Economists love globalisation. It allows them to achieve what their fellow bean counters the accountants call economies of scale.
This has substantial knock-on benefits. It increases profits so it is good for shareholders and share prices . It reduces the prices at the till and so it is good for customers. It keeps down inflation which is fantastic news for old decrepit types on fixed incomes.
It creates job opportunities in the developing world which means the developed world does not need to dig so deeply into its aid pockets.
International understanding is improved by the exponential growth in global business, political, social and cultural links required to grease the wheels of globalisation.
Politicians are happy because the increased savings and profits mean more tax revenues for them to spend on their pet projects and ships, planes and soldiers.
But there are some dark clouds in this blue skies picture. First there is what I regard as a bit of a canard—job exports. I am unimpressed by this Trumpian argument because it can be rectified with economic growth and retraining.
Blowing away the next cloud – identity loss–is more problematic. As the world melds into one interdependent homogenous blob who are we as individuals? I ask the question because who we are is determined to a large degree by the language we speak, the religion we practice, our national history, culture and laws.
Globalisation is creating an identity crisis and that in turn has created a political backlash from people who fear that the essence of who they are is under threat. Furthermore, the nationalist backlash created by this perception threatens to undermine all the benefits of globalisation and regionalisation that have accrued since the end of World War Two and many years before.
There are many examples of this but two recent ones are independence referenda in Kurdistan and Catalonia.
The Kurds have been an ethnic group with their own language for centuries, but it was not until the 1920 Treaty of Sevres that the idea of a Kurdish state was officially mooted. However, three years later it was scrapped by the Treaty of Lausanne which divided the old Ottoman Empire between Britain, France and Turkey. What the Kurds regard as their homeland was divided between Syria, Iran, Iraq and Turkey.
Catalonia was actually its own medieval kingdom until 1492 when it joined with Queen Isabella Castile and King Ferdinand of Aragon to expel the Moors from the Iberian Peninsula. To a greater or lesser degree they have stayed part of what evolved the modern Spanish state ever since while still retaining their distinctive language and customs.
Now both Kurdistan and Catalonia think they can do better on their own and want to go independent. But they are facing problems in doing so. During the years that Catalan and Kurdistan have been part of bigger political units the world has moved on. Laws, treaties, and trade agreements have been negotiated and implemented by the parent governments (Iraq and Spain respectively). Are these to be jettisoned? Do Spain and Iraq’s political and trading partners want to deal with an independent Kurdistan and Catalonia? Will Iraq and Spain let them?
In the case of Kurdistan, Iraq, Turkey and Iran have discovered a rare common interest and physically isolated landlocked Iraqi Kurdistan in a bid to strangle the political foetus before it is born. All three have large and discontented Kurdish minorities and they fear that an independent Kurdistan in Iraq in Iraq will act as magnet that will drag away large slices of their respective territories. Turkey has actually sent troopsto the Kurdish-Turkish border and the independence referendum may inject a destabilising element into one of the world’s most strategic and volatile regions.
In Catalonia, Spain has arrested political activists and declared any referendum illegal and the result null and void. It is worried not only about losing its most productive region (more than a fifth of Spanish GDP) but also of breathing new life into independence movements across the Iberian Peninsula.
Spain is far from a homogenous unit. Among its 17 autonomous regions, eight have separatist movements. There are five official languages, three unofficial but recognised languages and four other languages. To discourage Catalan separatists the Madrid government has let it be known that it would block Catalonia from EU membership which it would need to survive.
Catalonia and Kurdistan are just two of the most recent examples of the world’s national identity crises. The election of Donald Trump can be traced back to the issue as can Britain’s Brexit decision. Independence movements are growing in numbers and influence around the world. The Scots, Bretons, Welsh, Walloons, Basques, Andalusians, Tibetans, Chechens, Palestinians, Houthis and many more are agitating either for independence or greater autonomy despite the economic and political consequeences.
The practical politics of globalisation have run into the brick wall of emotional national identity and vice versa. It is up to the political leaders to balance the opposing sides—or face the consequences
* Tom Arms is foreign editor of Liberal Democrat Voice. He also contributes to “The New World” magazine and lectures on world affairs. He is the author of “America Made in Britain,” two editions of “The Encyclopaedia of the Cold War” and “The Falklands Crisis.”
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19 Comments
An excellent article which points out the clear benefits of globalisation.
My own thought is that you can still have a local cultural identity despite using foreign branded goods and services.
For example supporters of Premier League football teams can be passionate about their North London or Manchester team despite the players not being local (as they once were) or even English.
Why is it ‘a crisis’ when Kurds, Catalonians and others feel a sense of identity? Why should it be a negative if globalisation allows suppressed regional groups to assert their identity?
I cannot make up my mind whether this article is complaining that the world is becoming or is not becoming what it calls a “homogenous (sic) blob”.
Yes the world is becoming more and more interdependent: to resist this would be as futile as attempts to resist the laws of thermodynamics; time goes forward – we have to live with it. No, this does not mean that diversity should be suppressed: let’s live with this too.
“Globalisation is creating an identity crisis”
Are the Chinese becoming less Chinese or the Indians less Indian?
Are the English feeling less English?
Various ethnic nationalism have been around for centuries.
Economically, the correct way to look at the problem is to say that imports are good because they depress prices in the economy. This gives the Govt scope to deficit spend, and reflate the economy, creating extra employment without creating extra inflation. So if Germany can make cars more cheaply than we can and Germany is prepared to accept our IOUs (gilts) rather than trading their cars for something we can make for them then we just go ahead and let them supply them. Similarly with the Chinese and Steel, Spain and apples etc etc.
But, the crude economics doesn’t tell the complete story. If we have displaced steel workers, car workers, apple pickers, or whatever, in our economy it isn’t that easy to retrain them to be able to do whatever jobs our economy might create as a result of Government reflationary spending.
So any changes should be made slowly. The other factor to consider is a strategic one. We might be able to manage without making our own steel now, but what if there is an international crisis and we can’t buy it from China any longer? So again the crude economics doesn’t give us a complete guide. But, at least, we should understand what options are allowed to us.
@Martin: “Yes the world is becoming more and more interdependent: to resist this would be as futile as attempts to resist the laws of thermodynamics…”
Diversity and dependency are different things. 20 odd years ago, an error was spotted in the design for some Intel computer chips. There was a minor kerfuffle but it didn’t matter because computing of the time was diverse. If Intel chips made a mistake, you could run a different analysis to check the result. At the time, IT professionals talked about diversity — and there was some true diversity.
Today you can buy an ARM chip from different suppliers — even design one yourself — and they are diverse. But they are still dependent on initial designs from ARM.
In all aspects of life, we don’t think hard enough about diversity and dependency.
@Tom Arms
Well done for getting this site back onto an issue of more substance.
Can’t help wondering whether this linkage between globalisation in an economic sense and calls for independence is really the issue. More that it is the integration of political structures and stagnating prosperity that is more at the root of the identity crisis.
To quote:
‘Now both Kurdistan and Catalonia think they can do better on their own’
I’m trying to think of an example of a push for independence from a group that knew it would make them worse off. It is probably no mere coincidence that the calls for independence have increased during the post 2008 financial crisis.
Discontent born out of hardship exploited by vested interests. Brexit anyone?
PJ
A formal declaration of independence would definitely make Taiwan worse off.
The basic problem with globalisation is that it isn’t real in sense that most it advocates talk about it. Trump isn’t the result of an identity crisis. It was the result of Republicans voting Republican in a stubbornly American election. The people with an identity crisis over Brexit are Internationalist. The people who voted for Brexit are perfectly happy their identity which is what makes some internationalist fume about Little Englanders. It’s the classic projection.
This is an article by a person from anywhere not a person from somewhere. The majority of the world’s population identity themselves from somewhere and want to continue to live in their somewhere, be it Scotland, Kurdistan or Catalonia. Politicians need to accept this and make the world fit this desire not try to make people fit into globalisation and a sense of nowhere matters – a rootlessness.
There is no society that has yet provided enough re-training, redistribution of income, and enough economic growth to deal with the economic and social consequences of globalisation. In a world where those who own capital are above the power of national governments, ordinary people will suffer. As Liberals we should know that we have to control this un-restrained power of capital as we in the past controled the power of the “landed interest”. Liberals once saw nationalism as a good thing (Italian and Greek nationalism to name two), we need to accept the break-up of countries into their national states as we accepted the break-up of Yugoslavia. But we also need to accept that every country needs to co-operate and set common rules for controlling international capitalism, while ensuring that the people are still in control.
Voters should be cheering globalisation and actively wanting more jobs going overseas and foreign ownership of national infrastructure, companies, housing and public services. Foreign investors have done more for this country’s prosperity than anyone else and should be welcomed with open arms. Job offshoring allows corporate growth, cheaper products and better services. Globalisation is a win win for everyone who is willing to accept it and work with it.
It is notable that those who are anti globalisation support two of the most dangerous ideologies ever – nationalism and socialism or a combination of both. Whenever I hear Farage and Corbyn speak, I fear for society as their protectionist policies would destroy the very people that back them. Global liberal corporate mindsets needs to be educated into these people so they don’t fall for the snake oil of Corbyn or Farage and welcome migrants, job offshoring, privatisation and foriegn ownership.
The fact the socialist left hate globalisation despite it being the best redistribution of wealth man has ever created sums up the fact they are hypocrites. Ditto with the nationalist right who resent foreign aid and call for people to stand on their own two feet.
@Michael BG
‘There is no society that has yet provided……..’
I think you introduce the most important word; ‘society’.
When Tom asks;
‘As the world melds into one interdependent homogenous blob who are we as individuals?’
He misses the part that society plays in the hierarchy of identity. It is this struggle between different societal allegiances that is at the heart of this debate. When you say that a person is form nowhere I disagree. That person is just somebody that is happy to share and balance allegiance between societies in the same way we do between family and community for instance. Whilst conflicts of loyalties arise in all walks of life, so does it in conflicts between societies. The person you say is from somewhere is just the person who is unable or unwilling to manage those conflicts and sacrifice the advantages of that alternative societal allegiance. I fear this is a losing strategy for any individual.
Stimpson
Maybe you should add globalization gives people the opportunities to seek work abroad instead of living in poverty in their homelands.
I was once standing at a bus stop in a Gulf state. There was a mix of people there from the Indian subcontinent and various other countries. None of us had any concerns about our identities.
Tom – Yes there are economies of scale but their existence tells us nothing about who captures them. The evidence suggests the economies of scale are mostly captured by large corporations and those who control them, in short by ‘capital’ as Michael BG rightly says.
Also you miss what is probably the biggest advantage/disadvantage (depending on your POV) of globalisation, namely ARBITRAGE of various sorts – tax, regulatory, labour cost etc.
What that means is that if something is illegal or expensive in one place you do it somewhere else. If you don’t want to pay UK tax just arrange to have your profits pop up in a tax haven – typically a small island in the Caribbean.
Similarly, if you’re a bank and want to do some dodgy financial manoeuvre that’s not allowed then do it somewhere else with obligingly lax rules. For Wall Street that’s often the City but if some plan is too rank even for UK authorities then it can be done in one of those convenient islands. The legal and accounting work is still done in London but in the name of a company in a tax haven. Money laundering for the Mexican drug cartels and the like, you name it – it’s all happening somewhere, sometimes by a division of your high street bank (one has particular form).
For the 99% this is not good. The tax take, especially corporation tax, is down because companies can blackmail countries – either lower rates and/or look away or will will move. Moreover small firms simply can’t afford the high-priced advisors to play this game and don’t have the international operations so they tend to be out-competed on a very tilted playing field. For labour it means that jobs can just be offshored. Talk of re-training is mostly just propaganda and simply isn’t happening on an adequate scale.
For the 0.01% this is great. It means they achieve the age-old dream of elites to be above the laws made for the “little people” nor do they have to pay material tax.
Hence one of the Leave campaigns most powerful slogans was/is “Take back control”. As Michael BG says that used to be Liberal territory, now it’s apparently forgotten we are struggling.
To me avoiding the need for separation would be key. in a true federal structure, each community can decide how independent is wishes to be by referendum. There are also logistical issues that must be considered. However in some cases such as the Kurds, there is a clear case for a separate nation, something only a global organisation such as the UN can achieve.
P. J. 29th Sep ’17 – 2:19pm:
I’m trying to think of an example of a push for independence from a group that knew it would make them worse off.
Slovakia. Separation was only supported by 37% of Slovaks [1] and it was widely thought that Slovakia would become poorer as a consequence (it had previously been a recipient of transfer payments). However, after subsequent economic reforms, it eventually caught up with the Czech Republic [2].
1. ‘Dissolution of Czechoslovakia’:
https://en.wikipedia.org/wiki/Dissolution_of_Czechoslovakia
2. ‘Czech Republic? Did it only benefit one? Did it benefit neither of them?’ [August 2012]:
https://www.quora.com/Was-the-Velvet-Divorce-beneficial-to-both-Slovakia-and-Czech-Republic-Did-it-only-benefit-one-Did-it-benefit-neither-of-them
P. J. 29th Sep ’17 – 2:19pm:
Discontent born out of hardship exploited by vested interests. Brexit anyone?
Not me. Longitudinal polling shows that support for the UK leaving the EU has generally declined during periods of economic recession…
‘European Union membership – trends’:
https://www.ipsos.com/ipsos-mori/en-uk/european-union-membership-trends
@ PJ
I didn’t say anyone was from nowhere, I stated people where either from somewhere or anywhere and we shouldn’t push the idea that no where mattered. Most immigrants would identify as being from somewhere and even the third generation can identify as from somewhere outside of their country of birth.
I think you have misunderstood these people. A person who identifies from anywhere thinks their identity is not linked to where they are from. A person from somewhere does identify themselves with a region of the world. It is possible for both to live somewhere else. I knew a woman who was born in England but identified herself from Dundee as that was where her family came from and where she went every year to see her extended family. The majority of people who see themselves from somewhere would like to live out their whole life at this somewhere. Therefore we as politicians need to shape an economy where this is possible and they are not disadvantaged because they stayed at their somewhere.
@ Stimpson
“Globalisation is a win win for everyone … globalisation despite it being the best redistribution of wealth man has ever created”
This is just not true, there are many losers especially in the most economic developed countries. Globalisation does not redistribute wealth within a society, but I expect an argument can be made that world inequality has been reduced because there are millions of people in say India and China who have benefited from globalisation and there are immigrants (a minority) who have benefited too, probably to the determent of their home country.
@ Manfarang
Before globalization some people migrated from their “homelands.
Michael GB
“Before globalization some people migrated from their “homelands”
I never said they didn’t.
These days with the internet and jet travel it is a lot easier to move around.
Wow! I am delighted at the debate my article has stirred. All of you have made excellent points and given me and others food for thought. ~Thank you. I should say a bit more about where I am coming from. I am a globalist. I believe that increased interdpendence is inevitable and a good thing. That is not say that it does not have its drawbacks. Every action, after all, has a reaction and one of the primary reactions to globalisation is the backlash of nationalism. To deny this would be to admit to being politically, deaf, dumb and blind. I don’t offer a solution to this problem. I just ask acknowledgement that it exists and that our political leaders need to address it. At the moment they face it by turning their backs on it and sticking their heads in the sand or pandering nationalist sentiments.