Is Globalisation Unravelling? by Gayatri Sahgal

The death knell of globalisation has been rung. Following the US elections, political pundits, media outlets and intellectuals across the spectrum have begun to predict the end of the globalised era and a return to protectionism.

Globalisation which has been most closely defined with free movement of goods, labour and capital, has come into question as the fruits of this great promise were found to be bitter or wholly missing for those who found themselves at the bottom of the global order. And by capturing the resentment of the growing number of the dissatisfied, populist leaders have advocated for stronger restrictions on the movement of goods and people in an effort to boost investment in the national economy and improve the employability of local labour.

In the US, President Trump has threatened to levy taxes and import duties on companies that are outsourcing jobs overseas (ABC News, 2nd December 2016). Taking note of such policies, Ford Motors the automobile giant announced its decision to cancel the $1.6bn plant it planned to build in Mexico and instead extend operations at its factory in Michigan (BBC, 3rd January 2017). Seen purely from this perspective, Trump’s policies and the rising tide of protectionist sentiment, are in stark contract to the neo-liberal rhetoric which the republican party helped craft and have assiduously defended. These policies were based on the premise that ‘trickle down’ economics associated with increasing inequality at the national level would somehow work in a global context. Thus the story seems to be – the Right was wrong, and having summarily realized it’s great folly, decided to reverse its previous stance and promote the interests of all those Left behind – the end. However, in the vein of badly made sequels, there seems to be something more to this neat little story line. For starters, protectionist policies alone will not work without the establishment of fundamental reforms aimed at tackling inequality. Joseph Stiglitz, a Nobel Laureate Economist best known for his work on ‘Globalisation and it’s Discontents’, has argued that the nature of the US economy has fundamentally changed such that the US is no longer as competitive in the manufacturing sector (especially with the growth of Chinese and Indian economies) and an emphasis on the manufacturing sector alone is likely to create only low paying jobs (Stiglitz, 2016). Stiglitz continues to argue that, if the interest is really around addressing inequality then the emphasis should be on promoting research and investment as well as reforming taxes, regulating the financial sector to promote greater competition as well as increasing public investment in education, access to affordable housing and medical care. Recent announcements from the Trump administration of providing the largest tax breaks to the richest 20% (83% of tax breaks) (NYT, 3rd January, 2017) and repealing the affordable care act, appear to be a significant deviation from this type of economic thinking.

Whilst the posture towards addressing inequality seem suspect within the anti-globalisation rhetoric, the message when it comes to limitations on the movement of people (especially immigrants and refugees), seems unconfused. The nativist impulse which was a contributing factor to the UK’s Brexit referendum has been followed up with plans to implement stronger visa restrictions including regulations for foreign workers and international students.

In France, the Front National (FN) party led by Marine le Pen who will likely be the primary challenger to the conservative candidate Francois Fillion, has made her policy platform ‘French for the French’ an anti-globalisation message supporting her proposals to end immigration and pull France out of the EU (though recently in a move that is viewed as courting a wider mass following, she has argued for maintaining links with the EU) (BBC, 29th December 2016).

In a similar move, the Trump Administration has vowed to institute visa restrictions on immigrants to ‘stem the tide of refugees and migrants’. During his election campaign president Trump called for “a total and complete shutdown of Muslims entering the United States.” (Atlantic, 10th February 2016) as well as proposing the construction of a border wall with Mexico.

The anti-immigration policies while reminiscent to those of the left (workers parties which have traditionally argued for better wage conditions for the native labour force), draw on the “lump of labour” fallacy — the idea that there is only so much work to go round. Empirical evidence contradicts such notions, according to authors such as Event and Piketty, over the long run immigration flows have been found to be a source of economic dynamism; the people who arrive find jobs, but they also spend and invest, create new firms, pay taxes, generate ideas, and contribute to the resilience and flexibility of the economy (Event, 2016 in Economist 5th October, 2016 and Piketty, 2016). According to estimates of a non-partisan study by the National Foundation of American Policy, more than half of all US technology start-ups were founded by immigrants.

A deeper read into the current anti-globalisation rhetoric, demonstrates less of a challenge to the global order (which improved connectivity between people and capital but simultaneously bred much inequality), but rather a preservation of the old system – where the fundamental structure of capital remains intact, but the character of labour is stripped of it’s pluralistic credentials.