Globalization 2.0–Taking it Global

I know a lot of people are upset with the UK. Lots of wealth destroyed around the world, Young Brits mad at older Brits, Scots mad at the English, Europeans upset with the Brits.

It’s important to not forget something remarkable happened with the Brexit vote.

From the WSJ

“Never has there been a greater coalition of the establishment than that assembled by Prime Minister David Cameron for his referendum campaign to keep the U.K. in the European Union. There was almost every Westminster party leader, most of their troops and almost every trade union and employers’ federation. There were retired spy chiefs, historians, football clubs, national treasures like Stephen Hawking and divinities like Keira Knightley. And some global glamour too: President Barack Obama flew to London to do his bit, and Goldman Sachs opened its checkbook.

And none of it worked. The opinion polls barely moved over the course of the campaign, and 52% of Britons voted to leave the EU. That slender majority was probably the biggest slap in the face ever delivered to the British establishment in the history of universal suffrage.”

Almost as remarkable is the fact that in the US two candidates from extreme ends of the political spectrum – Trump and Sanders - have picked up over 25 million votes in the primaries.

There is a definite anti-establishment sentiment in both democracies. And much of that is centered around a backlash against globalization. From the New York Times

“Trump, Sanders and those in Great Britain who ran the Leave campaign are tapping into an anger and anxiety that is clearly festering. Working-class folks in the United States are similar to working-class folks in Europe. And a lot of those working-class people feel as if the international economic system is not working for them and strangling the middle class.”

We cannot and should not ignore this as just some racist, old fart sentiment. The numbers are too large, the discontent too vocal.

Can we unwind globalization? No. Even the harshest critic has to acknowledge no generation ever in the history of mankind has seen so much product variety from everywhere at incredible prices and access to travel to remarkable places. It’s the other p - people, especially the volume of people, different from ourselves we are not comfortable with. It crosses cultures. Trust me, I have traveled to over 60 countries – it applies anywhere in the world.  In small numbers people different from you are a curiosity. In large numbers, they are considered a threat.

We have to manage the people volume and spread it around the globe.

The U.S. has had a quota of a million legal immigrants a year over the last couple of decades. However, the majority of these immigrants are admitted based on family reunification, not talent. They are the spouses or parents of talent-based immigrants. Instead of giving preference to talent, we have created new “lanes - added H-1B, L-1, and other types of "temporary" visas, or in the case of the agriculture and construction sectors, allowed a flow of undocumented aliens. Next, the annual H-1B limit the government announces is allowed to be exceeded with an uncapped flow of nonprofit and governmental researchers. Students on F-1 visas enrolled in STEM (science, technology, engineering, math) fields of study from accredited educational institutions in the U.S. are allowed to work for as long as three years as part of "practical training." The Center for Migration Studies, a New York City think tank, estimates we have 10.9 million undocumented workers. Many others believe we really do not have a good handle on how large that number is. The politicians keep talking about "comprehensive immigration reform" and "building walls," but the flow continues. Even for a country of immigrants, this has been unpalatable to the general population. 

In the EU, the issues are different. In the US, people are mobile. It is estimated 1 in 40 Americans moves across states every year. In Europe, it is much, much slower (interestingly, the English are the most mobile there) but the East Europeans are changing that dynamic. Then there is the floodgates of refugees. Too much, too fast.

But that’s nothing compared to the other changes we need. China has its Made in China 2025 initiative, India has its Make in India. They also need a Sell in China/India and Work in China/India versions. Ditto for Mexico, Brazil and many other countries. Trade has been too one sided. Labor flow has been too one-way. Their citizens should be allowed to enjoy the same benefits of globalization – more product variety, better pricing, access to more places.

That will mean we have to encourage our small businesses to export more. It will mean we have to encourage our young to go work in Chongqing and  Pune and places they could not find on the map today.

We cannot roll back globalization. We have to adjust some elements, but more importantly we have to spread it around the world. Ironically, we need to take globalization global. It’s way too unbalanced today.