ANTI-GLOBALIZATION GOES GLOBAL

Amlan Mishra : 1310110048Dinesh Kumar : 1310110128

Introduction

• From America to Europe and beyond, populists like Donald Trump, Marine Le Pen, and Britain’s “Brexiteers” have been lifted by a wave of resentment against free-trade deals, immigration, and remote, supposedly out-of-touch elites.

• It seems a mystery: people in the growing economies had been told that globalization would increase overall wellbeing. So why have so many people become hostile to it?

What is Globalization?

• The process by which the whole world becomes a single market.  This means that goods and services, capital, and labour are traded on a worldwide basis, and information and the results of research flow readily between countries – Oxford Dictionary of Economics.• First believed to be used in the

1930s.

Arguments For Globalization

• Ethical, Political and Cultural Benefits as well as Economic Ones• Increased opportunity and flexibility for countries to specialise and

operate according to comparative advantage• Countries with more free trade historically have been shown to be

more developed.• Increased Competition• Attraction of greater foreign investment and its benefits• Free movement of labour – is it an advantage?

Arguments Against Globalization• Costs of Free Trade – Infant Industry and arguments for Tariff

Protection• The Primary Good Production Argument• Less Cultural Diversity - uniformity of products worldwide• The MNC Advantage• Standards of Labour and Environmental Regulation – Tax

competition and avoidance• Free movement of labour – is it a drawback?

Greece• The country's largest earners, tourism and shipping were badly

affected by the recession with revenues falling 15% in 2009.• Increase in trade deficit due to increased labour costs; a direct

result of the introduction of the Euro.• Greece was shut out from borrowing in the financial markets due

to its loss of credibility.• Greece was forced to reduce its budget deficit substantially due to

the sudden decline of foreign aid.• Countries facing such a sudden reversal in capital flows typically

devalue their currencies to resume the inflow of capital; however, Greece was unable to do this to its usage of the Euro.

Sources – The New York Times and the Washington Post.

Expectations

• People, in the beginning, supported Globalization because they were promised better returns, that they will be better off in the long run.

• But as time passed, people started asking for the promised benefits and the answers they got were not satisfactory; neoliberal economists who advocated for Globalization said that people are better off. They just don’t know it. Their discontent is a matter for psychiatrists, not economists.

Reality : Falling Incomes

http://www.mckinsey.com/global-themes/employment-and-growth/poorer-than-their-parents-a-new-perspective-on-income-inequality

Reality : Falling Incomes

www.mckinsey.com/global-themes/employment-and-growth/poorer-than-their-parents-a-new-perspective-on-income-inequality

Decline in Employment

Rising Inequality

OXFAM-bp-working-for-few-political-capture-economic-inequality-200114-en

Opposition to Trade

http://www.democracycorps.com/attachments/article/1021/Dcorps_RTR%20Jan%20Web%20Survey_1.25.16_v7.pdf

A Socio-Economic and Political Agenda?

• Economists proposing ideal models without factoring in cultural and political realities• Highlighting of certain statistics while ignoring the bigger

picture• Increasing nationalistic and isolationist slogans within the

developed countries of the world• Economic Hardship and Inequality hand-in-hand with political

instability• Vicious cycle as the opposition politicians seek to build on this

resentment and further flare up such sentiments

Recent Opposition to Globalisation

• Largely due to the Economic Depression of 2008.• The inability of the economy

to recover quickly leading to increased opposition.• Further exacerbated by

recent political turmoil.• Brexit and possible Scottish

Independence Referendum• Syrian Refugee Crisis• The Pacific Rim Trade Pact

Challenges

• Ensuring that the benefits of globalization extend to all countries. That will certainly not happen automatically due to the problem of production distortion.• Dominance of the Developed

Countries in the Global Forums – United Nations and WTO

• Fear that increased global competition will lead inexorably to a race to the bottom in wages, labour rights, employment practices, and the environment in the industrial world.• Globalization and all of the

complicated problems related to it must not be used as excuses to avoid searching for new ways to cooperate in the overall interest of countries and people.

Challenges

Getting Back on Track• “True social equity requires not equal treatment for all, but rather

unequal treatment in favour of the poor and most disadvantaged.” - Amartya Sen, in his magisterial ‘The Idea of Justice’.

• It is time to return to the macroeconomic policies of the 1950s and 1960s, which recognized the benefits of full employment in fostering social stability and sustainable growth. As the Nordic model shows, high employment is good for the economy because it ensures adequate tax revenues to finance high levels of social investment, which creates a virtuous cycle.

Getting Back on Track

• Support progressive taxation on wealth and income; use their tax revenue to provide universal healthcare, education and social protection for citizens.

• The sooner, the better: the labour-market transformation now

occurring as a result of progress in robotics and artificial intelligence will only make inequality more difficult to address in the future.

References• http://www.nytimes.com/interactive/2016/business/international/greece-debt-crisis-euro.html• https://www.washingtonpost.com/news/wonk/wp/2015/07/05/as-greece-votes-heres-everything-you-need-to-know-about-the-nation

s-crisis/• http://econ.economicshelp.org/2007/05/discuss-whether-globalisation-benefits.html• http://econ.economicshelp.org/2008/07/free-trade-policy-and-paradox.html• http://www.cato.org/publications/commentary/blessings-challenges-globalization• http://www3.weforum.org/docs/WEF_Geo-economics_7_Challenges_Globalization_2015_report.pdf• https://www.carnegiecouncil.org/publications/archive/dialogue/1_11/relevance_social/588.html• http://www.mckinsey.com/global-themes/employment-and-growth/poorer-than-their-parents-a-new-perspective-on-income-inequalit

y• OXFAM-bp-working-for-few-political-capture-economic-inequality-200114-en• http://www.democracycorps.com/attachments/article/1021/Dcorps_RTR%20Jan%20Web%20Survey_1.25.16_v7.pdf• https://uk.pinterest.com/pin/474848354438339955/• https://s3.amazonaws.com/lowres.cartoonstock.com/business-commerce-china-economy-global_market-pay-oustsource-forn672_lo

w.jpg• http://i23.photobucket.com/albums/b377/punkneverdies/globalization-manga1.jpg• http://www.interest.co.nz/sites/default/files/embedded_images/image/kal-sep-3.jpg• https://ohgoshmygrades.files.wordpress.com/2014/11/globalisation_290555.jpg

On a Lighter Note…