Globalisation – Benefits, Trade-Offs and Political Mischief

2016-11-22 05:40

Political outcomes previously considered out of the question are becoming commonplace.

The Brexit vote and Donald Trump’s victory are amongst the most obvious, but many other tectonic plates are moving under the socio-economic mantle of the planet.

Even in our own back yard.

And the trend is bound to continue.

For example, once Britain has left, the EU cannot expect to last long in its immediate (post Brexit) form, because it lacks cohesion and is an anthropological contradiction. As previously argued, the attempted marriage of Mediterranean and Northern European/ Nordic nations in one economic union qualifies as farce.

In the former bloc, there is less formality and certain elements of the population tend to fiscal delinquency whilst in the latter, people in general are sticklers for the rules; so amongst the former some take delight in dodging the taxman whilst the latter tend to be more driven by probity and public duty.

Such a “union” thus ignores cultural and economic differences and assumes symbiotic growth without equal effort and commitment. The EU enterprise has thus attempted to coerce unity despite the heterogeneous nature of its constituent nation states and in the process exposed a misguided form of globalization.

The Grexit debate – as yet far from resolved – bears further testimony to that fact.

Add to that the many geopolitical developments of the past few decades. The fragmentation of the Balkans (Yugoslavia); the implosion of the Soviet Union; the secession of South Sudan and East Timor and growing calls for Scottish independence all serve as examples of societies seeking to restructure themselves and their relationships with others in the modern era.

The inescapable conclusion is that there is a general move to “smaller is better”. Is that surprising?

The reason for it would seem to be that many are victims of majoritarianism – where the will of a numerically superior national constituency with different values determines the shape of others’ lives, often unjustifiably and all too often breeding resentment.

Some examples -

• At a supra-national level Brussels served as an irritation to many Brits (and others) with its bureaucratic requirements, heavy handedness and purporting to speak on behalf of Europe Incorporated.

People asked themselves - why should they be permitted to do so? And opted out.

• At a formative state level, Serbian hegemony in the 1990’s promoted wars in the Balkans because they were the strongest ethnic group in erstwhile Yugoslavia and sought absolutist control.

It was resisted at cost of many lives – because again, why should they have been permitted to get away with it?

• In reaction to an established nation state's authority, East Timor’s secession from Indonesia resulted from the coercion of a culturally and religiously different population who called the shots - one bye product of which was genocide.

In the end, they were not permitted to do so any longer, they seceded – and the killing stopped.

Thus numerical asymmetries count – as do cultural differences, religions, racial predispositions, ethnicity and differences in cognitive capacity.

But does that in any way nullify the benefits of globalization? Hopefully not – for commerce without borders has a great deal to offer in the fight against poverty. More people emerged from poverty in the past 30 years than throughout world history - and globalization had everything to do with it – so if that is to continue, trade-offs between nationalism and self-determination on the one hand and the desire for economic success on the other will become increasingly relevant.

Trade-offs are essentially conflicting considerations that stress the fabric of the nation state, require resolution and compromise, have high stakes and lend themselves to political mischief. I am reminded of the words of Stanford Professor, author, philosopher and economist Thomas Sowell who was quoted as saying – “there is no such thing as a solution - only trade-offs”.

We in South Africa would do well to embrace this reality.

The notion of trade-offs is essentially unknown amongst our ruling elite. For them confiscation from others and entitlement to what others possess are passports to short term office and personal gain - never mind the resulting bye products of a declining economy, crumbling state education and corporate and departmental failures.

That happens because there is close to zero political cost to the perpetrator(s). The reason for this in turn is that their values are extractive, non inclusive and ignore the realities of trade-offs. Their ignorance of democracy and the majoritarian mandate of the ruling party are at the very root of the problem.

Added to that and looming threateningly on the horizon are the values of Malema and his acolytes. For them the confiscation and reallocation of assets – essentially from whites - is a sine qua non. Furthermore, his preoccupation with “the land” vividly illustrates the EFFs intellectual vacuum.

Modern, successful economies have limited use of land. They are instead driven by human capital, cognitive capacity and innovation. Land is an important but very small factor of production comprising a few percent of your typical modern economy – in terms of GDP, population and employment.

Other than contributing to food security land is a marginal economic asset – as is evident in the enormously successful example of Singapore. Thus fighting over land begs an important question: does it illustrate the EFF’s cognitive limitations or something more sinister?

It seems to me likely that its intention is to abuse an ignorant and poorly educated electorate with outdated but emotive rhetoric for its own political gain.

The same applies to a national “minimum wage” such as government is currently promoting. It is a bad thing and requires no knowledge of economics to figure out the cost of a minimum wage; all you need is common sense and rudimentary arithmetic. With a current growth rate of under 1%, a growing population and more than a third of the working population unemployed, a minimum wage stands to deprive the poorest and most marginalized in society of their only tool for access to the economy - the price they place on their labour. It will undeniably increase unemployment.

At its simplest, a minimum wage rate is a crime against the people.

Thus EFF rhetoric and populist government interventions in the market for peoples’ skills are mendacious examples of how political mischief trumps logic and ignores the importance of trade-offs that would benefit everyone.

Such are the costs and penalties associated with a low intelligence, wilfully ignorant and ideologically obsessed ruling establishment.

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