Our highly sophisticated global system of exchange now faces its single biggest existential threat. Globalisation has made us richer, freer, and more connected than ever before as we trade goods, services, capital, labour, and information across national borders at an unfathomable pace.
But globalisation’s paramount strength is also its principal weakness. What started as a virus-ridden bat in a provincial Chinese wet market has led to the infection and death of thousands across the world and an impending global recession.
However, this international crisis is by no means the first and won’t be the last. In 2008, many argued that the Global Financial Crisis and the subsequent European debt crisis would signal the end of globalisation and worldwide capitalism. Before that, it was the 2001 dot-com bubble burst and the 1997 Asian Financial Crisis. This isn’t the first pandemic either as we’ve seen SARS, Ebola, MERS, and swine flu. To make matters worse, our globalised world has faced military conflicts, genocides, natural disasters, trade wars, refugee crises, and nuclear proliferation.
Preview (opens in a new tab)Like all those subsequent crises, COVID-19 won’t kill globalisation because quite frankly Australia and the world can’t afford it to. We have become hooked on global exchange and the stakes are now far too high to abandon it. As an example, global trade of good and services stands at $25 trillion each year, about 18 times the size of the entire Australian economy.
Socialists and nationalists view globalisation as a choice; as if global exchange is some sort of switch that we can flick off without any real consequences. The reality is that it would take decades of economic depression compounded with dangerous jingoism to expunge our addiction to globalisation. It is a cure that is far worse than the virus.
And yet COVID-19 is more pernicious than previous crises. Not only because the health and economic effects are felt by the mass populace, but also because globalisation was already under attack before the virus broke and those usual suspects are now using this pandemic to intensify their misguided ferocity.
The political sands have shifted. It’s no longer ‘left’ versus ‘right’ but rather ‘open’ versus ‘closed’. Those of us on the ‘open’ side of the debate have for too long viewed the benefits of globalisation as a truism. We forgot to prosecute our arguments. We didn’t bring ordinary people along with us. We became complacent and arrogant. We never differentiated globalisation from unfettered globalism.
We should have spoken more about the $470 billion Australia earns each year in exports from goods and services such as iron ore, coal, natural gas, education, tourism, and agriculture. We are an exporting nation and our jobs and businesses rely on international markets, predominately in Asia.
Even more pressing, we never properly prosecuted the argument that $421 billion of imports is just as beneficial to Australia as our exports. Research by the Institute of Public Affairs highlights how consumer goods are bigger, better and cheaper today than in the 1970s, a direct result of global trade with low-cost economies. For example, the average Australian would have to work over 190 hours to save up for a television in the 1970s. It’s now less than ten hours.
Free trade agreements with China, Japan and Korea delivered by Tony Abbott as prime minister, and the Trans-Pacific Partnership championed by Malcolm Turnbull, will continue to add to our prosperity. The Liberal Party’s proud free-trade legacy isn’t just about exports, but also that consumer goods that are more cheaply produced offshore than in Australia means lower prices and a higher quality of life for Australians.
But we are selling globalisation short if we only focus on trade. Perhaps the strongest argument for globalisation is that it has coincided with more than a billion people rising out of extreme poverty since 1990. While multinational corporations acted out of their financial interest by establishing operations in low-cost economies, they also created livelihoods for the world’s poorest people. The left may never acknowledge it, but the best humanitarian program ever seen in world history was created by global capitalism and not by NGOs or foreign aid.
Globalisation also means worldwide technological connectivity, information at our fingertips, and lucrative entrepreneurial opportunities. Likewise, Australians make around 11 million trips overseas each year and there are around one million Australians working and living overseas at any one time. Walk into any bar in London or New York and you’re almost bound to bump into an Aussie.
Flick off the switch to globalisation and you’re saying goodbye to all of these benefits. Abandon all global exchange and Australian society would be an isolated dystopia, probably feeling a bit like an Amish town or life behind the Iron Curtain. Globalisation is in Australia’s national interest and COVID-19 is not going to change that. In fact, the economic pain that we’re experiencing now is because we’re being forced to temporarily halt globalisation. But it will be the dynamic forces of global capitalism that will lead our recovery when this virus eventually passes.
Finally, those of us on the ‘open’ side of the debate have to acknowledge that we’ve made mistakes. We’ve found it difficult to explain the intangible benefits of globalisation while failing to understand community concerns such as open borders and job losses in traditional industries. We need to be better prepared for pandemics and have a little more faith in sovereign nation-states, but less in unelected international institutions. Continuing with a pro-globalisation agenda in a COVID-19 world requires us to follow David Cameron’s advice of listening to the “genuine arguments of those who are anti if we are to preserve what I believe we all ought to be pro.”
Christopher Rath is the Vice President of the New South Wales Liberal Party.
Illustration: Ports Authority of NSW.
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