The Future Of Globalisation

To appreciate the paradox of globalisation, consider this:

– The first of the UN’s eight Millennium Development Goals was to halve, between 1990 and 2015, the proportion of people whose income was less than $1.25 a day. This target was met five years early. Over half those lifted out of extreme poverty during this period, 470 million people, came from one country alone: China.
– Average real hourly wages for all Americans with only a high school or a bachelor’s degree have decreased in the last three decades (there are similar statistics for the UK).

China’s extraordinary contribution to what is almost certainly the greatest increase in global prosperity in history was not primarily due to overseas development aid or even effective state planning.

It was due to globalisation: the process of removing global barriers to the movement of capital and goods. This was led by the West but embraced by much of the rest of the world, particularly after the collapse of organised ideological resistance, with the fall of the Berlin Wall and the Soviet Union.

Supply chains became global. Western capital was invested in countries like China to produce goods that were then sold back to the rich markets of the West, whilst in the process helping to lift those hundreds of millions out of poverty in the new centres of global production.

Western consumers benefited enormously from the increased range of goods available and the fall in their prices. The richer half of western societies also saw their real incomes increase in the 1980s and subsequent decades, with eye-wateringly high returns going to those at the very top.

None of this would have been possible without the consent of the electorates in those rich western democracies over the last thirty years. That democratic consent cannot now be taken for granted.

Beneath the intense debate over the perceived rights and wrongs of the UK’s EU Referendum vote, and now the results of the US Presidential Elections, the fact remains that the median voter in our countries has not shared equally in the benefits of globalisation. If any single factor explains the electoral earthquakes we have seen in two of the world’s leading democracies, it is that.

Prime Minister Theresa May said on her first day in office that she wanted to make the economy work for everyone and not just the privileged few. She has also said that she wants the UK to be a beacon for free trade. That’s not a contradiction. Free trade is perhaps the most powerful engine of prosperity there is. But to say it benefits everyone eventually is to invite Keynes’ famous retort that, in the long run, everyone is dead.

Democracy has given us a wake up call. Unless we can rebuild political consent amongst our electorates for globalisation – and adapt globalisation so that it works better for them – we will increasingly turn our backs on it. And without the leadership of the US and Europe, how long will globalisation – and with it the peace and prosperity that it has helped foster – endure?

This challenge underpins the work of the UK Mission in Geneva. We are continuing to champion open markets and the removal of barriers on the global economy’s new digital frontier, working with the WTO, ITU, WIPO and the internet governance processes in Geneva. We are seeking to address the root causes of the refugee and migration crises, working upstream on jobs, education, and human rights with UNHCR, IOM, ILO and the OHCHR. Globalisation makes us more vulnerable to global health emergencies as people travel more; and we are working to ensure that the health institutions based in Geneva like the WHO are part of the answer.

To admit that globalisation has not worked for everyone is not to turn our back on our values. And there are few better places to demonstrate this than in the Human Rights Council of the United Nations. The UK has just been re-elected for a second term, and we have pledged to advance human rights for all, and to uphold their universality, and the UN Charter.

Many see the process of removing the barriers between peoples since the Second World War as the greatest contribution of the last half century. If we are to sustain it, we will need to adapt. And the international institutions have a role to play.