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CIAO DATE: 07/06
Volume 10, Number 3, February 2006
Transcript
JAMES GLASSMAN: Welcome. I'm Jim Glassman. I am a resident fellow at the American Enterprise Institute and I'm the host of the website TCSDaily.com. I'm here today to talk about globalization. And to my right is Claude Barfield, who is a trade expert and resident scholar at the American Enterprise Institute, taught at Yale, is a former journalist.
Claude, let's just begin with a basic question -
(Pause for technical difficulties.)
MR. GLASSMAN: Claude, let's start with a basic question. What is globalization?
MR. BARFIELD: Well, everybody has a different definition, I suppose, but in the terms that I am comfortable with, I think it is the impact of changing technology on individual countries, individual societies over time. And I think globalization is very much technology-based.
MR. GLASSMAN: Is this a new phenomenon?
MR. BARFIELD: No, I mean I think almost from the time you have - you can go back to the Greeks. Any time you've got commerce among different nations or different societies, you're beginning to have globalization because what you're having are ideas, movements, transactions - commercial transactions - between different peoples and different societies. And that's the beginning, as it were, of globalization. You're not in an isolated community, human community that you have no other contact.
MR. GLASSMAN: So globalization is - you're defining it in terms of trade?
MR. BARFIELD: Well, I'm trying in terms of societal contexts as well as trade is a part of it. And I think that in the modern terms, I think you could take - I mean the two most recent periods that people look at are the late 19th and early 20th century, from roughly the 1870s to the First World War where you had - because again, you have technology changes in transportation and communication, you had a knitting together of what we would call the developed world very, very closely, in fact more closely than the developed world is today. And some people look back on that as a golden age, as it were, of globalization. And then you could just pick up gradually after 1945 the gathering force in the '70s and '80s into the '90s, where you really have this burst of new technologies in terms of instant communication and very quick travel. I think one point I would make to go back though to the 19th century - I think it's a little - it's false actually to look at that - so the 1870s to 1914 - as even more - the world was more globalized.
MR. GLASSMAN: But some people say that.
MR. BARFIELD: Well, but the point that they forget is that, yes, there's globalization if you take Europe and the United States, but you've left out whole other areas that were very little involved in this. So you can take these statistics about cross-investment or trade, but this is trade which is not whole worldwide. I mean you've got some trade in Africa and a little bit in Asia, but it's only today I think that you've got a worldwide globalization.
MR. GLASSMAN: So there is that big difference. But then, you talk about technology, but part of the reason that globalization has increased has also been just arrangements among nations' treaties, trade agreements. I mean there was a period - you say things began to go downhill after 1914, obviously World War I. And then, there was a period in the 1930s where there was not only a depression, but there was also kind of a beggar-thy-neighbor policy where countries erected big trade barriers. And then you have World War II and then the cycle began again.
MR. BARFIELD: Yeah, I think public policy certainly can have a - and could still - I think it'd be tougher now - but it certainly can have and if one looks, an impact on globalization. Because if one looks at the policies after 1920-21 in the United States, and then after the Depression began in the early '30s in Europe and the United States as well as those countries - for instance, Argentina, which was quite advanced at that point or other countries that are now on the periphery or what would be called the periphery of development in the 1930s. All of those countries had policies that we would call autarkical. They drew back into themselves. They cut trade and cut investment.
MR. GLASSMAN: So our target goal countries - are there any significant ones that are left? People used to point to India as being a country that wanted to close itself off and do everything itself.
MR. BARFIELD: Well, I mean, you could take North Korea as the obvious example, but even that is breaking down. So that I think you had autarkical system that the Soviets set up in Eastern Europe in the periphery of - around Russia, or the Soviet Union, which again had policies internally, which you didn't really have much trade. And certainly almost no trade - well, except in arms and what they thought were revolutionary ideas outside of the Soviet Union - or the Chinese - the People's Republic of China from the late 1940s through the late 1970s where you had an internal autarkical society. But those have broken down, I think.
In the Chinese case, you have kind of a case study. It's a fascinating one because you have - you went from Maoism, which was the most extreme form of communism/authoritarianism on the one hand, right through a kind of throwing open of a society by people who actually were devoted to the earlier Marxism, and decided that it just wasn't going to work. And so the Chinese society and the Chinese economy over an extraordinary short period in terms of human history - several decades - was just thrown wide open.
MR. GLASSMAN: Some people say that globalization is an American idea, that the rest of the world is kind of adopting an American concept. Is that accurate?
MR. BARFIELD: Well, I mean only to the extent that I think the United States, given its position as the 20th century evolved, was always on the cutting edge of technology. And that was true even during the Depression. We may have had hard times here but when you look at individual sectors who were moving ahead, so we were in the vanguard of a kind of technological change that I think are a key base. On the other hand, I don't think it's - the good and the bad of - certainly the good of globalization brings great economic growth, income. That's not just an American ideal. All people, all countries want to have a better life. And in general, globalization produces these side effects. Globalization is to produce greater economic growth and greater income per person.
MR. GLASSMAN: Is that the only benefit? I mean what are - let me just ask you in general, what are the benefits of globalization?
MR. BARFIELD: Well, I think the main benefits are that - I mean this is taken just in terms of an individual person, an individual consumer - the ability to consume better goods and better products at cheaper prices, to have a better quality of life. That begins in economics, but it doesn't end there, because people have other goals in their lives besides just economic goals. But I think that globalization is a means by which they can reach those other personal and national and societal ends.
MR. GLASSMAN: We're going to take a break right here.
(Pause in discussion.)
MR. GLASSMAN: We are joined by MOISÉS Naím, who is the editor of the prestigious magazine, Foreign Policy, which is the winner of the National Magazine Award for Excellence in 2003. He's also a former executive with the World Bank.
Mois és, actually, I wanted to read a part of your definition, I think, of globalization from your book "Illicit," which has just been published. You're talking about globalization in terms of not just technological, but also political. "One major change that this most recent wave of globalization often brings to mind is the revolution in politics, as deep and transformational as the one in technology." Tell us, this revolution in politics, was this caused by the revolution in technology or the revolution in communications? How has this happened?
MOISÉS NAÍM: I don't think we know. All we know is that it happened at the same time, and there is a very good, solid case to say that the more information people have, the more free they were to learn how others lived, that created strong incentives for them also to strive and fight for freedom. And so there is a connection between new communications and transportations technologies and the political revolutions of the 1990s that opened borders and created a wave of democratization. So but we - it's going to be very hard to really decide on causality, but it doesn't matter. All we know is that these two things converged, and I think it's very important.
One of the things I try to do in the book is to decouple the very common association between globalization and trade, or globalization and investment, or globalization and economics. I think it's very important that we understand that the world now is connected in ways that go beyond economics, and beyond trade, and you know, 9/11 is an example of globalization. 9/11 was driven by political turmoil in the other side of the world. The terrorists relied upon the tools and technologies of globalization. They also took advantage of the opportunities created by more open borders due to the political changes. And you know, when you think about globalization just in terms of trade and investment, you tend to lose all these other dimensions of globalization, which are connecting peoples and countries and polities everywhere.
MR. GLASSMAN: We were talking about this earlier, Claude, but do you agree with that?
MR. BARFIELD: I do agree with that. And I'm not sure what the - since I haven't had a chance to look at the book, I'm not sure what the dimensions were of the political revolution. But I do have a cautionary note. And this is a puzzle that we will have to work out in the next years, not just we, but all nations. And that is, while you get with globalization the ability of technology to come over the borders, of governments not having as much control over their populations as they did, and governments having because of globalization where there's trade and investment or whatever or ideas coming over the border, still having to react to that, the nation-state is still the only focus of democratic legitimacy. And so that, working out what is - we're really concerned about issues and ideas of democracy, there is no democracy above the nation-state. It may be at some point you could have it. But you've got to work at this with sort of what is possible, or what is legitimate for a nation to do, and what should it give up? And we fight about that. I mean the United States' administration's position on the International Criminal Court, or what powers we should give to the United Nations or the World Trade Organization for that means.
MR. GLASSMAN: Yeah, you know, a lot of people have said that with globalization technology, the nation-state would wither away. Now, maybe it's a little early to see it withering away, but do you think that's going to happen?
MR. NAÍM: No. And I do agree that the nation-state is a core, central organizing element of the international system. What is - and I do believe that there is a lot of discussion about the withered nation-state, and I frankly think that's a silly conversation. I think the nation-state is going to be with us for a long time. What is happening is that the nation-states are being transformed by globalization, are being transformed by liberal politics in the new technologies. And the constraints that nation-states now have to do things are narrower and tighter than in the past. You talk to any head of state today, even those that live in and exercise the role of authoritarian types of government, and they will tell you that they're very limited or more limited than in the past. There is also some constraints - their predecessors.
MR. GLASSMAN: So what kind of constraints? Is it that the population has more contact with the outside world or is also flow of capital into countries?
MR. NAÍM: All of that, and you are absolutely right. They have to contend with bond markets and international financial systems that constrain their economic choices. They have all sorts of trade constraints and possibilities. But also they have international standards. They cannot torture as freely and as openly as in the past. It happens and it continues to happen. But one interesting change we now have is that I believe that as a result of globalization and the changes of the '90s, dictators no longer sleep as easily at night as before. Dictators don't always now go from the presidential palace to houses and villas in the Riviera. They may end up like Milosevic in trial. They may end with Pinochet. If you start thinking about the recent dictators and what happens after they are ousted from power, their life is not as cozy and attractive as the dictators of the past.
MR. BARFIELD: I would though add that this is a two-edged sword. We think - and there's a lot of literature about this, though it's contested - that democracies are peaceful, and democracy will lead you to the kinds of freedoms that we have in the bill of rights. And I think in general, that's true, but democracy can go off in the wrong direction. I mean, Germany was a democracy - (inaudible) - like ours in the 1920s. Japan was a democracy. Again, these were democratic nations in terms of their times, and they can go off in all kinds of directions.
The thing you have to think about is that it's no so much dictators, though you might end up with - I mean, after all, Mr. Chavez is an elected official. He won overwhelmingly. But this technology, which can be used to get dictators on the Riviera and to find members of al Qaeda could also be turned against populations. And so you've got to think about it. You could find somebody anywhere now in their house.
And so while we are now in a benign era, there is a, if not a frightening at least one should step back and say, you know, this can go both ways.
MR. GLASSMAN: Well, actually, I'd like to talk about the downside of globalization since Claude had earlier talked about the upside, which is economic growth and more exposure to new ideas and perhaps, as you say, more democracy, less control by dictators. Your book "Illicit" actually talks about one of those deficiencies of globalization. You say that you're convinced that more and more things are being stolen - ideas - or plagiarized. You begin with a terrific anecdote about how Bill Clinton's book was stolen in China and rewritten to some extent. Just how dangerous is that? Is that something that we really should be worried about? Is it a drain on the resources of countries that more and more are devoted to producing intellectual property, or is it something that may be just a passing fad?
MR. NAÍM: That's a great question and a very valued one. When one thinks about countries and the explosion of the international trade in counterfeits, the examples that come to mind is the very expensive sneakers that you can buy for a fraction of the price if they are counterfeited, or the elegant ladies' bags and things like that, or the DVDs or the movies and music that are constantly copied and used without payment. And then the question is, well, you know, who cares? Who is this in effect damaging?
But one tends to forget several things. First is that illicit trades are connected, and very often the person that is selling you the elegant bag, the street vendor, is as illicit as the bag that he or she is selling you. He probably was trafficked from another country and he's being used and exploited by the networks that traffic in people to peddle these counterfeited items. And he's the equivalent of an indentured servant trying to pay back the debt that he owes to the traffickers. So there are connections between the counterfeit trade and other horrible trades. That's the first thing.
MR. GLASSMAN: On the other hand - let me just interrupt you - this person - and I agree that being an indentured is a terrible thing, but a lot of the original colonists in America were indentured servants and a lot of people get to the United States or to other countries where there is more freedom, more opportunity through maybe indentured servitude or some other terrible thing, but at least after a few years they're here and they're freer.
MR. NAÍM: And there is always that, and all of these trades have these free market, free will, free impulse to get a better life by doing illegal things like moving to another country illegally to earn a higher salary. So there is that dimension. But very often they are not the happy volunteer traffic people, these workers. Very often they have been - in the case of the international trade in women they are enticed with the opportunity - with the notion that they're going to be taken from Eastern Europe to Western Europe to work as domestic workers and then they are coerced into prostitution and exploited. And that is a huge element of that trade.
And then, going back to the counterfeiters, we can have fun about the very expensive watch that costs $5,000 and one buys for $20 in the streets of Manhattan and that's fine, but there are other things that are counterfeited and they are very dangerous. There are airplane parts that are counterfeited and are defective and cause plane crashes. There are medicines that are counterfeited that instead of curing, kill. There are all sorts of dimensions associated with these trades that are not as benevolent and not as easy to tolerate as these more -
MR. GLASSMAN: And this is a kind of natural fallout from globalization, or is there any way to stop this or is it transitory?
MR. NAÍM: No, I think it is with us. It's very important not to think of globalization as a project. It's more - I think it's more useful to think of globalization as a reversible trend that has components that are no longer under the control of governments or individuals. You can steer aspects of globalization, which is disintegration - the integration of economies and societies, and there are certain things you can do, but by and large, globalization is a process that has a life of its own.
MR. GLASSMAN: Claude, let's talk about some of the more popular images of globalization. I just attended the World Trade Organization meeting in Hong Kong and there were some South Korean rice farmers who got a lot of attention for their demonstrations, and their complaint was, look, if South Korea opens itself up to trade in rice, as it is not now, then we're going to be out of a job. We can't do anything but farm rice. We're not very good at anything else. They're kind of older people. And rice doesn't cost that much anyway. So is this part of the negative force of globalization or is it actually ultimately positive?
MR. BARFIELD: Sure. It's a question of how you handle it and it's also a question of timing. Nations are not very good - the United States hasn't been very good, though we have bigger churn so our government gets out of it I think. But the Koreans or nations in South America, in dealing with the negative sides of globalization or the negative sides of opening up your markets to trade or investment, because it can have a wrenching - those South Korean farmers, that's what they've done for generations, and nobody has stepped in to try to - except by attrition, which is actually what's happening in Korea - to try to ease that change, the transition of the adjustment. And you certainly - there is certainly - and I think all nations are delinquent, basically because the policies are not very good. We don't really have a handle on how you make this adjustment, but there certainly is a social - there certainly is a moral or a social obligation of the nation that is involved with this, whether it's Korea or the United States or the Brits or the Europeans, to do that, to step in. And it can be a wrenching situation.
There is another side to this, though. There is a lot of - when you get into the anti-globalist movement there is a lot of - you can take the rice farmers. There is a lot of sort of romanticism that we should leave these tribes in the upper part of the Amazon or the impoverished farmers in Southern Mexico, that somehow this is a terrible thing that's happening to them, that Mexico is being opened up. Well, think of the like those people are living and just think - you know, we think about the good old days here because we had most of our time a great agricultural life in the 19th century. But even in our farms in the Midwest and the South or wherever, those were long days, people were not educated - drudgery, just a lousy life. And so it's the transition questions that are - the questions in terms of public policy that I think are important, but not that you - as the other speaker said, you're not going to be able to stop it. It's how do you make the adjustment more socially acceptable, or morally acceptable?
MR. GLASSMAN: Do you think that one way to make it acceptable, as some people say, is to have a different pace of the opening up - or let's put it this way, the taking down of trade barriers for developing countries compared to developed countries? In other words, developing countries in any trade agreement should be allowed to keep some trade barriers for a while, and whereas the developed countries should take them down right away. Do you agree with that argument? We've heard that a lot, that Hong Kong, it's one of the things that's holding up the Doha Round.
MR. BARFIELD: If one could control it - if I really thought - I mean, and both sides are - and people will lie in their teeth about this, that all the countries will lie, and we lie. I mean, the United States and the Europeans and the developed countries said, well, we just need a decade or decade-and-a-half on the textile, which is the most - the textile and clothing, which are the most protected parts of many economies. So in the early '90s we said give us that decade. The developing countries are similarly saying, well, give us those extra decade or decade-and-a-half, but the problem you face is nobody does anything. So we came up to 2005 after over 10 years and nothing can be done, and then this crash thing.
So I don't have any problem with giving more time, but it has to be a time certainly to set in as much concrete as you can. And you have to also keep in mind that - what the developing countries often talk about when they talk about so-called special and differential treatment is to allow themselves to be plagued by their local monopolies, their inefficient industries for just more time. So you're not really doing them a great favor. There is on the other side the fact that you might give a transition period, but be careful about that because that transition period, as it can in the developed countries, can just go and on and on.
MR. GLASSMAN: Besides this illicit trade in counterfeiting, The Downside of Globalization Not that we can do much about it, but does it have -
MR. BARFIELD: Of course.
MR. GLASSMAN: - negative consequences?
MR. NAÍM: It has negative consequences, and some of the consequences we are already seeing. There is a generalized sense of uneasiness in the population. You know, a lot of their resistance is the sense that something big is going on - the changes that are very, very profound in the way people live, in which companies can survive or not survive. Entire sectors are being redefined. We just heard in this country, the United States, in the last year a very furious debate about outsourcing, about the whole idea of utilizing employees in Asia, in India to do work that used to be done here, and you could detect a lot of anxiety that went way beyond the job losses. If you measure the job losses -
MR. BARFIELD: Right, very small job losses.
MR. NAÍM: - with outsourcing, it's very small. And then the big debate would lead you to think that we're talking about hundreds of thousands of Americans losing their jobs, and that's not the case.
So there is an anxiety - there is a general anxiety about globalization because there is a sense that there are changes that are going on that are touching all of us, and we don't know how, at the end of the day, our families, ourselves, our companies, our communities are going to end up being hit or not hit.
MR. GLASSMAN: Yeah, I always had the feeling that globalization is an example of something where the benefits are very widespread -
MR. NAÍM: Spread out.
MR. GLASSMAN: - right - and that the costs are very narrow and they hurt specific industries - you know, the American shoe industry or the Korean rice industry, and those people are yelling and screaming, but you're talking about something, a more widespread anxiety. I mean, is that - does that have a basis in fact? Because really the benefits are widespread whereas the costs are very, very narrowly shared, it seems to me.
MR. NAÍM: And the best example is an example you yourself gave of the South Korean rice farmers, because I wonder where were the consumers of rice in those meetings? You know, of course there is a whole generation perhaps of South Korean rice farmers that are going to suffer from what's happening to the international trade rules in rice. But there is millions - far more people are going to benefit from the opening of trade and the elimination of subsidies - the trade-distorting subsidies in rice. These are consumers that are not represented there because each one of them is going to benefit in a tiny way -
MR. GLASSMAN: Not very much.
MR. NAÍM: - in often an imperceptible way whereas the Korean farmers are going to be hit right now in a very measurable way, so it's easier to mobilize them and organize them. And your point is that, yes, that is happening but there is something wider. And I think that we are still adjusting our minds to a new world where the traditional ideologies of the past - you know, the socialism or the Soviet Union-type communism gave a lot of people anchors on how to think about the world and how to interpret changes, in which you have two superpowers that balanced each other and now there is only one, in which every day we get news of changes that we don't know how to interpret, from cloning to things brought by the Internet, to the illicit trades, to the war in Iraq, to international suicidal terrorists that are willing to kill and die -
MR. BARFIELD: But that's not just true in the sort of closed-off societies of Eastern Europe or Russia; it's true in the United States too.
MR. NAÍM: I'm talking about the United States.
MR. BARFIELD: And we are of a society that has traditionally been mobile, accepting new ideas, and much greater capacity to do that and not be worried about, than other societies. But I do think - and this gets to a question that you talked about later - is that looking beyond economics, there is a greater sense now that there are a lot of forces that are out of your control. I'm talking about the individuals; I'm not talking about governments. And it would come from anything from biotechnology through the extraordinary impact of the information revolution.
MR. GLASSMAN: But is that because -
(Cross talk.)
MR. BARFIELD: - with young people, I think, who accept a lot of this stuff and understand it. They understand how to deal with their cell phones and all the computers, et cetera, et cetera, but they're still even more aware of the fact that this is something that the technology is really mind-boggling, even for them I think.
MR. GLASSMAN: But are things really more out of people's control than they used to be, or is it that we know more about what's going on in the world than we used to know? In other words, I'm bringing up again the role of communications, which may have overall beneficial effects but could also produce a lot more anxiety. For example, you know, we've seen the number of natural catastrophes is on the rise, but actually a lot of scientists believe that it's not really on the rise, it's just we happen to know what's going on. We might not have known very much about the tsunami that happened in the Pacific certainly 50 years ago. It might have taken a while for us to find that out and we never would have known the extent of it.
So is it that people feel that things are out of their control because they know a lot more about the world, or is it because the technology is moving so fast, or both?
MR. BARFIELD: I think the combination. People talk - you get these stories in the early to mid-19th century when people first saw a train and it scared the hell out of them. You know, are all these new - or you first got a radio and you could get beyond your own county or city in the United States. But I think - I just think it's the scope of coming from all directions and from various kinds of disciplines - technology as well as science - that I think is important - beyond just its kind of single line.
MR. GLASSMAN: Mois és, is there a connection between globalization and the rise in religious fervor - some people call it fundamentalism - that we see not just in the Muslim world but in other religions?
MR. NAÍM: Well, we see it in the United States. There is no doubt. The results are a movement towards more religiosity and more formalized practice of religion, and even a bigger presence of fundamentalist interpretations of religion in daily life, and even in politics. And I think that's a great question. I think behind your question there is a powerful hypothesis, and that is that as the world changes, either because of globalization or the information revolution, that as all of the changes you two have discussed touch all of us, people are looking for anchors. People are looking for - because what is happening is that predictability has declined. People used to have a sense that their lives could proceed more or less like those of their neighbors and parents. Now the sense that many things can happen to your lives - many wonderful things but also some very terrible things that will make your life and that of your family not look like the ones of your neighbors or your parents, or your brothers or sisters.
So that sense of uncertainty, of anxiety about where is this taking - you know, people need to have something to grab, and I think there is a very forceful opportunity to do that through religion. That is in some countries. In other countries religion has replaced the hope for prosperity as a way of thinking. In a lot of the Islamic - a lot of the Middle East - as we know, the economic performance of the Middle East, even in countries that are wealthy, is dismal. And there is - if you combine that with the demographics where there is a lot of very young people that essentially have no hope - no hope for better politics or for participating in the public life and the political life of the country, or no hope for really prospering and having more material goods, then religion becomes a very interesting option. It's often the only option in terms of devoting one's life to a cause, to an idea, to a hope, or to a sentiment, a religious fervor.
MR. BARFIELD: The really fascinating thing, though, I think is - I think it's important, though - the Middle East certainly is the - it's got to be front and center. It's a great experiment just in terms of all the things we've talked about about globalization and its economic and political consequences, and also its psychological impact on individuals and the need for some anchor. It's bound to be China and then India just because of the scope and the pace.
MR. GLASSMAN: And you're writing a book about China, right?
MR. BARFIELD: Yes, I am but I'm not - I would not claim to be able to get into that. I'm just thinking of trade and investment. But, I mean, just think about what's going on. We talked about lives being uprooted and changes. Some of you as a young person, let's say in the '60s - or the '70s or '80s in China, what they're saying, or this generation that's coming along let's say teenagers in China now. This is going to be an extraordinary - and given globalization as an overlay on an authoritarian and increasingly - at least at the local or regional level - creaky system, corrupt system, the one that is - you've got people who really do think. We have some young people at my institute - young Chinese who are convinced that there will be some form of democracy. These weren't practical MBA types, they're not dreamers, and yet that transition is going to be very difficult.
MR. GLASSMAN: Well, actually, let me ask that question, which is almost a clich é but I'd still love to know the answer, does globalization - let's just define it in economic terms as meaning a more open economy, a more market-oriented economy - does that naturally lead to democracy, or vice versa? But I think more interesting is the first question.
MR. NAÍM: I think it's too soon to tell. We don't know. We don't know.
MR. GLASSMAN: Not just in China but anywhere.
MR. NAÍM: Anywhere. We don't know. Remember, we have had waves of globalization throughout history. This is not the first time that the world experiences a very intense integration of global economy - of different economies. In this one, this one started at great speed in the '90s. It is, again, the information revolution coupled with the collapse of the Soviet Union, the opening of countries that were closed before. And it's happening as we speak and it's happening at a speed and in ways that we still do not fully comprehend. In some areas globalization is creating better conditions for democracies. In others, globalization is hampering democracy.
MR. GLASSMAN: Where is it hampering democracy?
MR. NAÍM: In all of the places where there is all sorts of opportunities - I am thinking of, for example, oil countries where globalization has created very large markets. You know, the price of oil these days is in large part very high because of what's happening in China and because the global economy is growing quite significantly.
That creates a stream of revenue for people - for authoritarian governments that then creates - inhibits - you know, those very high revenues are inhibitors of economic reforms and of democratic -
MR. BARFIELD: Yeah, I don't disagree except I think it's, though - I mean, I think there is - the unfortunate thing for them is they have this one resource, so they have not been - the forces of globalization don't hit them as much. You don't have to get out the -
MR. GLASSMAN: I think the bigger problem is that one resource is owned and controlled by the government.
MR. BARFIELD: Well, that's true, but the whole thing is that these countries don't have to scramble as you had to do with Brazil, Argentina or Chile, for example. This whole question - to go back to your original question, does globalization - "naturally" I think was the phrase you used - produce democracy? The answer is no. However, this is a fight that is going on in intellectual circles - that I think Naím's book takes on - between realists and so-called liberal internationalists. And we have, at the institute at which I work, where those who work in security and in terms of diplomacy you'd say, well, you guys, you economists, or you people who favor mobilization keep saying it's going to be democracy. Well, look at the Chinese; it doesn't seem to have done that. And I agree with that. I do not think there is a natural progression. You could take the Middle East; you can take all kinds of other things.
However, it is also true - to go back and think of things that we've talked about - that with globalization, and even with the fact that the Chinese government can control the Internet in part, and they control these other sources, it is just impossible today to control your population in terms of information, in terms of sealing them off, as you could do in Eastern Europe, in Hungary and Czechoslovakia in the 1950s and '60s, or China in the 1960s. You just kind of seal them off. And then you realize that the Chinese were also letting their students go all over the world. You're just not being able - they made a pact with the devil, in a sense, if you're an authoritarian at the top, because I think you've unleashed forces that you will ultimately not be able to control. Whether it will produce democracy, I don't know, but it is certainly true that it is going to be unsettling for whatever government is in power.
MR. GLASSMAN: Do you agree with that?
MR. NAÍM: Yeah, I fully agree with that. I fully agree with that. Again, what I said, however, is that it's too early to say. I stand by that. We don't know. Let's remember for a second that the majority of mankind today lives in non-democratic regimes. It is normal. A normal human being today is a person that does not eat three meals a day, that does not get information from independent sources, if at all. A third of the humanity today doesn't have a phone and has never made a phone call, and most of humanity doesn't live in democracies; most of humanity lives in authoritarian, non-democratic - (cross talk).
That's normal, but, you know, if you think of what is normal today, well, normal today is for children not to go to school. The majority of children in the world do not go to school. The majority of people in the world don't have formal paying jobs.
MR. BARFIELD: But I think we need to be careful. I mean, I don't have the numbers in front of me and I haven't looked - I don't read, as a lot of people do, in a lot of detail these sort of compendium of liberty that the Cato Institute and these other various institutes do about whether you have democratic governments or governments that have liberty, but I think the other thing to keep - I think you would have to say that more than any other time, I would guess in human history, you've got people living under quasi or some kind of democratic states.
MR. NAÍM: Yeah, I think -
(Cross talk.)
MR. BARFIELD: As I say, China really skews it because it's so large.
MR. GLASSMAN: But I think the number - and I may be wrong about this - I think the number of democracies has actually doubled in the last 20 years, although the majority of people don't live in democracies, if we count China as a non-democracy, as most people would.
Let's just talk about where globalization is going. Is this - well, we've had periods in history - late 19th century or early 20th century is the best example - when there was globalization, but it did come to a screeching halt for a fairly long period of time, for at least 40 or 50 years. Is it possible that we'll see the same thing again? Is globalization here to stay or is it cyclical?
Mois és?
MR. NAÍM: Again, if you take the definition of globalization and heavily imbue it with trade and investment, then it is true. If instead you think -
MR. BARFIELD: It is true?
MR. GLASSMAN: What is true?
MR. NAÍM: It is true that - you know, trade cycles may go up and down and we may have a spur of protectionism.
MR. GLASSMAN: By the way, just to interrupt you, do you think that's happening right now?
MR. NAÍM: No.
MR. GLASSMAN: Okay.
MR. NAÍM: I think that trade is very strong and free trade is now - international trade is moving and has been moving regardless of all of the noises and all of the -
MR. GLASSMAN: I've got to see if Claude agrees with that. But go ahead; I interrupted you.
(Cross talk.)
MR. NAÍM: Every year international trade grows, and trade has been growing more than global GDP. Global trade is growing faster than global GDP. So, yes, there are all sorts of trade impediments and there are all sorts of subsidies and distortions, but trade is moving. So that's the first thing.
What I'm saying is that what we now have, if we take a broader definition of globalization that includes not just trade and investment and economic dimensions, but we take the formational aspect that you mentioned, and you compare what those are today with what they were in the 19th century - because the example is the telegraph. You know, when the telegraph came there was this furor of communication around the world. But the telegraph was mostly used by institutions. Instead, the Internet is being used by teenagers that get together with like-minded teenagers across the world. There are all sorts of like-minded groups, of interest groups, of people that share interests, passions, technologies, hobbies that get together across borders and create virtual communities that have all sorts of activities and capabilities and develop all sorts of new political dynamics. That is irreversible, because as, Claude, you said, you can control the Internet but there are limits to how much you can control it.
So the cat is out of the bag. People are organizing. We have more - this is more individual globalization than we have ever seen in history. The prior waves of globalization were institutional, were commercial, where the central actors were trading companies. Today there is a globalization of individuals, and that is a very important difference.
MR. GLASSMAN: Just quickly, Claude had also said that the difference between this globalization period and the period a hundred years ago was that the earlier one really just involved Europe and the United States whereas this one is really -
(Cross talk.)
MR. NAÍM: Think about China again. Think about who would have ever thought that China was on its way to becoming the central trading economy in the world.
MR. GLASSMAN: And in the 1870s, the other great period of globalization which some people say was even bigger than this one, Japan had just been open for 10 years to the outside world.
What do you think, Claude, about the possibility that this is cyclical and it may come to an end?
MR. BARFIELD: Well, I mean, we don't disagree on this. Actually, the only thing I would add is that think it would really take - we take the First World War, which was a kind of rolling - it was an awful four years - I think it would take just a huge conflagration where you - and you've got the military technology now. If something were to by accident or - take something like that where you actually physically destroy nations, and they have the capability - we have the capability and others have the capability of doing that. And so that's not outside the realm of possibility, but short of that, I think there are things that, as was said, just roll on their own. It's going to be much harder to stop it through the economic policies today I think than it was in 1920 and 1930. You could do it to deflect - you could raise barriers in the United States - but I think even there there would be a reaction sooner or later - sooner than later.
MR. GLASSMAN: Just one last question. On this issue of whether trade is increasing - whether we are facing any kind of resurge in protectionism, you're saying no, that's not true, that trade is increasing - I mean, obviously -
MR. BARFIELD: I don't have the number in front of me, but the thing that's really mind-boggling is investment, and that indeed is really tied to things that you were talking about, because I think it's cross-investment that really knits individual countries together more than trade because there you can just sort of beat up on the other guy. And it's General Motors in Florida against the Japanese, but when General Motors - are both investing in China, and IBM is in China, it's not IBM and the United States versus China; it's some people in the United States - and IBM is straddling back and forth. I don't mean to take that as an example; it's any multinational.
Anyway, sorry -
MR. GLASSMAN: No, no, no, but what - just picking up on something that MOISÉS said, what particularly concerns me is that in the developing world - which is large, as he says; we're talking about a lot of people here who have really not joined this globalization movement. It's not a movement; it's a process. Is there anything that can be done about that? I mean, I have to say that my experience in Hong Kong was quite despairing, where you would see developing countries really acting against - really, against their own interests in not joining.
(Cross talk.)
MR. BARFIELD: Look, I think if you look at developing countries - forget about what the politicians say and what they will sign to, or the heads of state will sign to in Hong Kong; you just take East Asia or even Latin America and just go back to the question. They refuse to sign up to treaties that lock in investor rights or investment, but they've thrown their borders wide open.
And the other thing to keep in mind is that in trade terms - which I know something about - we can't measure this, but the amount of just voluntary opening of markets - forget about the negations - is enormous in almost every region except maybe Africa or the Middle East. What Argentina did and what Indonesia has done in investment, or Argentina did actually in terms of investment, over the last 20 years is far beyond anything they would put on paper, but it's happening. In other words, they are convinced about it. They see that this is the way to go, but they're very nervous about being hauled before the World Trade Organization or some other international organization and somebody say, you have to do this. You know, they're like the rest of us; they want to have their cake and eat it to. They want to be able to throw it open to foreigners, to General Motors to come in there, or GE, but they don't want somebody to say that you have to have some rules about - (cross talk) - the same rules that you deal with your autonomous company there in Brazil or in Chile or in Mexico.
MR. GLASSMAN: But you're generally optimistic about the developing world as well as the rest of the world?
MR. BARFIELD: Yes.
MR. GLASSMAN: Thank you, MOISÉS Naím -
MR. NAÍM: Thank you very much.
MR. GLASSMAN: - and thank you, Claude Barfield.
MR. BARFIELD: It's been a pleasure.
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