TIME Magazine [June 4th, 2018] by calibre

Author:calibre
Language: eng
Format: mobi, epub
Tags: 新闻, TIME Magazine
Publisher: calibre
Published: 2018-05-24T17:33:27.133000+00:00

This appears in the June 04, 2018 issue of TIME.

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This article was downloaded by calibre from https://ti.me/2kdmwG7

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The False Promises of Protectionism

Moyo is an economist and the author most recently of Edge of Chaos: Why Democracy Is Failing to Deliver Economic Growth� and How to Fix It.

Much of the criticism leveled against globalization today is related to the idea that it enriches the few, leaving the many behind. The people making this argument frequently advocate for the wholesale abandonment of globalization — which would put the very existence of an international agenda at risk.

It is understandable that policymakers are responding to their electorates’ grievances. While some people have benefited from globalization, large pockets of society have suffered — from farmers in the developing world to manufacturing and industrial workers in the West. But these frustrations have less to do with the ideal of globalization itself than the lite version that politicians have implemented over recent decades. Regrettably, governments across the globe are pivoting today toward lesser political and economic models. These will offer quick wins but over the long term will reduce growth, increase poverty and spur more political and social unrest. Rather than address its shortcomings, this will only entrench the inferior form of globalization.

If the world continues on this isolationist path, three major shifts will happen.

First, a more siloed world will force businesses to adopt increasingly local and decreasingly global models. In essence, they will be more likely to rely on local and regional capital — and less likely to be centrally run from leading financial centers such as New York City, Tokyo and London. This change will significantly alter how businesses fund themselves, how they structure costs and how they view the proposition of long-term growth. They will be less able to access the global capital that is necessary to fund investments and grow companies — reducing their opportunities to hire people and invest in communities.

Second, there will be short-term deflation and then long-term inflation. We’ve already begun to observe the former. Low energy costs, low wages and indeed the low price of money itself (reflected in low interest rates) indicate a prevailing deflationary world, though they all have notably risen recently. As for the latter, the persistence of low inflation has defied warnings of a sharp uptick that date as far back as 2009, right after the financial crisis. Beyond that, rising trade tariffs and protectionism will increase prices of imported products. This will undercut the actual value of wages’ being forced higher by a relatively closed economy with reduced movement of labor.

According to the International Labour Organization, there are approximately 66 million people between the ages of 18 and 24 who are out of work around the world. That labor imbalance is particularly pronounced when you consider that there is an aging population in the West and Japan, while across many developing nations as much as 70% of the population is under the age of 25.

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