The rumblings in developed countries about globalisation have been going on for some time now. A cover story in a January 18th issue of the The Economist says:
“Signs of a backlash abound. Stephen Roach, the chief economist at Morgan Stanley, has counted 27 pieces of anti-China legislation in Congress since early 2005. The German Marshall Fund found last year that, although most people still say they favour trade, more than half of Americans want to protect companies from foreign competition even if that slows growth. In a hint of labour’s possible resurgence, the House of Representatives has just voted to raise the federal minimum wage for the first time in a decade. Even Japan is alarmed about inequality, stagnant wages and jobs going to China. Europe has tied itself in knots trying to “manage” trade in Chinese textiles. The Doha round of trade talks is dying.
Sufficient to make India uneasy. We are in a race with China to grab all those lucrative jobs and contracts and Indian companies are likely to buy more foreign companies in the coming years. Makes me wonder how people there have taken Tata’s buying of Corus…
But any strong move by developed countries to impose restrictions will eventually backfire on them. As the article explains:
Widespread protection would surely meet with retaliation from abroad. Even if people gained as workers they would lose as consumers, investors and future pensioners. Moreover, the protection of jobs and pay would be short-term, because it would gradually lead to companies losing competitiveness as rivals in India and China innovated. Paradoxically, therefore, the greater the number of people threatened by globalisation, the less each of them is likely to gain from getting their governments to stand in its way.
Food for thought. At the same it is an argument which will not be easily bought by those who have lost their jobs to globalisation.