After World War II, a new era of trade liberalization began across the globe. From that point, a combination of technology and international trade agreements led to decreasing tariffs and quotas at ports as well as tightening economic alliances between democratic nations. This movement often goes by the name of “globalization.” For much of the past decade, the opposing forces to globalization have been successfully winning elections and swaying the working class against free and open trade in many nations around the world. To me, this represents a significant economic crisis, especially as the forces of climate change and civil strife will require humanity to come together. Isolationism cannot prevent the migration of climate refugees and the destruction of global supply chains, and will ultimately lead the global economy into an unrecoverable downward spiral. There isn’t any doubt that the outsourcing of manufacturing and labor to other countries has negative effects on unskilled and skilled laborers, but the proper response to these negatives is not for the United States to leave organizations such as the World Trade Organization (WTO).
There are many benefits to the liberalization of trade worth considering before discussing the negatives of globalization. The Office of the United States Trade Representative states that trade expansion benefits families and businesses by “supporting more productive, higher-paying jobs in our export sectors, expanding the variety of products for purchase by consumers [and] encouraging investment and more rapid economic growth.” The lower prices and economic supercharge that trade provides to the U.S. economy is extremely positive for the nation as a whole. If you go to the store and buy clothes, order goods online or even go out to dinner or a movie, it’s likely that the deeply rooted global supply chain and decrease in trade regulations over time have led to lower prices and access to a higher variety of goods.
However, along with the benefits of globalization come many flaws. In developed countries like the United States, the working class might face pay cuts from employers who could otherwise export jobs to labor-rich countries where production could create higher profit through lower labor costs. Additionally, multinational corporations are increasingly influencing political decisions and mismanaging their usage of natural resources. One prominent example is the exploitation of child labor. Child workers are very common in nations where developed countries outsource manufacturing, and inhumane conditions with very low pay are the standard. The benefits I mentioned earlier have also been distributed unequally, with many developed nations such as the United States gaining an extreme amount of power and wealth while developing countries struggle to pay their debts and support the modernization of infrastructure. Pakistan’s representative to the United Nations all the way back in 2003 noted that globalization “increased the digital divide, widened income inequalities and concentrated economic power in the hands of a few.” Additionally, developed countries over the past few decades have continued to maintain high resolve in keeping tariffs and trade barriers on the agricultural industry, which directly harms the agricultural industry within developing nations. These negatives must be solved in order for globalization to morally continue expanding, and some of the responses to necessary change have been ridiculous.
In 2017, former President Donald Trump withdrew the United States from the Trans-Pacific Partnership (TPP). This deal included labor and environmental standards and sought to increasingly liberalize trade relations between the United States and many other Pacific Rim nations. Trump’s 2016 campaign had included many allusions to outsourcing of jobs with many obvious racial undertones, which is a good example of the right-wing populist opposition to globalization that has been increasing over the past years. In fact, many in the U.S. labor movement agreed with Trump and fought the TPP, believing that trade deals like it erode wages and lower environmental and labor standards. If these concerns persist for all regional and international trade agreements, in which both losers and winners will unquestionably be created, how can we seek to perpetuate globalization while minimizing the costs to all people?
The answer comes with increased government involvement. Yes, this is sort of counterintuitive to the idea of free market trade relationships, but I believe it is also necessary to change the minds of those opposed to globalization and sucked into the whim of right-wing populists using racial rhetoric to make the problems of globalization cultural and nationalistic. Recently, a group of far-right leaders in charge of nationalist parties has agreed to work together to influence European Parliament migration and trade policy, seeking to act on fears they promote around Europe. The Republican Party has also been moving toward protectionism while the Democratic Party has been moving toward trade liberalization, creating a stark divide in approach to solving the negative consequences of globalization. Both of these are examples of right-wing populism in opposition to globalization. A study from 2019 which used a sample of 16 democracies between 1980 and 2010 found that the welfare benefits of unemployment insurance helped in reducing disposable income inequality and that it contributed to solving the negative consequences of globalization for the working class. Governments offering generous benefits and implementing progressive income taxes can seek to balance the class disparity that comes with the national economic benefits of globalization. By increasing welfare for all Americans, for example, countries could further enhance their performance in the competitive global market by lowering the social strife many in labor face today. If we do not seek this path to rebalancing inequalities in the world economy, populist leaders will continue to use effective nationalistic messaging to convince many in the working class in need of higher benefits that turning away from world trade is the only realistic solution.
Sean Reichbach is a freshman double-majoring in economics and philosophy, politics and law.