Friday, May 30, 2008

Globalization And Its Discontents

FALLING BEHIND

Globalization and its discontents

By Henry A. Kissinger

Published: May 29, 2008

For the first time in history, a genuinely global economic system has come into being with prospects of heretofore unimagined well-being. At the same time - paradoxically - the process of globalization tempts a nationalism that threatens its fulfillment.

The basic premise of globalization is that competition will sort out the most efficient, a process that, by definition, involves winners and losers. If there are perennial losers, they will turn to their familiar political institutions for relief. They will not be mollified by the valid proposition that the benefits of global growth far outstrip its costs.

Moreover, to remain competitive, many countries are obliged to abridge their social legislation - a task bound to generate domestic protests. In periods of economic distress, these trends are magnified. The debate over trade policy in the U.S. presidential campaign is a case in point.

In industrialized countries, globalization impacts domestic politics in two ways: Improved productivity generates the paradox of enhanced well-being, accompanied by higher unemployment. At the same time, there occurs a migration away from menial jobs, which are then filled by workers from abroad. A clash of cultures and a nationalism advocating exclusion develop. Variations of protectionism thereby acquire a domestic base.

That trend takes place even within the productive sector of the industrialized world. Connected by the Internet to similar industrial and financial institutions around the world, transnational enterprises operate in the global marketplace served by staffs that often have longer tenure than those of governments and fewer restrictions on their analyses.

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Friday, May 30, 2008