What The Hell IS Globalization Exactly ? Thorsten Polleit Explains

Globalization has fallen into disrepute. More and more people are rejecting it outright as unfair and as a source of all sorts of evil — including economic crises and migration.

This kind of blanket condemnation of globalization however is a huge problem. The reason for this becomes apparent if one considers the fact that globalization has two dimensions, an economic and a political one.

Economic globalization is synonymous with the cross-border division of labor. Today, no country produces solely to satisfy its own needs, but instead also for producers and consumers in other countries. And each country makes what it knows best, relatively speaking.

Economic globalization, with free trade being a natural component, increases productivity. Without it, the poverty on this planet would not have been reduced to the extent it has been over the past decades.

From the very outset, political globalization has nothing to do with economic globalization. It aims to direct and determine all relations between people on the various continents by way of authoritarian rule. The decision about what is being produced and consumed as well as where and at what time isn’t to be found by the free market, the division of labor and free trade, but instead by an ideological-political creative force.

The core argument of political globalization is that coping with ever more complex problems of this world — ranging from economic crises to the protection of the environment — requires a central decision-making process. The nation state — as a sovereign representative of people — has become obsolete and needs to be replaced by a globally active political power.

Of course, the thinking behind this opinion is purely socialist-collectivist.

It is also the basis of the European Union (EU). Ultimately, it aims to create a European super state, in which nation states will dissolve like sugar cubes in a hot cup of tea.

For the foreseeable future, this dream has come to an end. The desire to realize uniformity has foundered amid hard political and economic realities. The EU is undergoing radical change — at the very last following the British decision to leave the EU — and may even be about to break up.

With Donald J. Trump taking over as president of the US there is no longer any intellectual support by the US for the European unification project. The change of power and direction in Washington has ousted the political globalizers — which gives hope that the future US foreign policy will be less aggressive in military terms. President Trump — unlike his predecessors — doesn’t strive to enforce a new world order. But at the same time, it is the economic globalizers who are concerned.

And that’s understandable. The Trump administration fancies the use of protectionist measures — be it in the shape of import duties or tax discrimination — to boost production and employment in the US, to the detriment of other countries if need be.

Such an interference with economic globalization and the turning back of the clock wouldn’t just infringe on prosperity. It would probably also rekindle old and new political conflicts. But, it doesn’t have to be that way.

With the planned gigantic easing of the tax burden — to the tune of $9.5 trillion — President Trump may be able to generate such a positive economic dynamic that all the backward-looking protectionist electoral promises will disappear in a drawer. And that would be most desirable: Globalization — the voluntary division of labor and free trade — promotes a productive and, what’s more, peaceful cooperation across borders.

And that’s why it is important to preserve economic globalization.