• Globalization, goodbye!

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    More and more states are saying ‘Stop the world…’
    ‘Globalization’ is going out of fashion. The unintended consequences of the spread of industrial technologies; the intermingling of economies and cultures, and the rise of cross-border civil society are beginning to bite—and more and more countries are saying, “Stop the world; we want to get off!”

    Great transformation
    Globalization during this half-century has been “The Great Transformation.” It has speeded up not only the economic transition from artisan handicrafts to assembly-line industry and today’s cutting-edge technology. It has also embedded countries in multilateral economic, political and security networks that serve their collective purposes.

    This openness to cross-border influences has created new-types of jobs and livelihood opportunities and has eased global poverty. While the world’s population has doubled since 1960, the percentage living in poverty has also been cut in half.

    OFW and BPO
    For our country, the dramatic benefits from globalization have been overseas contract work and business-process outsourcing (BPO). Already, OFW remittances make up close to a tenth of GNP. Meanwhile, the BPO industry has generated nearly a million jobs, spread over every major city.

    Rising tide
    That was the good news. The problem is that the rising tide has, as usual, raised the yachts faster than the more modest craft. Sharp inequality has been the worst unintended consequence of globalization.

    Between 1960 and 1998—the years of East Asia’s ‘economic miracle’—the UNDP reported the richest 20 percent of the global population as consuming 86 percent of global resources—while the poorest 80 percent used up only 14 percent.“Some of the poorest countries have actually become worse off.”

    As Joseph Stiglitz, the Nobel Prize economist, pointed out, “inequality is self-perpetuating; and it is produced by the vast amount of political power the wealthy hold to control legislative and regulatory activity.”

    Shrinking middle class
    Already global income inequality is horrendous enough. The international charity OXFAM says the richest 1 percent controls half of all global wealth. The 80 richest individuals in the world together own $1.9 trillion—“nearly the same amount shared by the 3.5 billion people who occupy the bottom half of the world’s income scale.”

    In our country, labor’s share of income in total GDP has shrunk over the years, while the share of profit income has risen substantially (Cielito Habito, 2016).

    And this is true most everywhere in the world. The middle class— the bedrock of social stability—is shrinking, as globalization and the revolution in communication technology erode the foundation of its prosperity: the high-wage, middle-skill industrial job.

    Migrating jobs
    Of all the problems brought about by globalization, the migration of jobs from the rich countries to the poor ones has been the most wrenching. The loss of US manufacturing to Japan, China, Mexico—and more recently to East Asia—has deindustrialized the American heartland and set off the populist nationalist revolution that raised the demagogue Donald J. Trump to the White House.

    Global ‘pop’ culture
    Socially, the rise of a secular ‘pop culture’ is roiling local cultures, breaking down habits of deference and setting off local rebellions.

    So far its most destructive effects have been to foment anti-Western terrorism by Islamist factions, and to stir up Middle-East conflicts within the scope of the age-old Sunni-Shiite rivalry.

    In our country, the commercialization of agriculture has kindled successive peasant insurgencies. Until the middle 1940s, Filipino landowners had been compelled by custom to honor their rice-tenants’ right to subsistence loans during the lean months between planting and the harvest.

    Social cohesion
    Japan leads in using economic policy to preserve social cohesion. The state ensures full employment, job security, industrial peace. Not only does Japan protect its rural constituents with tariff barriers for their high-cost agriculture, it shields even its neighborhood retail stores from competition by foreign chains like the American Walmart.

    Globalizing politics
    In the Arab world, the spread to hierarchical cultures of foreign concepts of individual rights has set off popular democratic movements. But recent setbacks to this ‘Arab Spring’ dramatize the complexities of democratization, and legitimize—for influential theoreticians such as Harvard’s Samuel F. Huntington (1927-2008)—the idea of an “authoritarian interval” for the “developmental state.”

    During this “transition,” a strong man government would temper democratic practice, since—in the Singapore strongman Lee Kuan Yew’s view—“[t]he exuberance of democracy leads to undisciplined and disorderly conditions … inimical to development.”

    As their economies grew, strongmen regimes in Taiwan, South Korea, Indonesia and Myanmar have yielded, with varying grace, much of their power.

    In China and Singapore, stern developmental states still ensure they control the ultimate source of political power: the commanding heights of the economy.

    No stopping the world
    As Stiglitz argues, the capitalist economy is not self-regulating. We need to find ways of managing globalization. We need to find an alternative to the prevailing model of a predatory kind of capitalism. We need to find an alternative to the prevailing view of the world “not as a global community but as an arena where nations, nongovernmental actors and businesses engage and compete for advantage.”(Wall Street Journal, June 2017)

    To this hard-edged world-view famously espoused by Margaret Thatcher, East Asians might oppose their concept of the market and the state not as competing but as complementary operating systems.

    This economic model is not too different from the German “social market.” It has worked in China, where an anti-poverty drive has provided the impetus for growth during this last generation. The UN’s Millennium Development Goal reported that, in 1990, 61 percent of the Chinese people were in “extreme poverty.” In 2016, “just four percent are still extremely poor.

    Particularly for poor countries just entering the global economy, there might be merit in bringing together the best elements of both capitalism and socialism in a new applied art of governance—based on what works best for a particular society over a specific historical period.

    The question is far from resolved. But stopping the world won’t work; the headlong progress of technology by itself won’t allow it. The only certainty is that, for the late-industrializing country, good government is not a luxury but a necessity.

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    1 Comment

    1. Robert Arellano on

      Good article but could you write a follow up article up to the above with what has happened with Theresa May’s party and Brexit?