I went to Rana Faroohar’s book party in New York tonight. Faroohar has a new and important book, “Homecomings” that dissects globalization as we know it and looks ahead. I have not read the book, and did not even ask Faroohar for a free copy (which were aplenty at the party tonight): the reason is that I know how authors struggle to write cute dedications in the midst of a party, and I did not feel like imposing this onto Faroohar. (In addition, I think I can afford to buy the book). But I have read her articles in the Financial Times, and was told at the party tonight that she had an important--programmatic—op-ed in today’s issue of the Financial Times. So I bought today’s FT. The link to Faroohar’s article is
Aside from the ideological difficulties, there are practical ones - in geographic sense. Wallersteins world-system analysis has it's huge drawbacks, but at the moment it seems to describe what is happening between US and Europe quite neatly. If the US is constructing a its new trading block instead of global reach, it also needs a new periphery in wallersteinian sense. And looks like Europe is going to fill that role via deindustrialization and capital starvation - all the good stuff has to flow to the centre.
Nice idea, but
1. The West has lost what little development skills it once had.
2. We don't know how to plan such an undertaking. There's only one country capable of realistic, budget-constrained, longterm planning, and it's not us.
3. We cannot even develop an airplane or ship on time and on budget, let alone an entire industrial sector. From scratch.
4. We don't trust our governments.
"There are two reasons why the West should abandon globalization. The first is that it was [...] good for Asian middle classes and the global top one-percenters, but not for the Western middle classes. Second, geopolitically, globalization helped the rise of China..."
When you start from wrong assumptions, as Faroohar has done, the entire argument goes pear shaped quickly.
(1) The reason for good/bad fortune of Asian/western middle classes is not globalization itself, but the internal economic policies of the respective countries. There are national economic policies that can be applied to benefit one class or the other (taxation, fiscal policies, social policies). Such policies redistribute the wealth and none are contradictory to global free trade. Blaming globalization for US government’s decision to allow all benefits to flow to top 1%, is dishonest. As a mental exercise, imagine what would have happened if:
- All the wealth squandered America’s forever wars was redirected towards health care, education, unemployment benefits and re-training of the workforce,
- The government stimulus during the 2007/8 banking crisis was designed to help borrowers rather than bankers,
- The antitrust laws, once successfully applied against Standard oil and ATT, were also applied against todays IT giants in a timely manner,
- We had a truly progressive taxation, designed to keep CEO’s salaries to only(!) 100 times larger than the worker’s salary.
If all that happened, would we still be moaning about the fate of American middle class?
(2) We have two big bad geopolitical players now. Putin and Xi. So what? We declare the end of free trade? Did we really believe that free trade would solve all the world’s problems in one generation? Did we really believe that no one will ever abuse the free trade? That all the outcomes would always be just as we want them? The idea that free trade leads to peace remains as valid today as it was 30 years ago. We just need to look at a longer time scale. We also need some humility (abandon the idea that all people of the world want the exact same democracy that we have and that they want it now) and some grit and resilience (the first glitch in the system is not a complete failure).
Globalization is not an option since it was globally successful in reducing poverty. The reason why globalization did not work for western countries is that they did not succeed (nor even tried) to compensate domestically their middle class: why do you think this difficulty cannot be overcome?
I went to Freeman’s lecture at Brookings and, like Branko, read Faroohar’s articles in FT. Friendshoring = new Cold War. A especially disgraceful proposal in the middle of the Hot War between the two+ blocs in Ukraine.
retreating from globalization would be a moronic idea. same goes with the hypocritical message of doing business only with countries that share certain values. if the West did mistakes, like lacking diversification in SCM or missing to retrain some sector of its middle class, it is politicians' fault not globalization's that actually has brought wider offer and lower prices to consumers. Ultimately economic freedom leads to political freedom (that's why the backpedalling of Xi) so we should push for it by abolishing unilaterally even duties and tariffs.
“Friend-shoring” only really targets China. I doubt Indonesia will have trouble securing free trade deals.
The UK ceded hegemony to a power with similar commitment to liberal principles like individual liberty.
The PRC does not share a commitment to liberal principles.
Does that cause the US’ calculus to be different from the UK’s when it ceded to the US?
What is the painting?
Would you be able to comment on Ha-Joon Chang's book Bad Samaritans (if you are familiar with it) in relation to this deglobalisation move? And his claim that free trade and globalisation have always been primarily to the benefit of big (western) economies and that Asian countries that did achieve great success, did that by selective protectionism and government intervention, in other words by not following the free trade mantra.
>Montesquieu-Bloch-Doyle view of trade as an engine of peace
Which Bloch would that be? The only writter of that name I can think of would be Marc Bloch, but that hasn't been the topic of anything I read by him (in fact, I vaguely recall, at the end of "l'étrange défaite", a collection of his letter in which he seemed to embrace protectionism & price control as a way to protect the global poor against volatile food prices, but my memory may be faulty here)
Here is a short passage from the intro of the book: "When a prevailing philosophy is no longer sustainable, it falls, yielding to one better suited to the times. We are leaving the era of "Rational Man" and entering a new era, one of more human-centered, place-based economics. The focus will be on local rather than global, Main Street rather than Wall Street, stakeholders rather than shareholders, and small rather than big. Some people talk about these changes as a negative, something that will reduce growth or create conflict and decrease our ability to work together as a planet on the big issues. They feel that there is nothing else on the spectrum between unfettered nineties-style hyper globalization and the nationalism, protectionism, and even fascism of the thirties."
"I disagree. I think that more focus on the local is actually crucial to saving what is best about globalization—namely, the sense that the world isn't a zero-sum game and that nations can work together to solve humanity's problems and make the world a better place. ...
"We are entering a new era of localization. This doesn't mean that all things global will fade. ...
"There is no going back—certainly not to the insular national economies of the 1950s and 60s. Nor should we want to go back."
Has capitalism devised enough tools (electronic & practical) to make it easier for trade blocs based on language/ethnicity?
Ideology always must give way to reality - 'economics' will be re-written
Despicable. The idea is all wrong and shameful. And remember that the stick has two ends.
They were taking a long time with that. That change in economic policy should have come 20 years ago.