By Nayan Chanda, The Straits Times, 17 Apr 2012
ALL over the Western world, capitalism is on trial and with it globalisation, as its most powerful purveyor. In an ironic reversal, developing countries, which once saw themselves as victims of globalisation, have emerged as enthusiasts of free markets and closer integration of the world.
The shifting sentiments are leading to a rise in protectionist and anti-immigrant sentiments that do not bode well for the world's economic growth and stability.
One needs to look no further than the French presidential campaign to see the bitterness generated by what a French government report calls 'unfair globalisation'. If there is one point on which each of the candidates is in agreement, it is the negative impact of globalisation. The policies they espouse are sure to roil - to a greater or lesser degree - the world economy.
Of course, it is not just France, which has always been the main globalisation- sceptic among developed nations, but public opinion in the West which has now turned cool if not outright hostile to global economic integration.
Writing this fortnightly column in 2008, I noted: 'With the collapse of the USSR, the ideological fault line lies along globalisation, broadly dividing the left and the right.'
Four years and a massive economic earthquake later, the ideological landscape has changed. Polls in the United States and Europe show a growing convergence of opinion among the liberals, right and left about the evils of globalisation and a general souring of opinion on capitalism. From being an issue of free-market principles, globalisation has become a zero-sum game, with nations cast as either winners or losers.
A Chicago Council on Global Affairs poll in 2007 showed 60 per cent of Americans considered globalisation, especially increasing connections of their economy with the world, mostly good - as opposed to 51 per cent in France.
In China, by contrast, 87 per cent held a positive view of globalisation; in South Korea, 86 per cent, and in India, 54 per cent. Another survey in the same year found that 59 per cent of Americans want the US government to 'actively promote' or allow continuing globalisation.
But the financial crisis and rising joblessness have dented Americans' faith in free market and free trade. A Pew survey of American opinion in late 2011 showed that favourable views of capitalism have dropped to 50 per cent, while unfavourable views have increased.
The 2008 financial debacle and subsequent euro zone crisis have impacted the French even more deeply. According to a 2007 poll, 54 per cent believed that globalisation essentially benefited advanced countries like the US and France. But a poll taken in January this year found that optimism was waning. Fifty per cent of French believe newly developed and developing countries like China, Brazil and India benefit most from globalisation while only 16 per cent believe it helps Europe and the US.
With candidates of the extreme right like Ms Marine le Pen and the socialist candidate Francois Hollande rising in the poll, the Sarkozy government has joined the fray. Ms Le Pen denounces globalisation as being responsible for the French economic decline and calls for higher tariff walls and withdrawal from euro, while Mr Hollande lambastes 'globalisation without rules and marketing without principles'.
In a recent government report entitled End Unfair Globalisation, three of Mr Sarkozy's ministries blamed French de-industrialisation on the unfair trade practices of its partners, especially China. Immigrants have emerged as another favourite target of attack for the country's ills - from unemployment to crime. A majority of French, and a greater percentage (57 per cent) of liberals, are in favour of raising tariff on imports.
The policies propagated by the candidates range from punitive corporate taxes to withdrawal from the European Union's passport-free Schengen zone. Similarly, as the presidential election battle shapes up in the US, there is a growing talk about stemming outsourcing and encouraging federally assisted manufacturing. A Bill before the US Congress, for instance, proposes to penalise companies setting up call centres abroad.
It is likely that the realities of global trading rules within which countries operate will temper any eventual policy measures. Still, a rising nationalistic perspective on globalisation - one which views economic exchange as a zero-sum game and ignores the reality of a totally interconnected and interdependent life - will be a powerful headwind against global growth.
The author is director of publications at the Yale Centre for the Study of Globalisation
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