By Koichi Hamada*
In the last few years, for many people and their leaders, globalisation has become a scourge to be purged in favor of greater protectionism and unilateralism. This represents a sharp departure from the recent past, when globalisation was widely regarded as a positive force. What changed, and why?
Key components of globalisation include greater cross-border mobility of goods, labour, and capital, each of which promises significant overall benefits for economies. Free trade enables countries to capitalise on their comparative advantages, boosting all participants’ economic performance and prospects. Migration can inject diversity and dynamism into, say, an aging society, while helping to reduce poverty in source countries, such as through remittances. And foreign direct investment (FDI) can create employment, spur research and development, generate tax revenues, and enhance competition.
The problem is that these benefits are not necessarily broadly shared. For example, migration can put wage pressure on lower-skill workers in destination countries. By enabling companies to move operations to lower-wage markets, the elimination of trade barriers can have a similar effect. Even cross-border investment has its downsides, as domestic players may struggle to compete with foreigners.
Such factors have contributed to rising inequality in many countries. In the United States, for example, lower-skill workers in the Rust Belt – the manufacturing region stretching from Michigan to eastern Pennsylvania – have faced decades of stagnant wages, while high-skill workers in finance and technology – Wall Street and Silicon Valley – have enjoyed soaring compensation. While economic openness boosts economies as a whole, there is an obvious need to ensure that the benefits are more equitably distributed or, at least, that some groups are not inordinately hurt by it.
Many economists argue that the key to success on this front is to adopt redistributive policies, typically via the tax system. But such policies are very difficult, if not impossible, politically. That lesson has been learned by many a progressive politician, including US Senator Bernie Sanders, who tried and failed to secure the Democratic nomination for the 2016 US presidential election on a platform that focused on addressing people’s frustrations with the increasingly unequal status quo, largely through redistribution.
More politically effective, but economically and socially damaging, is the approach of populists like US President Donald Trump, who offer simplistic explanations that play on voters’ fears and frustrations (for example, by blaming immigrants or countries with trade surpluses) while pretending that there are easy fixes (say, erecting walls and import barriers).
Trump blamed the struggles of Rust Belt workers on international competition. But that is only part of the story: technological displacement has played a larger role, though this has often been ignored, not least because it is harder to demonize. Meanwhile, the Trump administration has pursued extreme and morally unconscionable anti-immigration policies, such as the recently reversed policy of separating migrant children from their families at the southern border with Mexico.
Similarly, in many European countries, the backlash against globalisation has translated into virulent opposition to migration, not to mention increased resistance to European integration. Voters in Austria, Hungary, and Italy have elected politicians who campaigned explicitly against immigration. In the United Kingdom, the 2016 Brexit referendum partly reflected a rejection of the free movement of people within the European Union.
By encouraging unilateralism, and to some extent even authoritarianism, the backlash against globalisation threatens not only to prevent countries from reaping the economic benefits of openness, but also to undermine the structures of international cooperation that have supported nearly three-quarters of a century of relative peace since World War II.
Reversing this trend will require, of course, the unequivocal rejection of policies that flout democratic values and repudiation of the leaders who advocate and implement them. But it will also demand efforts to address globalisation’s real negative effects – beginning with an excessively unequal income distribution. Here, measures like a carbon price or a “Tobin tax” on international financial transactions could help. In my country, Japan, Prime Minister Shinzo Abe’s administration may need to consider direct wage hikes.
Today’s globalised world is far from perfect. But protectionist and isolationist policies will only make things worse, especially if they are used as an excuse to deny basic human rights to immigrants, among others. Balanced policies aimed at reaping the benefits of openness – and ensuring that those benefits are broadly shared – may not be the most politically expedient option today; but they would do economies and societies a lot of good tomorrow.
Koichi Hamada, Professor Emeritus of Economics at Yale, is a special adviser to Japan’s prime minister. This content is © Project Syndicate, 2018, and is here with permission.
10 Comments
It is triply ironic that a Japanese professor should trumpet the 'benefits' of immigration: the trifecta is
- Japan has one of the least diverse, most restrictive immigration policies in the developed world. This is not gonna change anytime soon
- Japan is an island. This is similar to NZ's situation, in that both nations have zero experience living just across an porous border, with neighbours who are vastly different culturally, who can easily outnumber you if given half a chance, and who have designs upon your welfare and support systems. It's easy to mouth "open borders", "diversity", and similar sentiments. It's quite another to have to manage the grim reality, every waking moment. Poster children here: the Southern European states, overwhelmed by African and ME 'migrants', and the southern states of the USA. The old saw has it that one can have open borders, or welfare states. Pick one.
- The right to pick and choose your new citizens is absolutely fundamental to sovereignty. That is exemplified by our closest neighbour, which quite forthrightly and unapologetically defends its northern border - 200km across a shallow sea from 180 million impoverished potential immigrants. NZ has the double advantage, as does Japan, of living under a defence and security umbrella guaranteed by larger nations. So neither nation has a strong claim to being able to tell the makers and holder-uppers of that umbrella how to run their immigation or defence policies.
Make that 260+ million in Indonesia.
http://www.worldometers.info/world-population/indonesia-population/
Great comment though.
Great Comment. "" Voters in Austria, Hungary, and Italy have elected politicians who campaigned explicitly against immigration."" It may seem like a minor point for academics but a critical adjective is missing: "uncontrolled immigration". This applies to Brexit too - no people smuggler boats and the result would have been Remain!
Since it is a point that even a Professor Emeritus of Economics at Yale has missed this is the difference: guests at your party and gate-crashers at your party.
Fortunately not a problem with immigration into Japan or New Zealand but I do prefer the Japanese concern about "" migration can put wage pressure on lower-skill workers in destination countries"". I reckon that applies to NZ where world high continous immigration has led to near static growth in GDP per capita and ever increasing inequality.
I'm fairly confident that native peoples of any country would prefer to decide how many to allow in and who to allow in. Of course places with no government or even the concept that they were a single nation and no written communication were at a great disadvantage. Your point might apply to Tamils into Sri Lanka and Bantu into Southern Africa. Taking over other peoples traditional land without an invitation doesn't appear to be a uniquely white trait. As Waymad points out the non-white Japanese have been very careful as to who they allowed into their country even if they took an aggressive attitude by invading Korea and China. You may have a good point that only 'white' countries and then only some of them have a cavalier attitude to immigration. I think you could drop the 'white' aspect and consider Milton Friedman's comment about welfare state and immigration not mixing.
I don't think I need to drop anything, especially as it is the countries that were taken over by Europeans, us, Australia, the USA who cheerfully put to one side the people who were already there, then proceeded to operate as if it were the displaced who were the interlopers.
As for free market capitalism, it can only work in a time of sustained growth essentially that means more and more people, and it becomes an accelerating race to the bottom as everyone tries to outdo each other.
The time for that is over as we need to stop falling all over ourselves to destroy the planet and stop pretending that we own it
https://www.thedodo.com/in-the-wild/bornean-orangutan-guards-home-defor…
I think you have some good points - certainly worth discussing although not that I am sure I can agree with everything. I just think you lose the chance to persuade some readers by putting in the 'white' bit. OK most of the larger empires in the last 2 centuries were from Europe (various shades of white) but Wikipedia has a long list of empires all of which put the local people to one side. It was not simple - the UK took over Maori NZ but at much the same time they took my wife's country Papua into the empire. It is a large country which had only 32 European govt officials outside the capital and most of them were postmen. And now very few of UK origin live in independant Papua.
It might be easier to stop destroying the planet if we stopped blaming one race for everything.
I guess Yale has also come under control of far left extremists. Very biased article. That is not to say that the article has presented lies, but the biased approach is what some may consider fake.
Take for example the assumption that globalisation has always included open borders. The article gives a laughable attempt at presenting the benefits of migration, injecting 'diversity and dynamism', being buzz words for the far left.
Diversity of thought is not contingent on diversity of races or nationalities. To say that it is, is racist.
The free trade part of globalisation is alive and well as far as I can tell. Who has been arguing against free trade?
Also funny to see the article equate things like Brexit with flouting democratic values, which is exactly the opposite.
Anyone else find it strange that this agenda is most often pushed by people born in high-racism, low-diversity, closed border countries like Israel, Japan, China. And those people preach from behind their walled off properties in leafy suburbs. Western people are the least racist and most apologetic for the sins of their ancestors and this weakness of white guilt is constantly used against them.
On the ground it's a bit different for most people. The lunch room at my work is pretty much an apartheid of different groups. Chinese, Brazilians, Indians, Singaporeans, Eastern Europeans etc all stick to their own tight groups speaking their own languages. It sure makes life difficult in teams when people don't speak a common language. The truth is nobody actually wants diversity in their lives. It's innate human nature.
The segregation is not just limited to the lunch room but everywhere. Certain suburbs are basically ethnic enclaves. Certain churches are exclusive to certain groups.
And the research only show's diversity like this is bad for all of us as it reduces social trust. In a cohesive society these divisions simply can't exist.
In recent years, [Dr Robert] Putnam has been engaged in a comprehensive study of the relationship between trust within communities and their ethnic diversity. His conclusion based on over 40 cases and 30,000 people within the United States is that, other things being equal, more diversity in a community is associated with less trust both between and within ethnic group
unconscionable anti-immigration policies, such as the recently reversed policy of separating migrant children from their families
This guy is pushing the same old think of the children narrative used many times before to gift wrap shitty policies which do not benefit citizens. It's unwise of Trump to fall into such a trap but ask yourself who is at fault here - perhaps the parents using their children as immigration anchors.
Funnily enough when it's suggested to these people that their own home suburb or country needs more diversity they change their tune.
extreme and morally unconscionable anti-immigration policies
What? American and European immigration policies are quite reasonable. Japan is the one with the extreme and morally unconscionable anti-immigration policy. Japan accepted just 0.1% of refugee applications!
This "professor" needs to be called out on his BS. Okay I get that he, deep down, wants revenge on the US and the West for WW2 but we don't need to play along with his strategy to bring about the West's destruction while they continue to thoroughly protect their own sacred land and people. Makes me sick.
Men of the West wake up! Globalism and redistribution of wealth means that they want to take your wealth and give it to foreigners. They actually state this in black and white and sell it to you as a good thing: ensuring that those benefits are broadly shared. That it's good to get injected with diversity and dynamism yet woe betide you if you try being "dynamic" yourself.
It's like you are the only ones that can build civilized countries yet the only ones NOT allowed to protect yourselves. They claim it is your responsibility to look after the children of others, as well as their industries, their borders, their health and their cultures. At the same time you're not allowed to suggest ways in which they might improve their lot.
Don't buy it. Reject it all. Keep your wealth and privilege at all cost and pass it onto your own family.
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