The OLD Philosopher – John M. Miller
Globalization might be very briefly described in two words as “economic internationalism.” That is, it is the intentional expansion of international corporations into underdeveloped countries, especially in Africa, Asia, and Latin America for both manufacturing and sales. If Amazon, Huawei, Bombardier, Embraer, BMW, Foxcomm, Airbus, British Leyland, and other such corporations can build plants in places like Mexico, Ghana, Ethiopia, India, Ecuador, and Indonesia, and then sell their products anywhere in the world with low or no tariffs, it is presumably a win-win for everyone.
The underdeveloped nations benefit, because the international corporations give jobs to people who desperately need employment, benefiting the host countries. The corporations increase their profits. All the countries where the internationals do business derive tax revenues from them, if they can figure out ways to prevent the corporations from not paying taxes at all. Sometimes that is a major challenge.
Legitimate taxation has been a continuing complaint against globalization. Corporations naturally attempt to pay as few taxes as necessary. Certain nations encourage them to locate their official headquarters in those countries, thereby enabling them to avoid taxes in the countries where they were originally headquartered. Unfortunately, that complaint against corporations is not likely to dissipate soon, if ever, nor is international law likely to solve the problem.
Despite that, globalization has been an important component in raising standards of living for millions of people. According to The Economist, in 1990 there were two billion extremely poor people in underdeveloped countries. “Extreme poverty” is defined as a daily per capita income of $1.90. By 2019 that number had dropped to 630 million. The percentage of very poor people in the world thus dropped from 36% to 8% in just forty years. Globalization is perhaps the primary reason for that remarkable decline
International trade policies regarding tariffs is another factor in the improvement of the economies of poor nations. For the past half century, “free trade” became a goal espoused by politicians and economists on both the left and right in nearly all nations of the world, and especially in the European Union. Free trade is another necessary building block toward globalization.
However, there has long been a concern in wealthier nations that free trade means that certain of their own workers lose their employment to lower-paid employees in less affluent countries. In the United States, various sessions of Congress and various presidents have insisted on raising tariffs on particular goods produced in particular states, such as China or Viet Nam. Nevertheless, most economists say that the benefits accrued by underdeveloped nations outweigh the losses to the GDP of wealthy states.
China is a unique example of globalization transformation. Forty years ago had a notably underdeveloped economy. Chinese leader Deng Shiaopeng began to introduce many capitalistic practices into the Chinese economy. When that happened, western corporations streamed into the Middle Kingdom to establish new manufacturing and marketing programs. Now China has rivaled the US in economic productivity. Similar rapid rises in globalized production have assisted countless millions of people in other states which heretofore displayed anemic economic activity.
Nations which encourage migrant workers of various sorts also contribute indirectly to a rising standard of living in poorer countries. Most immigrants are very conscientious about remitting money back to their relatives in their home countries, knowing how economically disadvantaged they are. Globalization therefore enhances the lifestyles of millions of people who live far away from where the money is earned.
Despite its innumerable success stories, globalization is now being curtailed by two huge threats: nationalism and the Covid pandemic.
In the previous essay, reference was made to nationalistic impulses in the European Union which have become a danger to its success. Nationalistic leaders have risen in other parts of the world such as China, India, Russia, the Philippines, Iran, Saudi Arabia, Brazil, and Bolivia. Whenever nationalism is promoted, the desire for globalized business practices and international cooperation inevitably diminishes. Fruitful economic cooperation is replaced by noxious economic competition.
Globalization operates the most smoothly when nation-states work with one another rather than against each other. To put one’s own people ahead of everyone else in the world may result in the death of the goose that lays the globalized golden eggs.
The Covid pandemic is another economic terror that many health experts have long predicted, but no one could specify when it was coming or which specific virus it would represent. In just a few months, the world economy has severely plummeted. Rates of unemployment are as high in some countries as they were during the Great Depression. The World Bank estimates that remittances from migrant workers will drop 20% this year. That may mean disaster for relatives back home. The migrants cannot work harder, because there is less work to be found. The Bank further predicts that 49 million people will be thrust back into extreme poverty because of the pandemic, eliminating all the gains made since 2017. Other experts think that estimation is far too optimistic.
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The United Nations, the European Union, and globalization have been the themes of this series of three essays. But there is an additional factor working against all three. His name is Donald Trump, and he is the President of the United States of America.
In word, deed, and tweet, Mr. Trump has frequently shown opposition to these three 20th and 21st century concepts which have promoted internationalism and internationalization to the greatest degree. It is one of the many mysteries and tragedies of his administration.
Seeking the greatest good for the greatest number is inherent in the UN, the EU, and in the economic theory and policies of globalization. Such a quest is biblical, it is ethical, and it is doable. However, it is difficult. There is a persistent tendency in most individuals and most states to seek the greatest good for oneself or for one’s own countrymen.
The specter of war and international tension is far more likely when nationalism becomes a nation’s primary policy. Peace and prosperity for all peoples is far more likely through large international efforts than through smaller national or regional efforts.
We are in a period of world retrenchment. That is understandable, given recent trends. But it is a step backward, not forward. If we join hands with everyone, everyone will move ahead. If we join hands only with ourselves, we will only have ourselves to blame.
- June 15, 2020
John Miller is Pastor of The Chapel Without Walls on Hilton Head Island, SC. More of his writings may be viewed at www.chapelwithoutwalls.org.