Anti-glob­al­iza­tion is not sus­tain­able

The Smart Manager - - Cover Story - K SHANKAR IS CEO OF FEED­BACK BUSI­NESS CON­SULT­ING.

Anti-glob­al­iza­tion, by its def­i­ni­tion, is an­t­i­cap­i­tal­ist, anti-growth. It ba­si­cally op­poses in­crease in the global power and influence of busi­nesses, es­pe­cially multi­na­tional cor­po­ra­tions. The first ob­jec­tions to glob­al­iza­tion started al­beit slowly dur­ing the for­ma­tion of Euro­pean Union. In the lead-up to elec­tions in In­dia, the US, and some key Euro­pean na­tions be­tween 2013 and 2016, the antiglob­al­iza­tion deci­bel in­creased. While some econ­o­mists and so­cial or­ga­ni­za­tions cham­pi­oned it in the early years, it is now at the core of ev­ery po­lit­i­cal de­bate across both sides of the At­lantic. Brexit is case in point fol­lowed by the [pro­posal to re­view] NAFTA by the US. The EU-Canada trade agree­ment was dis­banded on sim­i­lar grounds and as I write, there are ten world-class trade agree­ments that are be­ing rene­go­ti­ated. Un­for­tu­nate.

At the heart of the anti-glob­al­iza­tion ar­gu­ment are three main ar­eas of con­cerns:

01 Multi­na­tional cor­po­ra­tions are us­ing un­reg­u­lated po­lit­i­cal clout by way of trade agree­ments and poorly reg­u­lated fi­nan­cial mar­kets to ex­pand their sphere of influence

02 Law of con­ser­va­tion of jobs is be­ing chal­lenged—jobs are get­ting cre­ated else­where and are be­ing de­stroyed in some other place

03 Un­con­trolled abuse of nat­u­ral re­sources, la­bor, and hu­man rights. Prof­i­teer­ing is seen as the only ob­jec­tive of multi­na­tion­als

While these con­cerns are worthy of ex­am­i­na­tion, the move to de­glob­al­ize is ret­ro­grade and un­sus­tain­able. There will be unimag­in­able con­se­quences for de­vel­op­ing and poor coun­tries. Anti-glob­al­iza­tion will re­sult in a di­vi­sive and pro­tec­tion­ist ap­proach. Tar­iffs will shoot up and the com­merce of do­ing busi­ness will swell dis­pro­por­tion­ately, cost of money will in­crease, avail­abil­ity of es­sen­tials will not be guar­an­teed, etc. The very peo­ple for whom the antiglob­al­iza­tion move­ment has been con­ceived will be the first to suf­fer.

Busi­ness mod­els of multi­na­tion­als around the world are now wound in a ‘spaghetti-like’ struc­ture. For ex­am­ple, to make an iPhone af­ford­able in de­vel­oped mar­kets, de­signs are be­ing con­ceived in the US, com­po­nents are man­u­fac­tured in var­i­ous coun­tries, as­sem­bled in China, and shipped out of Hong Kong. If this is dis­en­tan­gled through an anti-glob­al­iza­tion ini­tia­tive the iPhone will be sold at two times its cur­rent price. The same would hap­pen to med­i­cal equip­ment, en­ergy prod­ucts, etc.

Glob­al­iza­tion al­lows for cap­i­tal flows across na­tions. Large parts of these cap­i­tal flows help in creat­ing sus­tain­able in­fras­truc­ture, as­sets, lo­cal jobs, and an ecosys­tem for so­ci­ety. Multi­na­tion­als stay com­pli­ant and pay taxes that are then used for lo­cal so­cial devel­op­ment. Part of the prof­its that are repa­tri­ated funds so­cial devel­op­ment pro­grams around the world. Glob­al­iza­tion is also a huge de­risk­ing lever for fi­nan­cial in­sti­tu­tions that have faced the brunt of a mas­sive credit over­hang over the last fif­teen years. Anti-glob­al­iza­tion will desta­bi­lize both sup­ply and de­mand side eco­nom­ics.

The fu­ture of glob­al­iza­tion re­sides be­tween cap­i­tal­ism and ‘turbo cap­i­tal­ism’. Gov­ern­ments can best ad­dress anti-glob­al­iza­tion sen­ti­ments by en­cour­ag­ing lo­cal en­trepreneur­ship, de­ploy mod­er­ate yet op­ti­mal reg­u­la­tion, ar­chi­tect poli­cies that sup­port trade, re-eval­u­ate bank­ruptcy law and make it in­vestor friendly, en­cour­age cor­po­rate so­cial re­spon­si­bil­ity pro­grams, and make sus­te­nance af­ford­able. Reneg­ing and scrap­ping well thought-out bi­lat­eral and mul­ti­lat­eral trade agree­ments is not the way for­ward. Look­ing in­ward for so­cial devel­op­ment and look­ing out­ward for eco­nomic devel­op­ment is the only way for na­tions to sur­vive and build con­sis­tently ac­cept­able so­ci­eties for the fu­ture gen­er­a­tions.

Bret­ton Woods did unite the world. The world did not suf­fer then and will not suf­fer in fu­ture. ■

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