Among the many people handing out opinions about life after this year’s multiple emergencies are those predicting the end of globalization. The chaos of the last six months, they argue, will throw globalization into reverse. Goodbye to the free movement of goods and people and ideas.
In moments of crisis predictions about the future are seldom accurate. But it’s safe to say Davos Man, the creature of globalization, isn’t going anywhere.
The underlying urge of globalization is to make things work efficiently. Committed globalists like to remind us of the data suggesting that, around the world, in the past two or three decades free trade has elevated people out of the most desperate poverty.
Yet it can’t be ignored that specific pockets of people are made worse off by globalization, whether in the developed world or elsewhere. They see no path for themselves or their kids. If Brexit and the US election of 2016 were about anything they were about that.
The 40-year theology of (almost) unmanaged globalization is overdue for a reboot. Repeated overheating has frayed the consensus on internationalism that obtained in the first quarter century after World War II. Resurgent nationalism has been taking it apart.
Markets are not flawless mechanisms. They need rules and structure and policies to keep the playing field level and still make economic sense. It may be that a new generation is showing an appetite for exactly that.
This is a ripe moment to think about what a better globalization might look like once the world fully opens again.
Start with safety valves
Bread and circuses—sports, celebrity culture, fighter-jet flyovers—can only distract a society from economic inequity for so long. Without functioning safety valves the economic system overheats and unbalances the whole.
A healthy voting system, for instance, is a safety valve. It relieves stress on the system by throwing the bums out. It sustains the system without forcing a redefinition of the system.
The multiple crises of 2020 could be said to have pushed globalization into the “red zone”. Safety valves built to sustain the system have been malfunctioning for a long time. The old ambition of a capitalism that creates widespread prosperity and the stability trade depends on now has a rival in a toxic capitalism that treats the unlimited freedom of individuals in markets as its highest goal.
Even true believers in free markets like us need to acknowledge that a globalized economy can create pain that is felt locally. It needs safety valves that are international and local at once.
Ideas from hard experience
The hard experience of the years between 2008 and 2020 have marked a generation. Not long ago Rachel Bovard, the 36-year-old senior director of policy at the Conservative Partnership Institute, told The New York Times that many in her generation want to see an interventionist government in areas like trade and finance policy.
“I think that’s gone unquestioned for so long,” Bovard told the Times, “and it’s become this national theology: Private enterprise is good. Full stop.”
To question the theology is to consider guardrails around the vulnerabilities that accompany globalization. Inevitably this will engage the role of governments and the international institutions governments belong to.
Governments and institutions write the rules of globalization. Which will not gladden the hearts of Davos Women and Men who see global institutions as an impediment. They should ask themselves this: What’s the long-term value of an unstable system?
There is a logic in collective action that international institutions offer. For example, Angela Merkel may have given the European Union renewed relevance in May when her government announced a plan to consolidate EU debt in response to the pandemic. The Brexiteers in Britain may be looking toward the Continent with a recognition that this is a terrible time to be going it alone.
For 75 years the world found strength in numbers. The United Nations was conceived for hammering out issues that could lead to war. The World Health Organization was built to solve global health problems. The World Trade Organization was intended to ensure orderly global trade. But there is no institution that solves for the country-level dislocations of globalization.
A new generation sees a system that is not delivering what it promised. That’s evident in a willingness to put a thumb directly on the scale to address inequities. What is universal basic income, for instance, but an effort to ask those who benefit from a globalized economy to cover some of the cost of dislocations? UBI is a local solution to an international problem.
Right now, for example, nations pay to support communities that have lost jobs because of offshoring. What if some mechanism were created that levied a fee from both the company offshoring jobs and the nation receiving those jobs? The margins of the gain for both would be reduced, and the incentive to offshore would be reduced a little. Companies would probably pass these fees along to consumers in the form of higher prices. If it supports the goal of social stability and general prosperity that might be OK.
In a crisis we are more willing to challenge assumptions and look with new eyes at what we’ve grown used to. The coronavirus has shown us that the world is a single place—an interoperative place, if you will. There’s a lesson there for the Davos crowd.