Globalisation has rescued millions of people from utter poverty especially in third world countries. It also gave people in western economies a chance to buy high quality goods and services at a fraction of the price that they had to pay before the first wave of free trade spread from one end of the world to the other.
But it now seems that the force behind globalisation is ebbing as western economies facing massive unemployment problems and sluggish growth look for solutions to the increasing income gap between the haves and the have-nots of western societies.
Maverick politicians like US Republican candidate Donald Trump are exploiting popular discontent and promoting orthodox trade practices based on protectionism. I believe it was Nicolas Sarkozy who most frequently used the euphemism ‘economic patriotism’ to promote government market intervention in free trade to protect French jobs when the economic and financial crisis erupted in 2008.
Now the usually sombre but competent IMF managing director Christine Lagarde is telling western economies leaders to ‘fight inequality to save globalisation’. Fiscal rectitude may be the first commandment of the IMF and the EU, but it is never going to keep Europe together as a functional political union.
A new generation of unemployed or employed but poor people have no security in their lives because their poor income will prevent them from taking important decisions to bring up families that are so important for the well-being of society.
We are already seeing the effects of relentless austerity on the political scene. We may see more of this later in the year when the US presidential elections take place.
What is the use of being able to buy a super-modern TV set made in a Far East low-cost country for a few hundred euros if one has no job because the political leaders in his country have failed to come up with job-creating strategies that work?
Ordinary people, including many who previously described themselves as middle class, are completely disillusioned with the ineffective strategies being adopted by traditional political leaders – strategies that have left large chunks of society, including the young, deprived of hope for their future as they struggle to find meaningful employment.
Our worst reaction to this stark reality would be an exercise in schadenfreude – gloating at the misfortunes of others stupidly believing that we are immune to the malaise that has hit most western economies. Our economy is undoubtedly doing well at the moment but no genuine analyst of where our growth is coming from can be complacent about the future and the sustainability of our present economic model.
Our economy is one of the most open in the world. We practically import everything we consume.
We therefore have to export at least an equivalent amount to pay for our dependence on imported goods and services.
Services have now mainly taken over from manufacturing as the main motors of our economy.
Our competitive edge in most service industries is based on tax-efficiency strategies – strategies that are increasingly being challenged by bigger countries that complain that small economies do not really want a level playing field when it comes to fiscal and other compliance issues.
Our political leaders rightly argue that small economies have few resources and eliminating fiscal incentives to direct foreign investors will mean economic hardship to small countries like Malta. But we obviously need a plan B.
We need to make our educational system more productive as all reforms so far have only produced insignificant improvements. We need to prepare our younger generations for the challenges that will come when we have to diversify our economic activities as our laissez-faire attitude to the implementation of fiscal and other compliance obligations are likely to be challenged more vigorously by EU and US authorities.
The Church leadership too can help in promoting a culture of solidarity in our people.
They need to listen more and imitate the strategies of Pope Francis who seems more interested in improving the quality of life of the poor than to defend Catholic orthodox doctrine.
I would love to see the head of our Church feel less upset by tweeting about the ‘vilification of religion’ and the ‘gelatinous muck’ that ruined some bathers’ holidays in St Paul’s Bay and being more interested in condemning the hatred that is rearing its head again in our society.
Globalisation will only continue to improve peoples’ lives if it does not create more inequalities.
What is the use of being able to buy a super-modern TV set made in a Far East low-cost country for a few hundred euros if one has no job because the political leaders in his country have failed to come up with job-creating strategies that work?
johncassarwhite@yahoo.com