Will COVID-19 be the end of globalization? – Has globalization been killing the middle class?

I agree that globalization has been killing the middle class and consolidating wealth rather than distributing it as has been claimed by supporters of it.

Like most things there needs to be a balance and more protections need to be put in place to ward off greed and corruption.

Will COVID-19 be the end of globalization? – Globe and Mail

Archived below

Tara Henley
Special to The Globe and Mail
Published 1 day ago
Updated August 30, 2020

When the Economist published its recent cover story proclaiming globalization dead, it represented a defining moment for the world order – and Jeff Rubin felt vindicated. The former Bay Street economist, and bestselling author, had already penned his new book, The Expendables: How the Middle Class Got Screwed by Globalization. It’s a title that had grown out of two articles he’d published as a senior fellow at the Centre for International Governance Innovation and had led him down a years-long research path. He dug into everything from trade policy to tax policy, questioning the pro-globalization consensus – and emerging convinced that it was, in fact, a recipe for economic inequality and populist politics. Then the pandemic hit, and overnight, this viewpoint was no longer considered so radical. Here, the Toronto author reflects on that shift, and offers analysis on Trudeau and Trump’s policies.

The pandemic is being called ‘the great revealer.’ What has it revealed about globalization?

I think it has revealed just how fragile it is. Prior to the pandemic, globalization was seen as not only desirable, but maybe fundamentally inevitable. The pandemic has led to a huge re-examination of that assumption. The just-in-time of global inventories? It’s just too late.

The dominant narrative pre-pandemic was that globalization creates a rising tide that lifts all boats. You can look at the data – GDP, jobs, economic growth – and say that it’s working. Why is that not the whole story?

Most research institutes and most academic economists will tell you that free trade is unambiguously good … And they are right … GDP will be smaller under protectionism than it will be under free trade. The question is, why do you [care]? The presumption is, of course, that if GDP increases, everybody’s livelihood is better. Neoclassical economics has always recognized that there would be losers from free trade. But in theory, the net welfare gains – the increase in GDP – would be large enough that it could be redistributed so that no one was worse off. And that is theoretically correct. But it is empirically wrong. That hasn’t happened. The opposite has happened. Not only have the gains not been distributed equally, but far from making everyone better off, it’s made a lot of people worse off. There hasn’t been a real wage gain in Canada or the United States in 50 years. And you wonder why there is the distemper of the times … Prior to the pandemic, most countries were at what most economists would consider full employment. The lowest unemployment rates in 50 years. But in most of the postwar period, having a job was an exit from poverty. Now it’s a gateway into poverty. Because jobs aren’t what jobs used to be. For your typical millennial worker … you are nailing down two jobs in the gig economy, you’ve got no benefits, and you are not covered by minimum wage because you’re a contract worker.

How do you define ‘the expendables‘?

I define expendables as people who used to have a standard of living that would be rising. That used to make things, the same things they consume – the dishwasher, the television, the car. Maybe had a family vacation once a year. Maybe put away some money for the kids’ education. Basically, the middle class. They are not only shrinking as a percentage of the population, they are shrinking as a percentage of income … The expendables were ignored by the Globe and Mail, and the Globe and Mails of the world, who were too busy extolling the virtues of globalization, and talking about all the millions pulled out of poverty in China and India. But never talking about all of the millions thrown into poverty in the countries where those jobs are coming from. But at some point, [the expendables] became silent no more. And hence, the rise of populism. Donald Trump didn’t just happen.

It’s considered a truism that Trump tricked ‘the expendables’ into voting against their own interests. But you are arguing the opposite in this book.

He has taken up their cause, when no one else gave a [damn]. It’s ironic that a gold-plated billionaire … having never worked a day in a factory, should not only pick up their cause, but do it with a fervour and gusto that’s brought the WTO to its knees.

You’re saying that Trump is actually fighting for them – and winning job gains on their behalf?

Absolutely. Can Chrystia Freeland say the same? Take the recent NAFTA negotiations. If you ask Freeland, “Whose interests were you representing?” Particularly with the auto provisions. She’ll say, “Canada’s.” But whose interests are Canada’s? Are the interests of the few remaining Magna workers in Ontario Canada’s interests? Or are the interests of the Magna shareholders Canada’s interests? Because if I am a shareholder in Magna, I want every job possible moved from Ontario to Mexico. Why am I paying $30 an hour when I can be paying $4? The interests of workers and shareholders aren’t just different, they are diametrically opposed. What’s a success for shareholders is a failure for workers. If you look at who won, Magna shareholders won. Magna workers got [screwed]. Too bad Donald Trump wasn’t their leader.

Do you have any reservations about giving this favourable characterization of Trump’s policies?

What do you think?

Are there things that you criticize about the President?

Yeah, but I don’t have that occupy that space. It’s well-occupied by others.

Is 2020 the end of globalization?

I think the pandemic is a turning point. Because it’s gone mainstream. Business is not a big fan of Donald Trump’s trade policies. They love him on the corporate side [with tax cuts], but business is not a fan of what Donald Trump is proposing. But now there is a more formidable challenge to globalization. Ventilators, respirators – people will remember that … I mean, Donald Trump invoked the emergency measures Production Act to force GM and Ford to start building ventilators at a closed plant in Michigan. I think that speaks volumes. Don’t leave it up to the market when you really need [things] done. That’s the bottom line here. I don’t think people are going to forget that. These things have been here to see. It’s not like just in 2020 they all become apparent. It shouldn’t have taken a bat peeing on a pangolin to bring this into focus.

This interview has been edited and condensed.

Tara Henley is the author of Lean Out: A Meditation on the Madness of Modern Life.

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About Kevin Yaworski

I use my blog to write about things that I think are a matter of public interest or that I think others will be interested in
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