Ian Bremmer: People Are Increasingly Resistant To Globalization by John Mauldin, Mauldin Economics
Globalization is one of the most dominant yet controversial economic forces in the world today. It has been one of the leading drivers of overall global growth. Globalization is still growing, though at a slower pace.
Deglobalization forces, which roll global integration back, however, are increasing as well. We see rising concerns and a growing resistance to globalization among the public.
My friend Ian Bremmer, professor at New York University and founder of the Eurasia Group, is one of the foremost authorities on geopolitical trends in the world. Ian also writes a weekly letter that hits my inbox every Monday morning.
Two weeks ago, Ian wrote a very solid essay on the issues surrounding globalization.
I think you will find it highly informative and well worth your time.
Update on Globalization
BY IAN BREMMER
This weekend witnessed the worst mass shooting in the history of the United States. It will also surely be the most politicized. Some 50 dead at the hands of a self-declared ISIS supporter with an automatic assault weapon, in the midst of the most polarized presidential election the country has experienced in the post-war period.
The responses are divided strongly along political lines: the left focusing on gun control; the right on radical Islam. There’s no policy change coming: the act of terrorism was by all counts “homegrown” despite an ISIS pledge, and the Obama administration will avoid any politics that pushes towards further American intervention across the Middle East or a post-9/11 style Patriot Act redux at home. While domestic American lobbies against gun control are set in stone until the next election at least.
The greater impact will be on the campaign, where a large attack on the homeland plays into Donald Trump’s (temporary) “ban the Muslims” platform. Hillary Clinton’s hawkish tone on terrorism and us intervention made for a stronger statement than President Obama’s… But it’s still a bigger opening for Trump, especially since the attack, along with the recent mass killing in San Bernadino, happened on Obama’s Democratic administration’s watch. Doesn’t change my overall electoral call, where the demographics and weak GOP (political and financial) support still give Clinton a significant edge. But it will make identity politics over the course of the election – and after – far more toxic, with negative long-term consequences for both constructive political legislation and, as a consequence, market sentiment.
Given the short-term situation (enormous headlines, a horrible tragedy, but limited US and global impact) I’m not planning on writing this week’s update on the shooting. Rather, I’ve been spending quite a bit of time thinking about something bigger:
It’s single most important trend of the past half century. Simply put, the various processes by which ideas, information, people, money, goods, and services cross borders at unprecedented speed and with unprecedented depth.
Those processes are world-changing, and many of them are still accelerating. But just as the Soviet collapse didn’t bring the end of history, globalization hasn’t made the world flat. Today’s ever-smaller world still has as many peaks and valleys: more clearly visible to one another, but still every bit as sharp in relief. That in turn is creating fragmentation, as a wide variety of deglobalization trends gain currency and momentum. The two sets of forces are interlinked and yet rarely considered together. Proponents of utopia and dystopia are getting ever-louder… and talking ever more past each other.
I think it’s worth considering the arguments for both globalization and deglobalization. To stack up the most important factors on both sides of the aisle, and see where we end up.
First, let’s look at globalization:
Migration. The world is crossing borders at record speeds. International tourism receipts are increasing, on the back of a strongly growing global middle class and a steady rise in visa-free travel: above average growth for six years straight; and for the fourth year in a row, global tourism spend has grown much faster than merchandise trade. The rise of China is dominant here, with 120 million Chinese now traveling abroad every year; a trend showing no sign of slowing (interestingly, around the world, only tourism from the former Eastern bloc is significantly shrinking). It’s also developed world interest in ever-more global destinations: even North Korea’s repeated arrests of visitors has not deterred westerners from reaching as far as the hermit kingdom.
The same trend holds for international students. 2015 saw nearly 1,000,000 international students coming to the United States (by far the most important destination for higher education); a 10% year-on-year increase, and the fastest rate of growth since 1979. The rise of China again drives the trend; making up 31% of the total foreign student count (India has 14%, Korea 7%, and Saudi Arabia 6%).
Overall, international migration figures are sharply up; reaching 244 million in 2015, up 40% since the beginning of the century. 3.3% of the world’s population is composed of migrants; 50% of them come from Asia, and 2/3 of migrants live in either Asia or Europe. Not all of this travel is welcome. The fastest recent migration growth has been in refugees – generally forced by climate change and/or conflict, and creating the biggest refugee crisis since World War II. 1 in 122 individuals on earth has been forcibly displaced, for a total of 60 million people. That in turn creates the potential for greater and faster contagion of externalities such as terrorism and disease – the latest illustration of which being the rapid spread of the Zika virus (prompting a realization that normal tourism flows make postponing the Olympics of little use; very much an illustration of our points here on the tension between globalization and deglobalization).
There’s pushback to all this moving around. Some as a consequence of the refugee flows: walls being built, tougher border checks – leading to freedom of movement being curtailed. That’s been easiest to accomplish in areas where borders are well guarded – most notably Europe in response to the refugee crisis, with what’s amounted to a de facto suspension of the Schengen agreement – while across the Middle East and in Sub-Saharan Africa there’s been little effective policy response to growing northbound flows.
Open borders are also being filtered by growing interstate conflict. Take the tourism ban between Russia and Turkey. Iran and Saudi Arabia have cut off direct travel and restricted use of each other’s airspace; most significantly with the Iranian government forbidding its citizens from traveling to Saudi Arabia for the hajj. And, finally, there’s been some enforcement of travel restrictions out of broader stability concerns from authoritarian regimes; with Russia and China implementing restrictions on government and public sector international travel – an effort to maintain loyalty and control. But these are outliers. Overall, vastly more people are moving across borders. Freedom of the seas and air travel continues to be largely