Future of globalisation
As the pace of globalisation continues to increase, new opportunities and challenges will arise for leaders and communities. While globalisation has brought immense benefits to many sectors, certain countries and individuals remain vulnerable, whose interests should be protected and promoted. How can societies best approach the challenges this presents? A conversation between Pascal Lamy and Kevin Rudd
What are the best and worst things about
Kevin Rudd: The spreading of wealth is the key benefit in my view: globalisation is lifting economic growth rates and living standards around much, though not all, of the developing world, and in developed countries as well. The worst thing is the disconnect between the volume of activity that now requires regulation at a global level and national political systems incapable of agreeing on global forms of governance to do that.
Pascal Lamy: The best thing to come out of globalisation has been poverty reduction, and the worst is inequality. Because globalisation is extremely efficient, inequalities within countries and among countries have increased: poverty reduction is absolute, inequality is relative. And if we don't change these inequalities, the social reaction will endanger globalisation. I come at this issue as a person from the left, and think inequalities in themselves should be addressed. But even if I came from the right, pushing globalisation for efficiency, I would want to address the problem, so that populist, sovereignist, isolationist reactions do not hinder the positive side of globalisation.
How can globalisation be made "safe" for the people who are being made less equal?
Rudd: Inequality is an inevitable consequence of capitalism. The key is managing the level of inequality. I do not support the ultimate neo-liberal form of globalisation but one based on a social democratic conditionality. That means ensuring that those who are temporarily losers are supported by adequate safety nets and able to readjust to other forms of employment.
I think waiting for the magical marketplace to resolve these questions is self-delusional. There are also economic dimensions to this. The net impact on government budgets of large-scale, long-term unemployment in terms of lost revenue through collapsing wages is significant - far better to be more radical in your interventions to get people back to work.
Lamy: In Europe, Nordic countries have addressed inequality reasonably well, southern countries have not. I think it is necessary and can be done. Governments need to address their debt overhang, which will take time, and make the necessary structural reforms to grow to their potential.
At an international level, we need proper global governance that has the necessary tools, power and intervention capacity to recreate a more level playing field.
Is there any part of globalisation that you think is improving the ability of individuals to hold those in power to account?
Lamy: Technology, the infrastructure of globalisation, has huge empowerment capacity, and it doesn't make governments' lives easier. Governments will regulate globalisation if their constituencies give them the mandate to do so - if governments don't do it, it is because they don't presently have the necessary political energy at home. The danger for democracy comes from globalisation not being harnessed, because people believe there is nothing they can do.
Rudd: The essence of globalisation is the contraction of time and space in international transactions through the platform of new technologies. Citizens, including some of those in the poorest countries, are now globally wired. But managing the business of existing democratic constituencies through regular election processes, and the new constituencies in a more chaotic form through new technologies, makes the business of democratic governance more complex than ever.
What is the most important element of cooperation needed to make international globalisation safe?
Rudd: A core problem is the WTO's inability to deliver a Doha Round - the one easy route to providing an extra 0.5 per cent or even 1 per cent in global growth in a growth-challenged world. It's not the WTO's fault; it's the inability of national governments to allow that institution to work by giving it an effective political mandate.
Lamy: Environmental sustainability issue is not being adequately addressed at present. I am not saying we don't have problems in trade - we do - but with trade, so far we've succeeded in not receding - we haven't damaged the system. On the environment, we are moving this planet backwards in terms of well-being, and that's why I think the environment should be the priority.
What is the shock you most fear in 2013?
Lamy: At the low probability end, but with a very high damaging capacity, is cyber risk. We who follow politics closely know that there is a much higher risk from that side than is acknowledged in public debate. Political instability in the Middle East may have a lower immediate global impact, but a higher probability to create shocks.
Rudd: A cyber-security attack that collapsed platforms for engagement in a global context would be catastrophic.
What would you put top of the agenda for leaders to debate at the World Economic Forum annual meeting in Davos in 2013?
Rudd: In terms of the sustainability of globalisation, it would be a new strategic roadmap for China and the US. Then, to work on things that they can agree on - globally that would be reaching a compact on delivering Doha, and climate change; and within our region, Asia Pacific, beginning to work out the security rules of the road in East Asia.
Lamy: The crucial issue is for each to make an effort to understand where the other is coming from. A radical recipe would be for each of these leaders to come to Davos with an anthropologist - the leader saying nothing, the anthropologist explaining to the others the specificities of his or her country. I think once they'd done that, the leaders would understand each other better and probably have a much higher capacity to converge on issues.
Pascal Lamy is director-general of the World Trade Organisation and Kevin Rudd was prime minister of Australia from 2007-2010. The Outlook on the Global Agenda is available for download, free of charge, at wef.ch/outlook2013