World trade is collapsing ... globalisation has run its course and demand is now faltering. Best strategy now is to hunker down, plant some trees, veges and shut the door.
http://data.worldbank.org/topic/trade

China is the only country which is really benefiting from Globalization.

They earn US$ from exports and pay their workers ( very little ) with paper money that is worthless outside China .

Its a brilliant system......................... for China ONLY .

President -elect Trump is right , China is a CURRENCY MANIPULATOR

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Open borders are not necessarily good for everything. Often we get people who just don't understand the country they have come to Mr. Makhlouf.

Or maybe you didn't understand him:

"Makhlouf argued free trade and globalisation have "undoubtedly" been good overall, but haven’t been good for everyone all of the time."

AKA hedging your bet.

Canadian economist, Gerald Helleiner:

The poor complain; they always do
But that’s just idle chatter
Our system brings reward to all
At least all those who matter.

1990 there were just under a billion people living in absolute poverty (less than US$1.90 per day in 2011 dollars) in the East Asia and Pacific region, more than the rest of the world’s people living in absolute poverty combined. By 2013 that number had fallen to 71 million, a drop of around 93 percent in a single generation.

Looks like more people do actually matter, but at what about the cost to the environment(caused by most of the people)?

Kiwi that is a common statistic, but what of the living standards of the ordinary people in the supposedly affluent west since 1990? Articles and stats I have seen suggest they have declined considerably. Meanwhile the rich and powerful get richer and more powerful. This is a form of population control George Orwell will recognise. Remove their wealth, make them more dependent, and they'll be more grateful for the crumbs.

What a horrible perspective to propose.
So, poverty is fine so long as the living standards of the western nations are maintained/increased?

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sounds more like an ACT party conference,gabriel probably lives in a gated community but the rest of us need the security of high fences to stop our neighbours privatising our possessions.some of us remember when we didnt need them or foodbanks.every day another piece of new zealand gone.

This all sounds very reasonable doesn't it? Is anyone really opposed to international markets and connections? Are people opposed to exporting and importing stuff?
I read through over thirty paragraphs, kind of wondering why he is even bothering to be so passionate about something fairly simple and obvious. Something that only people like the Sentinelese tribespeople would have some issue with.
Makhlouf is just building up to try and make a sale and sneak in a little bit of fine print that he hopes we won't notice when we agree to this contract.
The fine print at the end of his piece is this:

Flows of people

Nary a mention of this in the whole article until the penultimate paragraph. Sorry, we're not signing it and neither have all those teaming billions in the Asia-Pacific region.

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Globalisation means we compete with Vietnam for labour costs and New York for management. The winners are management. The losers are everyone else, including the poor who do the rich a favour by being exploited. It would be a very different story if we out-sourced treasury to India or China where there are millions of MBA's waiting. This speech is the fake news.

Rubbish.
The winners are the consumers.
Always has been that way, always will be that way. Globalisation is purely a result of consumer power.
Everyone is moaning about how their living standards are declining in the face of globalisation. It is nonsense.
The one sure way to reduce your standard of living now (especially in NZ) would be to move to protectionism.

It depends on what you mean by winning and whether it is long term or short term. If you consume all your investments you are hardly winning. If you consume your identity you are hardly winning. If you destroy your environment you are hardly winning. If you lose your quality of life you are hardly winning. If your children have no future you are hardly winning. All we have done is filled up our landfills with junk from the Warehouse and Briscoes.

http://www.newyorker.com/cartoons/a19766

Well, in both the short and long term the consumer is winning.

Okay, have less then.
Just don't complain that your standard of living is decreasing.
Same story, different day. Everyone wanting to have their cake and eat it too.

Globalisation doesn't force people to do any of that.

The anti-globalists think it does and the globalists think it doesn't. This is the discussion we are having. Globalization means sharing out the capital of your nation built up over generations, abandoning the privileges of citizenship. Globalization means giving up your identity.

Why, exactly, should the accident of where you happened to be born, entitle you to privileges not enjoyed by others who by another accident were born somewhere else?

Do you think that keeping poor countries poor is a good way of keeping rich countries rich?

Poor countries are poor, because off.... Bad governance, Corruption, Overpopulation, missuse of resources, Lack of education, religious squabbling, tribal fighting.... the list is long and most of these countries have been at it for two thousand years at least.
NZ is young but fought and earned its good fortune, Yes i would like to see all people lifted up but not by me being dragged down

Being born in a certain country is not an accident. It is a deliberate attempt at achieving immortality through gene replication. It is of the greatest importance that those genes get the best environment within which to thrive and replicate again. The further people are away from us, physically and genetically, the less interested we are in them and they in us.

Nymad - youre both right and wrong.
Globalisation is a move to a higher complexity supply chain, and this has benefited consumers, especially short term. This appears as higher world GDP and helps standards of living (if measured in consumption/lower consumer goods terms). The West has outsourced production and moved to "service" (read DEBT) economies. People are now moaning because their WAGES have flatlined.
Now the benefit from the move wanes while a lot of the negatives remain - ie less world resources, greater pollution, a more brittle (risky) supply chain, less local capabilities etc. and static western incomes with which to keep the demand up ...
The ONLY slightly sustainable way forward is local, but standards of living must be far lower.

Why does "service" mean "debt"?

You do me a service, I pay you for it. Why does this necessarily entail debt, any more than if you make me a good and I pay you for it?

The article makes more sense to me if i replace "Globalisation" with the words "Cheap labour".

I have to say that I’m neither reading nor hearing similar sentiments from the Asia-Pacific, where most of the world’s people live, the fastest-growing part of the world and the region that we are based in.

I'd have to say that whoever thinks this doesn't get out much. It's face palm stuff really. None of these countries are absorbing immigrants in any great numbers. China, Japan, South Korea and Taiwan are major exporters that protect their own industries.
China and Japan, the two mega-economies in the Asian region, are very much into protecting their culture, demographics and sovereignty. China's official line is that it has suffered 100 years of humiliation and is never going to let its people forget that. The enmity between China and Japan is still very strong too. Singapore is very protective of itself. South Korea and Taiwan have quite powerful armies. Indonesia invaded East Timor not all that long ago.

I have a bit of an issue with the term Asia-Pacific. These are vast regions. It's a bit like saying Europe-Africa. New Zealand is part of Australasia which is the major land mass part of Oceania. After all, the Pacific extends all the way to the West coasts of both American continents. Is Chile or California part of the Pacific region? Focus on Oceania if you think Australasia is too narrow. You don't have to say you are Asian to trade with Asia.

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New Zealand is not part of Asia.
Never has been, and hopefully never will be.

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More bloviating manager speak. The globalists refuse to really tackle the meat of many complaints about their megalomaniacal plans and instead reduce them to complaints about protectionism (or xenophobia). Also a dishonest suggestion that opposition to globalisation means opposition to trade, period. There is a also subtle hint here and there, an admission of the great social and cultural cost brought about by rapid development and demographic change; the sense of uprootedness, the notion that people should travel constantly and "adapt" to the contours of an ever changing economy. But the social and cultural costs, complex as they are, do not fit well into econometric graphs. The response is to breeze past these concerns with a promise of more complex solutions while simultaneously promoting the idea of a more globalised workforce. Tone deaf doesn't even begin to describe these people.

Life does not revolve around economic metrics, no matter how much the managerial class wishes that this were so. Culture and nation are important but always come second to technocrats who see the world economy as an exercise in utilitarianism. Of course the manager class are useless at parsing these real cultural concerns because of who they are and how they view the world (cosmopolitan). Many still seem to have no good idea why Trump won and imply that voters are uninformed and stupid, misled by "fake news" (lol) and if they only gave up their small-minded parochial concerns they would see how amazing further globalisation really is even as their local economy vanishes overseas and their community collapses into poverty (don't worry, you can always stack shelves at the big-box store full of cheaply made imported goods).

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I know digger drivers who have 30 years experience who have had to work for minimum wage for big roading companies. How is this good for the economy? I heard they were bringing in philipino workers to train up to drive diggers to build transmission gully. Maybe we should replace our civil servants and politicians with foreign workers and pay them $20,000 per year.

The ultimate in ridiculous
We can't or won't even train our own locals

"You heard they were bringing in philipino workers to train"

Gets my vote.

If we can include all Bankers and their thieving associates, I would be most obliged.

It would save us all a fortune, if we could get back to basic arithmetic, not over leveraged debt.

America was prosperous , until globalization came along.

American factories closed, whole prosperous cities closed down like the city of Gary Indiana ( GOOGLE it ) and it exported its prosperity to low wage economies in Asia resulting in the rust belt which has unemployment at 25% for African Americans

How can anyone argue that America has benefited from globalization ?

Boatman - "How can anyone argue that America has benefited from globalization "

Cheaper consumption. (albeit a temporary state of affairs)
http://www.aol.com/article/2016/11/27/heres-what-5-of-your-favorite-prod...

Hands up who on this thread had a go at Mr Makhlouf and his arguments for trade ... and typed it all out on their computer manufactured in China, Taiwan and Japan, and designed in the US?

Mr Makhlouf is absolutely correct. Take a look around you and think how expensive it would be for all the cars, machinery and electronics you see around you to be made in NZ. These items would become luxuries for the very wealthy if they had to be made here. You want to employ people? You gotta have demand for the products they are making first.

Far, far better for us to look to increasing our role in that global supply chain. If that means making some electrical components or whatever here - great.

Bottom line: a shut down in global trade would wreak havoc on our country.

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Most of us can see that he is making an "open borders" argument here. He is following some sort of Globalist New World Order directive to bring social justice to everyone in the world which is revealed in his focus on alleviating poverty in Asia in the first few paragraphs. No one is having a go at him about trade. Everyone thinks trade is mostly good. The consequences of open borders for the average working man is obviously quite dire as the global average wage for such a person is really very low.

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Yeah, we have always had trade since whaling and sealing before The treaty of Waitangi.
No new news there. Open borders for immigration is the big concern.
We bring in cheap labor from developing countries and the employer is the only winner. The developing country loses its skilled and perhaps even educated labor. We gain a cheap worker who sends money home, probably is subsidized by NZ taxpayer with accommodation supplement and or WWF.
Just look at 'Choras' as an example.
It keeps the cost of labor down but is a false economy when you look at the real overall costs. Not to mention young NZers miss out on jobs and training.
Free trade deals have reduced poverty in Asia but created poverty elsewhere, not quite a win win.

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An awful lot of jobs in supermarkets and fast food are taken up by immigrants. These are jobs that high school kids and university students could do to fund themselves through their studies or at least learn good work skills at this time. Training and work placement for people who have gone through our education system should be a priority.

My hand is up lesnarky because truely I am using a keyboard made off shore. But you overshoot you argument. Nobody is talking zero trade. But we do want trade arranged to our benefit - not to some odd ideology that clearly has objectives other than our welfare.

"We do want trade arranged to our benefit"

Who is "we" here?

If you want to benefit NZ widget manufacturers, then ban the import of widgets. NZ widget manufacturers will benefit and overseas widget manufacturers will miss out on a small part of their potential overseas market.

But the main losers will be the NZ widget buyers, for they will now find that prices are higher and choice and quality lower. That means either they have less to spend on other things, so sellers of those other things also lose out, or they have to put their own prices up, so their downstream customers lose out.

This is the case even if other countries do not retaliate by banning the import of NZ widgets, although in practice they are likely to do so.

Substitute anything for "widgets" and "widget manufacturers" in the above and it still holds.

By interfering in individuals' and firms' decisions about what they will buy and sell, to and from whom, and at what price, you will benefit one side of the transaction at the expense of the other.

This is why you have to be specific about whose benefits you are seeking to promote.

Always specific MdM. It's citizens, New Zealand citizens. And yes. It's hard sometimes to see who benefits from an intevention and just what to do. But ignoring is just as much a decision as intervening.

Nothing like specific enough, As I just showed, some citizens are producers and some are consumers; some are buyers and some are sellers. Their interests are not identical.

Thus, no external intervention in a commercial transaction can be beneficial to both sides of it. If a different transaction was better for both sides, then both sides would agree to it without the need for intervention.

Yes, doing nothing is a decision just as much as doing something. And it's often the best decision.

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Trade = good.
Open borders = race to the bottom for most.

Some on this site are arguing for ongoing globalization; others against it. Neither is really the point.

The point is that a significant proportion of the population feels sidelined by globalization, feeling that they are missing out & the rewards are going to the elite (who are also successfully avoiding taxation).

This group is lashing out via the ballot box, they only way they know how, since they feel that mainstream parties or candidates are captured by the corporates and elites.

They are lashing out mindlessly by voting for Trump, Brexit, Le Pen - whatever seems to strike a blow against the establishment. And you really can't blame them, when they feel this is their only option.

So the question is (& it's not one that Mahlouf seems to be interested in), what can be done to respond to this?

I think the argument is about the real agenda. Anti-globalists suspect that what is being attempted is the establishment of a global social contract with the express purpose of social justice for everyone on the planet. Every individual will be regarded as a World citizen with equal rights. This means that individuals in different countries will have the same rights as locals. This means there will be no special rights for ordinary national citizens.
On a smaller scale this has been largely successful within the Western sphere. Globalists believe that the next stage is to extend the privileges of being Western to the entire planet.

"Globalists believe that the next stage is to extend the privileges of being Western to the entire planet."

They mean access to a credit card presumably? Or ability to rack up unpayable debts....
The thinking is delusional..

"we live in an economy that is defined by a monetary system, (like it or not) we have no option but to define BAU by the same system, (endless spending).
The vast majority believe this to be the path to infinite prosperity, and that political promises made will be somehow met. But money, of itself, has no intrinsic value. So those who insist that BAU can be sustained by endless cash-passing are effectively asserting that our BAU future can be kept afloat on ”nothing”.
Money is merely the token by which energy-values are traded, so in order to sustain a viable BAU, we must produce ever increasing volumes of the hydrocarbon energy on which our society is based (oil coal and gas), in order to sustain monetary values.
Our society as we know it, is a universal gamble on hydrocarbon futures. And hydrocarbons are finite. This is why our (delusional) society has to run faster and faster in order to maintain the illusion of BAU, and keep up the pretence that in 25 years time, there will still be a viable industrial infrastructure with which to pay your pension. To publically admit otherwise would bring about instant chaos. If we stop, or even slow down, our “future-debt” society is certain to collapse, because our money values will collapse.

Really good points Philly. But I don't see the 'lashout' as mindless at all.

Well, I did think a bit before putting the word in. The Economist suggests that there is an irrational element in Brexit, those who voted for it may also be those who are likely to be the worst affected.

But the point is that it is mainly about making a statement. Sort of like those people in ghettos who vandalise their own public services.

I think the people that voted for Brexit and Trump feel a closer connection to their land and to their kin. Rootless cosmopolitans voted the other way.

I love the sneering condescension of the pro remain Economist and many of the commentators here. Voting "mindlessly". Perhaps the voters were being rational. Our man in The Sun demonstrates aptly how globalisation benefits the poor more than the elites: "The 50-year-old told The Sun on Sunday: “I think there are great opportunities. For years British bakers have been forced by EU tariffs to buy European wheat instead of looking to the wider world. Any master baker will tell you that the best baking wheat in the world is Canadian wheat. But we aren’t free to buy it because the EU punishes you if you do. And why should we be giving Spain money to grow sugar? What’s wrong with looking to the West Indies and doing trade there? Now when we leave the EU, hopefully we can shop around.”

"The problem with the EU’s free movement of people is that it doesn’t bring Dyson the brilliant boffins he needs. “We’re not allowed to employ them, unless they’re from the EU. At the moment, if we want to hire a foreign engineer, it takes four and a half months to go through the Home Office procedure. It’s crazy.”

He produces another staggering fact. “Sixty per cent of engineering undergraduates at British universities are from outside the EU, and 90 per cent of people doing research in science and engineering at British universities are from outside the EU. And we chuck them out!”.

So hiring a low-paid barista from Bratislava is no problem, but a prized physicist from Taiwan is a logistical nightmare. The Government claims that, if a non-EU citizen gets a job within two months of finishing their research, then they can stay here for two years. “The point is that it’s completely mad not to welcome them,” he says, “why on earth would you chuck out researchers with that valuable technology which they then take back to China or Singapore and use it against us?"

"Dyson sits on several European committees. “And we’ve never once during 25 years ever got any clause or measure that we wanted into a European directive. Never once have we been able to block the slightest thing.”

http://www.telegraph.co.uk/men/thinking-man/sir-james-dyson-so-if-we-lea...

New Zealand is not an innocent bystander in this free trade and globalization issue ......... for example the tarriffs placed by New Zealand on GIB board from Asia are simply horrendous .

Its little wonder houses are so expensive to build in NZ .

How much GIB is manufactured in NZ? If none, why not and why is there a tariff on a product not already made here? And how much would it cost to be made here?

It's hard to imagine something simpler to make than gib board. Two sheets of cardboard sandwiching some plaster. If a country can't make its own gib board there is something very wrong. Other countries have been known to put all sorts of rubbish like industrial waste into products like this too.

nymad wrote: It is not morally acceptable to say...I deserve the highest standard of living on the basis of country of birth.

We and our forebears have been furiously working away at building up our civilization for hundreds of years now. On occasion we have paid a vey high price indeed, having to pay for our privileges in the currency of our countrymen's blood. We deserve all the fruits of our labour and struggle. Other people in other countries can enjoy a high standard of living too if they follow our example. It's all there on the Internet.

"On occasion we have paid a vey high price indeed, having to pay for our privileges in the currency of our countrymen's blood."

That sounds like the royal we, to me.
That is also a pathetic excuse to justify that you deserve a higher living standard than another person.

Zachery nails it. NZ has every right to protect its borders from globalization. Ask the old ANZAC soldiers if we should give up and share our inheritance they have left us.

Okay, be poor then. It's simple.

If protectionism is what you want, realise that it means an end to cheap goods.
Realise that your standard of living will decrease accordingly.

Don't bring the ANZAC fighters into this.
They never realised battle on the home front. All they did was fight in the name of perpetuating England's imperialist dominance. Obviously a perspective of exploitation that you still think has a purpose in the modern day context. It doesn't.

You're pretty extreme nymad, almost a parody. I'm curious as to your background. Are you a Kiwi?

If extreme is advocating economic efficiency and the reduction of inequality, then yes, I guess I am extreme.
Born and raised Kiwi.

There's two ways you can pretend you are doing well without doing the hard yards. First you can borrow beyond your means, and second you can sell assets. Both options affect the next generation who will have to pick up the pieces. This will be JK's legacy.