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Globalization can no longer be the scapegoat for world’s problems: Olive

Globalization can no longer be the scapegoat for world’s problems: Olive
Business
For the past two decades, globalization has been demonized as the root cause of income inequality, and of all the ills that derive from it. In recent years, that antipathy morphed from the benign Occupy movement into the politics of fear and loathing, peddled by the Brexiteers, Donald Trump , and leaders of a pan-European xenophobia.

Yet that backlash has done nothing to abate low-skill job loss or the stagnation of middle-class incomes. It has been all too easy to scapegoat globalization for economic injustice, while paying scant attention to the taxation, social policies and warfare that in truth account for the economic sidelining of the 99 per cent.

Meanwhile, globalization is the leading factor in lifting an estimated 800 million people from peasantry into the middle class in China and India alone. That has enabled the UN to declare that the number of impoverished people worldwide has, for the first time in history, stopped growing, and is now in gradual decline.

It has become clear to many that the use of globalization as an all-purpose boogeyman has not been helpful.

Consider these recent signs of a counter-backlash to globalization:

And after more than a year of threatening a trade war with China, Trump has instead, earlier this month, signed a 10-point trade pact with China that further opens the two markets to each other’s goods and services.

Moderates of both parties on Capitol Hill prefer reworking NAFTA to scrapping it, and also have misgivings about Trump’s withdrawal of the U.S. from the proposed Trans-Pacific Partnership (TPP), which he did soon after his inauguration. The TPP was a chance for the U.S. to strengthen its influence in an Asia-Pacific region that has long been one of America’s top strategic priorities.

With OBOR, China proposes a network of 21st-century roads, bridges, ports, refineries, pipelines, industrial parks and other trade infrastructure traversing more than 60 countries, from Shanghai to Kenya to Kazakhstan to France.

OBOR essentially replicates the fabled Silk Road that 2,000 years ago linked Beijing and London, a route that today accounts for about one-fifth of world trade.

The “Silk Road Re-boot” will generate employment income as far away as southern Ontario, New Zealand and South Africa for multinationals and their thousands of suppliers.

At a Toronto summit earlier this month, the 11 remaining TPP members, including Canada, agreed they will try to finalize by November a sweeping free-trade agreement that was near fruition when Trump took office.

The TPP will be among the world’s biggest free-trade zones, and one of the most socially advanced. Its provisions for workers’ rights, environmental safeguards and consumer protections have never before been enshrined in a trade pact.

With a population of 626 million, the TFTA would eclipse the EU as the world’s biggest free-trade zone by population. Built into the proposed TFTA are human-rights and environmental protections that amount to a social contract, not merely a free-trade arrangement.

The new French president, Emmanuel Macron, defeated the xenophobic, anti-EU Marine le Pen in a landslide. Macron is pro-immigrant and pro-EU.

An EU that has several times renewed itself in its 60 years is gearing up for another reinvention. Talks are underway to create more robust protections against a recurrence of the Great Recession. That worst European crisis since the Second World War, and not globalization, accounts for the recent years of populist EU discontent.

An EU 4.0 would likely boast pan-European anti-terrorism and telecommunications agencies; a fiscal union to enforce probity in public finances; and a banking union with that same mandate in the financial sector.

EU reform advocate Macron is also pushing for a shared budget to assist EU countries in economic distress. The EU bailouts of Ireland, Portugal and Greece were a test of EU unity that the European Project passed with flying colours, considering the lack of precedent or preparation. But it was necessarily an ad hoc affair that fuelled populist resentment in donor and beneficiary countries alike.

If globalization is to be indicted for what afflicts us, it is also to be largely credited with the decline in poverty, now an affliction for one-eighth of the world’s population, down from about 40 per cent a generation ago. Illiteracy has also fallen, afflicting one-sixth of the world’s population, down from about 50 per cent during that time.

The more widespread application of medical advances, and the dawn of the Information Age — both tied to open borders, or globalization — mean that “with a few tragic exceptions, a child born almost anywhere today can expect to grow up healthier, wealthier and smarter than at any other time in history,” writes Christopher Kutarna, a fellow at the Oxford Martin School, in the World Economic Forum’s journal.

The troubling fact that the world’s richest 1 per cent lay claim to more wealth than the rest of humanity is not due to globalization. It is sustained by the rapid pace at which automation and artificial intelligence are replacing humans in the workplace; by chronic drug wars and ethnic conflict on four continents; and fiscal policies that under-tax the wealthy, underfund education, and allow the accumulation of stupendous wealth in tax havens.

Globalization is an engine of growth that stands alongside our maladies. Its manifest benefits can be redirected, by public will, to finally ensure a fair sharing of wealth.
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