Globalisation: Winners and losers in the gathering storm of alienation

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The inequality and alienation of globalisation has seen a backlash in the UK, U.S. and now Australia. John Menadue flags a serious gathering storm ahead.

THERE IS no doubt that globalisation has brought rising incomes and living standards for many people. Unfortunately it has produced inequality and alienation for many.

Those who are alienated rightly feel the benefits have not "trickled down". Yet the elites have prospered, particularly in the financial and real estate sectors.

The results of this alienation are more and more obvious around the world. In our recent elections about one third of Australians turned their backs on the major parties. They felt excluded. One result was the return to public life of Pauline Hanson.

A dangerous response to this alienation and exclusion is putting the blame on foreigners, outsiders and those who are different. This has been the stock in trade throughout history for populist and unscrupulous leaders who exploit discontent.

In Australia, John Howard, Phillip Ruddock, Tony Abbott, Scott Morrison and now Peter Dutton opened this Pandora’s box of hostility to foreigners — boat people, Asians and Muslims. Pauline Hanson has returned from the grave to point the finger at Aians and Muslims again.

The Brexit campaign led by the unlovely Boris Johnson and Nigel Farage told the UK people in dog whistling style that Europeans were taking their jobs. And in the depressed cities of the Midlands and further north, this argument resonated.

Donald Trump is appealing to people who feel left behind, particularly "working class whites". He tells them the answer is to build a wall to stop Mexicans and banning all Muslim migrants.

On the left of the political spectrum in the U.S. Bernie Sanders rightly speaks of growing income inequality and the need to act on unfair trade that is turning some states into rust buckets.

Marie la Pen blames foreigners and Muslims. She could be a serious contender to be a future President of France.

And so the sorry story goes on.

Not one of these populists has produced anything like policies that make sense in a global world that ensures that the benefits are shared. Having led the Brexit campaign, Farage now resigns! The leaders of the campaign are not prepared to take responsibility for what they have let loose.

Neither does Pauline Hanson or Donald Trump have answers.

In this dangerous situation, those at the centre of public life have a responsibility to ensure that the benefits of globalization are shared and that the vulnerable are protected. It means that all people must be socially and economically included in the body politic.

World Economic Forum: Joseph Stiglitz - Can we make a gobalization that works? July 2016.

In a policy of inclusion and protecting the vulnerable, we need to focus on certain values and ideas.

  • In the short term — adequate welfare and compensation provision will be necessary to help people and industries in transition. But welfare is not the long term answer. There needs to be well paid jobs that bring dignity.
  • One of the keys to social mobility and improvement is comprehensive education for everyone. Our TAFE system is a key to retraining and the provision of skills for the young and old alike. Unfortunately our TAFE system is being weakened by the ideological support of private VET operators, many of whom are proving very dubious.. We continue to provide a disproportion of our funds for children of wealthy parents in private and independent schools. The disadvantaged and vulnerable are pushed aside..
  • We must have a comprehensive and universal high quality health system that is available to all. Instead, as a result of private health insurance we are moving steadily to a two-tier health system — a superior system for the better-off and a safety net system for low income and "indigent" people.
  • In the provision of improved public services, both human and physical, we will need to increase taxation. Wealth, inheritance and land taxes must be put back on the public agenda. With their ideological blinkers, the Coalition says we have a spending problem but not a revenue problem.  But if we are serious about growing inequality and alienation we must improve those public services available to all regardless of income or wealth. It has been wisely pointed out that taxation is the price we pay for a civilised society.

In addition to such steps, we also need to attack those elements in our society that wreak of unfairness and privilege. One of these is excessive executive salaries. The other is large-scale tax avoidance by multinationals, large companies and individuals through a range of devices, including tax havens in places such as Panama and the Cayman Islands. The elite do not have a sense of how their behaviour in such areas is promoting alienation and damaging our society .

Increasingly people around the world who feel excluded and alienated will act in ways that may be illogical, but are understandable. We can’t ignore the gathering storm clouds.

Two recent articles address this gathering storm. The first was an editorial in The Economist of July 2, 2016, ‘Liberalism after Brexit: The politics of anger’. It said:

'Rather than spread the benefits of globalization, politicians have focused elsewhere. The left moved on to arguments about culture – race, greenery, human rights and sexual politics. The right preached meritocratic self-advancement, but failed to win everyone the chance to partake in it. Proud industrial communities that look to family and nation, suffered alienation and decay. Mendacious campaigning, mirrored by partisan media, amplified the sense of betrayal.' 

The second was an article by Nouriel Roubini on July 4, 2016 in The Project Syndicate, titled ‘Globalization’s political fault lines’. Roubini says: 

'Economic theory suggests that globalization can be made to benefit all as long as the winners compensate the losers. This can take the form of direct compensation or greater provision of free or semi-free public goods. (For example, education, retraining, health care, unemployment benefits and portable pensions.) For workers to accept more labour mobility and flexibility … appropriate schemes are needed to replace income lost as a result of transitional unemployment. … The backlash against globalization is real and growing. But it can be contained and managed through policies that compensate workers for its collateral damage and costs. Only by enacting such policies will globalisation’s losers begin to think that they may eventually join the ranks of the winners.' 

Can we manage this growing alienation and back lash that lies ahead?

Voting trends in Australia, the UK and the U.S. flag serious problems ahead.

Our current responses are not working.

This article was originally published on John Menadue's blog 'Pearls and Irritations' on 6 July 2016. You can follow John on Twitter @johnmenadue.

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