Globalization is dead, long live globalization

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Who would have thought that the meeting of the World Economic Forum (WEF) in Davos would one day become a symbol of the good old days? The era in which globalization took giant strides and world trade grew year after year even faster than the world economy as a whole. When the rise of emerging economies lifted millions out of absolute poverty every year and international competition kept inflation low.

This “Davos mindset” shaped the world view of the global elite for years. This also included the fact that one could no longer imagine that states that were becoming more and more networked with one another could still wage wars against one another.

Today we know that much of this Davos ideology was naïve and sometimes simply convenient for the already rich and powerful. But just as much remains true: more trade means more prosperity—and vice versa. There were leaders in Davos last week who clearly spoke out against the threat of de-globalization.

One European leader renewed his offer to the US to negotiate tariff reductions and warned:

Protectionism prevents competition and innovation!

He demanded: Since the World Trade Organization (WTO) is not fully capable of acting, Europe should strengthen its trade cooperation with “like-minded partners” and proposed a Free Trade Area for Democracies!

As a model for his idea, he sees the “climate club” that the seven largest industrialized countries (G7) proclaimed last year and in which they want to agree on common climate protection standards.

First assessment: Like the climate club, the free trade zone of the democracies is nothing more than a vague idea. But at least one that stands out pleasantly from the ever-new industrial policy subsidy programs that are currently being discussed in Berlin, Brussels, Paris and Washington.

I like this idea of creating the “Free Trade Zone of the Democracies.” As mentioned at the beginning of this article, many years ago, the era in which globalization took giant steps and world trade grew year after year even faster than the world economy, the rise of emerging economies lifted millions out of absolute poverty and international competition kept inflation low.

For the Philippines and some other Asean countries it may make sense to consider joining the free trade zone for democracies. Of course, that would require the Marcos administration to fully subscribe to democracy throughout the country, involving the national government and the local governments.

Not an easy job, but the benefits are there: supporting the government’s urgent agenda on the dual malaise of poverty and inequality and achieve the much-needed shared prosperity.

Feedback is welcome; contact me at hjschumacher59@gmail.com

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