Is globalisation the opposite of nationalism?

The talk last night was part of the Sydney Ideas series, and was on the topic of globalisation. The compere for the evening was Professor Glenda Sluga from the Department of History at the University of Sydney. She is an international historian. First up with a bunch of slides – which form the bulk of this blogpost – was Professor John Romalis of the Department of Economics at the university. He is an international economist. Also speaking was Dr Thomas Adams, a lecturer in American studies and history at the university’s United States Studies Centre. He is an historian of American society and cultural life.

The discussion swung around the question: Is globalisation the opposite of nationalism? The first slide that was shown showed what is called the DHL Globalisation Index, which measures trade, capital, information and people flows across borders. The index dipped, for example, in 2015 but did not go negative. This chart starts in 2005.

Professor Romalis brought up some slides looking at the case of Austria to question the assertion that there is too much globalisation. According to his sources, most inputs in industry in Austria comes from elsewhere in Austria or from elsewhere in Europe. The first chart looks at what Austrian businesses purchase.

The second slide considers consumer purchases in Austria. Again, most goods purchased by Austrians come either from Austria or from elsewhere in the EU.

He also put up a slide full of text titled ‘How do economists think about the gains from globalisation?’ It said:

1. Production linkages raise the productivity of firms and lower their costs. This increases the quality of goods and services that can be produced per person.
2. Consumption linkages lower costs to consumers. They shift purchases towards products that offer better value.
3. Investment linkages facilitate the transfer of better ideas and more productive technologies across borders, as many of these are either “tacit knowledge” that is not easily transferred, or proprietary in nature and will not be shared freely. Technology transfer raises the productivity of business.
4. 1 + 2 + 3 lead to higher AVERAGE income per person.
5. Economists still think that there is potential for further gains from globalisation, especially for developing countries, if the costs (whether policy based of otherwise) of conducting international business declines.

Romalis then put up a rather striking chart that shows the way that global wages – along a scale from the poorest on the left to the wealthiest on the right – have changed over the period 1988 to 2008. The red dotted horizontal line shows the growth rate in the mean of 24.34%. You can see the big dip in the chart up near the top of the scale. This dip represents the fall in wages of the poorer parts of the workforce in the developed world. Romalis noted that unlike in the US, Australia’s manufacturing industries were gutted by deregulation a long time ago, so we had already felt the pain that the US is feeling now.

Next, he looked at the way that real wages in rich countries have been depressed by globalisation, “because imports from poorer countries effectively embody the services of unskilled foreign workers, reducing the demand for the services of local unskilled workers.”

Adams mentioned in his talk Theodore Levitt at Harvard who invented the term “globalisation” in the ‘80s. He noted that when most people hear globalisation they hear loss of good jobs, but he called Trump’s promises of “good jobs” a cargo cult mantra. He also mentioned Mike Davis, a California historian.