Western Democracies Grapple with Globalization Fallout

Venkata Kondubhatla

The recent US presidential elections are another testimony that a large section of people of the west are against globalization in the aftermath of the Brexit referendum. The second Brexit, as the US election 2016 is now called by a few, is in part the success of anti-globalization voices.

The two decades of globalization has brought many countries, especially developing ones, out of the economic shackles that once had restricted their growth. For many countries in the East, it is a god’s gift, but for democracies in the western world it is now seen as a scourge.

The middle class of many developing countries has benefitted from globalization. In many eastern countries the globalization has winched up many from poverty. Thomas Friedman’s book, “The World Is Flat” explains how the level-playing field has helped underdogs to show their full potential in the international arena. The book shows how India, a country which was anything but suitable to do business with no minimum infrastructure and considerable red tape, could open up call centers and then technology companies. Now, the country is one of the important technology hubs in the world. China, Mexico, Philippines, and Thailand are a few examples where the middle class has bulged,and have been attracting many consumer businesses to invest.

Businesses worldwide, especially developed countries, have seen the advantages of globalization –they could now find ways to hire cheaper labor even if they were on the other side of the globe, quality products could be manufactured with low costs. Nuts and bolts of an engine are not necessarily required to be designed and manufactured at a single place. Dell has its parts shipped from Thailand, Malaysia and various other countries to finally get assembled at its headquarters.

Sharing resources and skills across nations has undeniably brought great results to global firms, and gave them an edge in the competitive markets. Not only global companies, but the nations also felt the same. Europe has seen economic advantages in the formation of European Union, and the participants have enjoyed the fruits of Union’s trade. Euro currency has grown strong to dictate the world economy.

The world has ultimately become more connected, and the welfare and relevance of the people that are far away has grown tremendously. Economic, consumer market calamities, and political instability in countries on the other side of the globe, have begun to pose direct threats to the global firms. At the same time, the irrelevance to local economies, localities have led to indifference to their problems or concerns among many global firms.

The opposite effects of globalization were hard to discern at the beginning. Rejecting it would mean blocking sunshine and being sclerotic in the face of adapting globalization to excel and making an edge. Even so, a few nationalist firms would stick around resisting to the enthralling benefits provided by global markets only to slowly move toward globalization, as they would suffer from global competition. Furthermore, they couldn’t find much assistance from the local governments.

The idea of being global has compelled many to think of a world without borders and purely in terms of business. It eluded many of their responsibilities toward the country and their people. Furthermore, as a global people they lacked the belongingness to their nations.

The result was a divided and unequal societies in the western democracies. In the book,”Global Inequality: A New Approach for The Age of Globalization,” author Branco Milanovic writes that the world has become equal, but the western democracies have become less equal.

The verdict in the recent US presidential election or the Brexit referendum can be seen as a reaction to the unattended jeremiad of the poor and the working classes who suffered for the last two decades due to the fallout of globalization.

America has benefitted a lot from globalization. The country is the leader in global economy with only five percent of world’s population. However, the fruits of globalization weren’t shared equally across the country and rather the opposite has happened. The white working classes near the Appalachia mountain areas and in the Midwest have suffered from the trade deals that resulted in closing of many manufacturing firms. The firms opted other countries where the products could be manufactured in a relatively lower costs. This pushed many into poverty,whom the federal government under Barrack Obama, George. W. Bush, or Bill Clinton have either ignored or haven’t paid much attention to.

Ironically, Donald Trump, real estate businessman who later became Republican nominee and then President-elect, has seen an opportunity of using this anger among the working classes to get to presidency, and his populist campaign rhetoric has lured many to vote for him. Even his ill-reputation and controversial past hadn’t encumbered his supporters to vote for him. On the other hand, Bernie Sanders from the Democratic Party also had captured the angst of the working class, but lost to Hillary Clinton, who won to become Democratic nominee. She has failed to turn Sander’s ardent supporters on her side.

Both the Clintons are big fans of globalization. Bill Clinton has signed NAFTA, a trade agreement between Canada, Mexico, and the United States, and Hillary Clinton supported the deal until 2009. Trump’s campaign called the deal a worst deal that took away many jobs from the white working class.Democrats have ignored working classes and their solution to the lack of jobs issue has always been education. Hillary believed that education and learning new skills should enable the working classes come back into the job market. With unemployment less than five percent, her argument made sense to many.

Whereas, Trump’s campaign ran broadly on protectionism and closing doors for the outsiders and stopping the jobs for themselves. His anti-globalization rhetoric was focused on deporting illegal immigrants and creating jobs of the working class; banning Muslims from entering the country or conducting extreme vetting, as he later changed his position; and building wall on the Mexican border.

Hillary Clinton, on the other hand, ran her campaign on big-heartedness, diversity, and pro-globalization, which a large section of people rejected. Though she won the popular vote, she has lost the electoral vote. The country’s mandate was clear and simple – globalization has increased the inequality and made the lives of the working class worse.

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