Backlash in rich nations against globalisation

Financial Times: Backlash in rich nations against globalisation

A popular backlash against globalisation and the leaders of the world’s largest companies is sweeping all rich countries, an FT/Harris poll shows.

Large majorities of people in the US and in Europe want higher taxation for the rich and even pay caps for corporate executives to counter what they believe are unjustified rewards and the negative effects of globalisation.

Viewing globalisation as an overwhelmingly negative force, citizens of rich countries are looking to governments to cushion the blows they perceive have come from the liberalisation of their economies to trade with emerging countries.

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The depth of anti-globalisation feeling in the FT/Harris poll, which surveyed more than 1,000 people online in each of the six countries, will dismay policy-makers and corporate executives. Their view that opening economies to freer trade is beneficial to poor and rich countries alike is not shared by the citizens of rich countries, regardless of how liberal their economic traditions.

The issue of rising inequality is now high on the political agenda of every country and will feature prominently in the 2008 US presidential election.

Most of what I have read suggests that the growth at the top end of the income distribution, versus the relative stagnation at middle and lower levels, has little to do with free trade and more to do with a nexus of technological innovations that have radically improved productivity through automatization. There are periodic spurts in this growth, which always benefits those controlling capital first. It tends to be followed by increased wages for middle and lower-income folks as the technological boom runs its course. I fear a tragic, ironic twist of a populist anti-trade wave that will stifle economic growth through interventionist policies at precisely the moment when middle and low-income workers are poised to benefit from economic growth.