Mike Moore on globalisation
The Herald reports on Mike Moore’s new book:
Mr Moore said more wealth had been created in the past 60 years than in all of history. Hundreds of millions of people had been lifted out of extreme poverty through globalisation.
Yet so many have fought against it. An unholy alliance of the hard left and far right.
Mr Moore said globalisation was “not a policy, it’s a process” and while it could be slowed it could not be stopped. Fascist and Marxist states that arose after the Great Depression had been vicious and protectionist.
And one great legacy of Helen Clark (and Moore and Goff) is firmly placing NZ Labour into the mainstream on globalisation and pre free-trade.
Protectionism was the “crack cocaine” of economics. “It does stimulate you for a while but it is addictive and it will eventually kill you.”
Nice analogy.
The cover has endorsements by former US Secretary of State Madeleine Albright, and former Czech President Vaclav Havel. It was launched jointly by Foreign Minister Murray McCully and Labour leader Phil Goff.
Again good to see bipartisan support for globalisation and free trade.
I worry a bit about where Labour may go, after Goff. Either Shane Jones or David Cunliffe will I am sure be pro free trade. But Andrew Little may not be, as unions are often heavily protectionist.
October 16th, 2009 at 11:40 am
Shane Jones reminds me of Philu .. talks in riddles .. so maybe this is a natural place for him to go .. can talk for years and say nothing that can be understood. As for Cunnliffe, god forbid he is still in politics for much longer, even the left hate him
October 16th, 2009 at 11:42 am
As DPF said before, its a shame that the nats are not progressing free trade at the moment. Their actions on trade are quite reflective of their actions on everything… don’t do anything that may cause the left to make noises.
Like you said, we must praise labour for keeping to the free trade philosophy. Labour governments have done more to achieve free trade than National ever has… funny that isn’t it.
October 16th, 2009 at 11:47 am
Enter stage left…the ‘Greens’ and ‘Professor’ Jane Kelsey…
October 16th, 2009 at 11:51 am
DPF – re: protectionism… do you think this has any parallels with the current subsidies built into the ETS?
October 16th, 2009 at 12:17 pm
I have got to 500 posts by complimenting Mike Moore on his brilliant metaphor about crack cocaine and protectionism.
October 16th, 2009 at 12:41 pm
While free trade enriches millions of people it doesn’t necessarily mean workers in NZ will be better off rather conditions will fall and settle at a low world average: you can’t discount resources (limited) or enormous populations. What’s more the masses may seem poor (hyperthetically) but may have happy fulling lives because people have access to cheap realestate by beaches etc as people did in the 60′s (prior to our globalised property market). That’s just my impression.
October 16th, 2009 at 1:18 pm
I haven’t readthe book, but I’m always amused by Mike Moore’s articles on globalisation – it’s like listening to a faith healer or TV evangalist. You get a long list of poorly structured sound bites, quips and cutesy slogans with all the weight of a toasted marshmallow.
“Hundreds of millions of people had been lifted out of extreme poverty through globalisation.”
I think it’s generally recognised that the largest fall in extreme poverty – while not quite what is sometimes cracked up to be – has been in China – one of the least globalised countries in the world. Their economic sucess was built on state-ownership, fixed exchange rates to keep out foreign competition, tariffs and plain bans on foreign ownership, not to mention informal (rather dodgy) ways of limiting foreign competition (as Lion Nathan found out).
Given this doesn’t match with the ideology of the free-marketeers they simply shout “China has globalised” over and over again, regardless of the reality on the ground.
October 16th, 2009 at 1:40 pm
On the contrary, the fascist and communist states that arose after the Great Depression were far from protectionist – they were very much in favour of globalisation and seeking out resources outside their own country. Fascists did their best to forcibly take their ideology to the world, and the whole thing about the Comintern was that it was an international movement.
Moore is confusing nationalism with protectionism. Fascist states pre-war were fiercely nationalist, and that’s cited as a key to their success; communist states were tied to the Comintern, and that’s cited as a key to their failure in taking ground without recourse to violence.
October 16th, 2009 at 2:24 pm
Sam Buchanan – Globalization lifted europe out of poverty, although it is a given that war put them in poverty. Prior to that, it was the expansion of empires or interstate trades that lifted the western powers out of poverty, this was in itself an early form of globalization.
Without trade NZ would be extremely poor. Globalization has provided us with all the things (other than food and environment) that we enjoy. Globalization has already lifted millions out of poverty in India, Russia, eastern europe, southeast asia and that is all after world war 2.
China is pretty globalised, even though it isn’t a democratic state. If it wasn’t for China being able to invest outside its own borders, and sell products outside its own borders, millions upon millions of chinese will be thrown into poverty.
Protectionism in its current form is a selfish, bastardized, unprincipled system. If you truelly believe in protectionism you will only trade or barter with people you personally know, However people evolved out of such stupidy back when we moved on from being hunter gatherers. People realised it was better to specialise at what you do best and let other people specialise at things you don’t do well and trade with each other. This concept is so simple and is applicable right up to the national level.
Protectionism in its current form is selective to the wim of noisy lobyists. Protectionism costs the consumer(everybody), and the worker in the country that the goods/services comes from. Protectionism often costs the worker in the protected industry, as in effect they are forgoing something they can do better. Protectionism costs everybody.
Chris C, you were nearly right. Fascists after the depression were only limiting globalization within their sphere of influence. Communists only believed in the globalization of their system. The communists didn’t believe in globalization in the economic sense. Hense they allocated jobs and land to people, regardless of whether these people had the resources and skills for the job.
October 16th, 2009 at 2:25 pm
Sam, I accept what you say about China’s measures (sounds roughly like the other ‘asian tigers’ blah blah) – but their global linkages have increased MASSIVELY since ~1978 on the basis of some relatively radical reforms which I at least *perceive* were certainly in the direction that globalisation cheerleaders like Moore advocate.
October 16th, 2009 at 2:26 pm
I have heard Mike Moore say this before, that globalisation has lifted hundreds of millions of people out of poverty.
Where are all these people?
I don’t have a strong view either way about free trade and tariff protection.
But I look around New Zealand and see industries that aren’t here anymore. An old schoolmate, who used to be a leading figure in the clothing industry here with several factories, told me (10 years ago) that it had become cheaper for him to send the material to China and have clothing made there and then import the finished product back here.
But then again, I didn’t complain too much 25 years ago when suddenly, one day, I found that I could buy shoes for all my children at 50 percent of what I’d paid before. The new shoes were the Brazilian sneakers that flooded the market, and which continued to do so for about 8 years. They suited me perfectly — they were cheap, I was on the DPB, and they lasted long enough on growing feet to be replaced cheaply. The kids, particularly the girls, liked the pretty colours.
October 16th, 2009 at 3:01 pm
“Prior to that, it was the expansion of empires or interstate trades that lifted the western powers out of poverty, this was in itself an early form of globalization. ”
Empires weren’t globalisation – it was just stealing stuff on a global scale. If this was ‘globalisation’ so is piracy and international crime.
“their global linkages have increased MASSIVELY since ~1978 on the basis of some relatively radical reforms which I at least *perceive* were certainly in the direction that globalisation cheerleaders like Moore advocate.”
China’s basically managed to create a massive trade imbalance – obviously a way to get richer, but not ‘globalisation’ in any meaningful sense. The drop in poverty levels was clearly evident before any significant opening up of borders occurred.
October 16th, 2009 at 3:25 pm
They did believe in economic globalisation – but they believed in labour force economics, the LCD being from each according to his ability, to each according to his need, rather than the free market model. It’s just not globalisation in the sense we mean today, or in terms you understand to mean globalisation. It is the reach of a social and economic model beyond national borders. Marxism is an economic theory, don’t forget. The difference is acceptance, and the consent of a population to rule by a system. The same goes for fascism, but where the main economic drive in communist societies is the state, the main economic drive in fascist societies was the corporation. Fascists traded freely across borders, and like communism, where totalitarianism failed to be accepted willingly, in both communist and fascist models, it was to be forced upon them.
You can’t limit globalisation to the economic or the cultural or the social, because that’s making mistakes that early Marxian economists made – that things only have one cause. The difference is that today we experience pluralistic globalisation – that interactions on a global level occur between different social, economic and legal cultures and advancement and interaction occurs despite them.
October 16th, 2009 at 4:39 pm
Chris C – You are correct with regards to fascism, but I think when Mike Moore refers to Fascism he is probably referring to authotarian single party states that weren’t based around marxism, eg, Nazi’s. The main thing with both communists and these authotarian single party states was neither wanted or allowed external cultural influences but would project their own culture outwards. Likewise, the communists resisted all external economic influences, and the authotarian single party states promoted (sometimes forcibly) and actively encouraged an internal self sustained economic system (VoltsWagon was a creation of this).
Sam – you are partly correct, a lot of expansion of empires in the 19th century did involve theft of resources, but it did lift europe out of poverty. When europe fell into poverty after WWII, it was globilization that brought it out of poverty. And Chinas poverty rates declined when it stopped allocating jobs to people, and people to places (ie, started dropping its marxist economic beliefs), and it started surging out of poverty when it opened its borders.
My point is, NZ is where it is today because of globilization. If it wasn’t for globilization we wouldn’t have many of our favourite tv programs, in fact, any tv’s we did have would be crude and exspensive. If it wasn’t for globilization we would wipe out 90% of our farms, and countries that do not produce enough food for their population (eg, any city state) would have poverty levels increase drastically.
October 16th, 2009 at 4:53 pm
Yes, stealing stuff makes you richer. Marxism is hopelessly inefficient. If you sell stuff and don’t buy much you get richer. But none of this is globalisation – the process of technology reducing the cost of distance and of countries allowing capital and goods (but not labour) to move freely.
October 16th, 2009 at 4:55 pm
Michael Moore has been a good champion of free trade. He was a likeable NZ politician, open, bubbly, accessible, and optimistic.
Long before Ricardo made it obvious, trade has benefited nations engaged in it, and free trade has in total benefited the world enormously.
However, you have to wonder if some nations benefit from it more than others. Obviously Germany, Japan, and now China are examples.
Countries benefit more when they manipulate their economies, chiefly through currency level but also through things such as wage rates tax and loan advantages and even levels of copyright enforcement. Political conditions that allow this include totalitarianism (as in China) or recent emergence from catastrophe (Germany and Japan).
Even more democratic countries, such as India, benefit by choosing when to move into free trade. India, long protectionist, is now booming when it’s vast, well educated (in maths and engineering especially) can take advantage of free trade in software and new technology. This highlights a third factor: strength in a new industry before protection emerges.
In the meantime, NZ nonchalantly lets its floating exchange rate crunch its exporting industries.
October 16th, 2009 at 4:59 pm
Whilst globalisation is fantastic for certain people (mainly the young, mobile, educated and skilled) it is catastrophic if you work in manufacturing or have no transferable skills. it would be also negligent not to mention globalisation’s contribution to the GFC.
The huge current account deficits of the Western Economies have allowed debt fuelled real estate and consumer booms in the face of reduced real GDPs. This has allowed huge production expansion in the manufacturing of the East Asian economies and fosiil fuel production increases in the Petrodollar economies. Now that the li its of this have been reached, we can see the inevitable effect on innocent victims in both the debtor and creditor economies as nobody now knows when or where to give credit safely.
Globalisation is good if it is done in a balanced manner where goods are exchanged for goods, but disasterous when goods are exchanged for credit, assumed property wealth or any other intangible fictitious product.
October 16th, 2009 at 6:26 pm
bchapman- I would go further and say globilisation is great when governments don’t selectively embrace it, and instead embrace it completely.
Jack5 – India didn’t benefit from trade when it chose to enter into it, it benefited WHEN it entered into free trade. It would have benefited further had it entered into free trade earlier. The exchange rate is where its at because the US dollar is devaluing greatly, and NZ’s rediculous taxation policy that encourages debt fueled spending in unproductive investments (property), and New Zealanders (and the english speaking world in general) culture of borrowing. Pegging the exchange rate might help out exporters in the short term but NZ’s inability to tightly control its spending would cause havok when we would be required to borrow money. I would rather fix up the fundamentals than play with exchange rates.
Sam – “If you sell stuff and don’t buy much you get richer”, not quite true, you only get more money (rich doesn’t always mean more money). I always thought globilization includes the free movement of labour and culture. But regardless, why would people be against the free movement of capital and goods?
Because China and India have started to allow freer movement of capital, goods, labour and culture they have really helped drag masses of people out of poverty, even though they still dick around with this movement.
October 16th, 2009 at 6:41 pm
CharlieBrown 2:24 pm,
The trouble comes when there is SOMEBODY else that can do EVERYTHING you do better and cheaper than you can.
The only option you have left then is to sell off the actual country to offshore interests. The populous then becomes nothing more than pauper tenants reliant on the benevolence of their ‘new’ owners.
Apart from that I think ‘Globalisation’ and ‘Free Trade’ are absolutely wonderful!
October 16th, 2009 at 7:27 pm
” I always thought globilization includes the free movement of labour and culture. But regardless, why would people be against the free movement of capital and goods?”
Well, pro-globalisers tend to throw culture into the mix as it distracts from the economic side of globalisation, but actually culture has always been highly mobile. Knowledge has as well, arguably more so before intellectual property laws arrived. Freedom of movement for labour is certainly not on the globalisation agenda, except in a very limited way. In many places labour movement is becoming more restricted as ‘security concerns’ are cited and technology makes policing easier.
The problem with free movement of capital and goods is that if goods are able to be moved freely, capital chases low wages, weak environmental and safetyregulations and political repression – hence the desire to set up in countries such as China.
October 16th, 2009 at 8:21 pm
Charlie Brown at 6.26 posted:”… why would people be against the free movement of capital and goods?”
I agree that international trade is overwhelmingly beneficial.
However, I think total free trade and totally free movement of capital and goods are just theoretical ideals.
There are plenty of goods that people support governments in banning legal free trade in: heroin, slaves (these days as prostitutes), criminals, guns, plants and animals that might carry disease. Similarly with capital: the MSM today features Australian police warning about international criminals laundering cash in New Zealand.
Even when it comes to legitimate capital, those countries who have been most successful in world trade recently — China, Germany, Singapore and Japan for a few– have also at times put difficulties in the way inflowing capital and free trade. Not many Western property companies thrive in these countries, for example, though their sovereign funds are free to buy up large in Australia, NZ, Europe, and North America. NZ examples of failed expansion in China include a big brewery, a cement plant, and at least one large agricultural undertaking.
Apart from Hong Kong in its heyday, Charlie, can you name any other highly successful, purely capitalist territory with utterly free trade and no restrictions on inflow of capital and goods. Remember Hong Kong initially was sheltered by Britain and in the last years of its status as a British colony the HK dollar was silently backed by Beijing, as when China humbled international speculators trying to break the Hong Kong dollar’s peg with the USD. Beijing did this by putting its vast currency reserves behind the HK dollar.
October 16th, 2009 at 8:32 pm
And that’s the rub. The left don’t actually want to lift anyone out of poverty because it destroys their constituency. They are totally opposed to anyone bettering themselves. The last thirty years of socialist indoctrination in NZ has proved them right – their warped sense of ideal has driven us to the bottom of the first world.
True story – i was out to dinner with a leftie public servant who explained to me that building the Auckland waterfront stadium for the RWC was a bad idea because it would drive down workers wages. When i explained that providing more employment would actually lift wages because of supply/demand constraints he left the table and went home.
October 16th, 2009 at 10:37 pm
Free trade has destroyed the United States. The problem is greed by these companies by maximising profits and not taking care of its people. I think capitalism works and can lift people out of poverty but when companies are in business for profit only, that’s when people suffer.
October 16th, 2009 at 11:41 pm
Free trade does not only promote economic wealth it also promotes international security. Supposing the world got very protectionist over essential raw materials like oil, coal, minerals. What would China do if its access to essential goods was denied through protectionist measures or the US for that matter. They would simply take what they want. And WW III would happen. Free commerce is essential to international security.
October 17th, 2009 at 7:21 am
tvb, that has already happened. Iraq, Afganistan, tried on Venesuela but didn’t work because the masses came out against the coup. The list goes on.
October 17th, 2009 at 10:44 am
I’m in the middle of an article by George Riesman.
He points out that the world pop’n is 6.1B but only a small % produce the wealth. Globalisation has the potential to bring those people out of poverty and up to the level of the first world. He says that that increases the number of geniuses working on specific problems. This assumes we can solve the looming energy crisis [that's an assumption of course] I look at tech sites and while I see thing such as cold fusion “X years from commercial development” there always seem to be a snag and just like reaching the speed of light , not everything we wish to achieve may turn out to be possible. The Old De Dion and modern Prious still run on fossilled organisms.
George says that when capital relocates the exporting country (F&P) actually produces more as the difference in development costs means more capital can be employed. The local employees who loose their jobs might end up flipping hamburgers but they can buy a widescreen TV at half the price….. this is where he looses me and I recall another article which discusses comparative advantage and I think it made the point that across borders it is pointless to send all your manufacture to another country unless you have a substitute service or industry….
George also talks a lot about goods being cheaper but this overlooks the fact that what really counts is a house on some land with the odd shrub and choocks scratching… we are human afterall. What profitetith a man if he gaineth a widescreen tv and plastic deck chair from the Warehouse but looseth his house thanks to Harcourts Shanghai?
All in all I think this topic is given too light headed a treatment by the likes of Mike Moore.
October 17th, 2009 at 2:42 pm
I think I’m done here.