How far might the backlash against openness go?

In Blog by Philippe LegrainLeave a Comment


How far might the backlash against openness go?

It’s often argued that in a digital age, globalisation is a technological inevitability, and thus irreversible. But in practice, even the internet can be segmented behind national walls: just look at the Great Firewall of China. The world is anything but flat. And that’s just one of the many ways in which the simplistic belief that globalisation is technologically determined is false, as Pankaj Ghemawat points out in an excellent piece for the Harvard Business Review.

Openness is a political choice; one which voters and governments can turn against. Brexit is a prime example: by leaving the EU single market and customs union, the UK would be committing an act of trade vandalism, while the immigration controls that the government plans to impose on EU citizens would compound the damage. Prime Minister Theresa May may talk about the UK becoming “Global Britain”, yet it risks becoming a “Little England”, as I explain in a piece for Aspen Institute Italia.

Globalisation and nation states have often made unhappy bedfellows, says Stephen King (the economist, not the horror novelist). Borders get in the way of the free movement (and exchange) of goods, services, capital and people. Indeed, in his new book, Grave New World: The End of Globalisation, the Return of History, out on 23 May, he warns that globalisation may be about to go abruptly into reverse. To get a taste of his new book, read his FT blog post.

Economists rightly point out that most economic disruption is caused by automation, not trade; that both make us richer overall. But some people may lose out and others think they do. One way of keeping broad support for openness is a Scandinavian-style welfare state that provides a proper safety net and helps workers retrain. But that seems politically unlikely in the US. In any case, beware what you wish for: throwing up trade barriers and keeping out foreigners will have a big political cost as well as an economic one.

One final thought: many of the economic and political problems that we face are due to the financial crisis, in which reckless cross-border bank lending amplified domestic failings. Yet nationalists primarily want to block the movement of people, not capital. Why?  

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Thank you, and have a good weekend.