Slowbalization: A New Kind of World Order

[Music] well thank you very much and um I'm impressed with those who've stayed for the last few minutes of the day um partly because otherwise I wouldn't have an audience at all but thank you very much for for sticking around um my comments today are actually partly a response to the last panel which I think maybe left you with a a reasonbly optimistic view about globalization I have to admit that I don't share that level of optimism and I want to tell you that I wrote a book back in 2017 uh which was called grave New World subtitled the end of globalization and the return of history and when I first talked about that book in 2017 I spoke to audiences like this and almost everyone disagree with me they said I was talking utter nonsense today people are much happier to talk about fragmentation um a polycentric World a sense that perhaps globalization even if it hasn't come to an end has changed in some kind of significant way I want to today try to explain what I think um has has gone wrong in one sense and to do that I want to go back 35 years 35 years to the point which the Berlin Wall came down um and Soviet style Communism collapsed this was the time when Francis fukiyama the famous eminent uh American political scientist uh described the world as facing the end of History I want to suggest that history did not come to an end in fact history has very much come back um over the last few years back then 35 years ago we concluded that borders and barriers were going to disappear um that the world was going to be a world that reflected the values of western style free market capitalism and liberal democracy and that countries elsewhere having toyed with Soviet style communism would effectively embrace the Western model and that meant that as borders and barriers slowly dissolved we'd have a single Market in Goods in Services people um and capital and this would be egged on by remarkable changes coming through in telecoms um and technology and the consequence of all of this will be that all of us would become considerably richer well today things look rather different it is true that this part of the world remains incredibly Dynamic it is true that India is incredibly Dynamic it's true that parts of Central and Eastern Europe are incredibly Dynamic but stagnation that started off in Japan has spread elsewhere most obviously to Europe and although the us outperforms both Japan and Europe to a considerable degree it is worth stressing that even the US is not as impressive as it once was not as impressive as it had been in the late 1990s when people talked about the new economy the new paradigm for the uh US economy itself what's gone wrong well population aging is one factor that kicked off in Japan of course but it's come through not just in Europe but increasingly so in China in South Korea in Russia in other parts of the world the rebuilding of borders and barriers has certainly been taking place over the course of the last few years partly a consequence of the deteriorating relationship between Washington and Beijing also between the west and Russia and from my own country's point of view uh the Advent of brexit uh which was um a remarkable moment which we removed us our El from our nearest trading block and now we have the threat of a trade war that seemed unimaginable 10 or 20 years ago I want to suggest that there were two factors during those hey days 35 years ago that we forgot about the first of these is actually history itself history is subjective each nation has its own historical narrative and sometimes one nation's historical narrative clashes with another's and they can't really agree um on a way forward for example when I was at school in England I won't say Britain because I think schools in Scotland and Welles had their own variance of history when I was at school we learned about the kings and queens of England but we didn't learn about Britain's involvement in the Opium Wars the Chinese know a lot about the Opium Wars in the way that we do not but it's important for China's history and it should be important for Britain's history just we're not so much aware of it our histories affect our our our political choices in in significant ways and it's worth stting that US history is peppered with examples of protectionism and isolationism the openness that the US has craved post 2 world war is actually a relatively recent phenomenon in US history throughout the 19th century there was tariffs partly to to raise revenues but tariffs also to protect infant Industries in the US in the late 19th century against the competitive pressures coming from What was seen to be a superior European story and in that sense Trump's threats of protectionism of tariffs and so on are kind of throwback to a previous period of American History a previous period of isolationism um a a period of us exceptionalism that we thought had gone but which appears to be making some kind of return the second Factor other than history is that globalization we forget has has created both winners and losers um and there's a sort of central Paradox in one sense um of globalization which is that it reduces income inequality between nations but it also seems to contribute to an increase in in income inequality within Nations and that really matters because it's within Nations that are the political choices are being made so when you look at what's happened in for example regions of the US or regions of France or or regions of the UK what you find is a very unequal story some regions absolutely flourishing Silicon Valley in the US or greater London in the UK or Paris in its surrounding areas in France but equally other regions left behind and that sense of being left behind is part perhaps a consequence of the impact of technology but no one wants to be a ladite no one wants to stop that from happening but also a suspicion at least that some of it is a consequence of competition coming through from countries elsewhere able to attract capital from the US from Europe um and from other um relatively Rich Nations and that sense of being left behind does have a big impact on voting patents uh Trump would not have been elected I believe if it hadn't been for the sense of being left behind in various regions of the US brexit would not have happened uh without that sense of being left behind and support for marine lean in France would probably be a lot lower if it weren't for the fact that some French regions are now significantly poorer um than the EU average so we resort to rebuilding borders and barriers the sorts of things that we did in the 1920s and 1930s now Donald Trump we can't be sure he'll actually go through with those borders and varies with those tariffs we can't be sure at this stage because it's probably a negotiating tactic if you want to have an optimistic story associated with this it Loosely relates to uh the presidency of Richard Nixon because he did impose import tariffs on other countries but only for about six months until there was a major revaluation or realignment of currencies that came through shortly thereafter so sometimes you have tariffs for a short period of time but again American history suggests that sometimes you can have it for far longer and that I think would be significantly more damaging but the choice of tariffs in one sense is a reflection of an underlying Dee rooted problem in the west which is simply that they've gone in many cases ex growth they simply can't grow at the pace that they had done in the late 20th century the whole period really from the end of World War II to around about 2000 or so was a period of growth exceptionalism much faster that we've seen in previous decades um and to be fair much faster than we've seen over the course of the last 15 or 20 years years it was an unusual confidence of positive events associated with that period the opening up of trade Capital flows expansion of tertiary education new opportunities for women in the workforce a whole bunch of things that contributed to unusually fast growth but now we have aging populations uh We've educated most people as far as we possibly can do um and we now hope to wave a magic wand of economic growth without being sure it'll actually deliver the right kinds of results and if it doesn't deliver the right kinds of results fiscal pressures will undoubtedly increase partly because of population aging The increased costs of Pensions and health care and so on and for the West that makes life very very difficult but for all of that negativity for all those risks with globalization I do want to end on a positive point because not everyone faces these problems I look at Abu Dhabi with a mixture of admiration and amazement the oil revenues haven't been squandered they've been invested there is huge amounts of diversification and there is connectivity with some of the most dynamic parts of the world economy India other parts of the Middle East perhaps parts of Africa in the years to come maybe even Europe which could learn a thing or two from what's happening in this particular part of the world and I want to conclude therefore by saying that the capital of capital is no longer just a vision it is very much now a new reality for the global economy thank you very much [Music]