Globalisation has presented leadership challenges no-one ever anticipated.
What, do you think, has contributed to the current challenges we’re facing as a result of globalisation?
For the last 30 years, the world has experienced an incredible upward trajectory of growth. Now that’s slowing down and all of a sudden questions are starting to be asked – but no one actually wants to know the answers.
The growth that we have witnessed was borne on the wings of globalisation; the increasing interdependence of goods, services and capital over the last three decades and the freedom of movement of each. It was premised on an accepted 70-year-old maxim: if we trade globally, both of us in that relationship will come out better on average – sometimes people will lose and sometimes they will win but, in the long run, we will all come out of it OK.
Now, though, world leaders are saying that the old model doesn’t work anymore as they hark back to a mythologised era, like President Donald Trump’s interpretation of America’s past; where everyone had a station wagon, a barbecue, a job – and everyone was white. Trump’s nationalism is not unique, there’s Brexit – a textbook example; China is posturing too if we look at Hong Kong. We also see it in Turkey.
So, whose fault is it, then?
Everywhere the catch-all claim is that it is the fault of globalisation and that it’s time to look within. Except that no one is doing this, we have now entered not just a post-truth era, but a post-fact era where experts are actually denigrated. For years, civil servants would give politicians expert advice and leave it to the politicians to decide based on facts, but now we are told that the world is tired of experts by no less a personage than the current prime minister of the United Kingdom – and this phenomenon is being replicated in India, in China and the US too.
Leadership is a very complex function in society. In the Sufism tradition, there is a story of Mullah Nasruddin walking past a perfect lawn, with not a blade of grass out of place or discoloured. The mullah was so impressed that he stopped to ask the gardener how he managed it. The answer was simple: you plant it, you water it and you mow it every day – for 500 years – to get a perfect lawn. The person replied that, if this was the case, he preferred his concrete floor – and that in a nutshell is policymaking. Things don’t happen tomorrow when you plant the seeds today. Instead, you take action looking for results over the medium to long term.
Does history have any lessons for us?
When I was doing my PhD, the overriding concern around the globe was of Japan taking over the world. There was this same paranoia which we now have about China. I set out to study how the Japanese did it and my studies took me to 1854 when Commodore Matthew Perry was sent there from the US to force the Japanese to open up their economy literally through gunboat diplomacy.
The Japanese realised they could try to fight this singular naval threat but, given their technical backwardness, they would lose. They chose to accept Perry’s demands, but also use the opportunity from opening up to modernise quickly rather than being left behind. They sent teams of experts to the then civilised world to study globalisation. They found that just by looking at the condition of a host’s road, rail and canal networks they could see immediately if the government of that country was in decline or not. More than a century and a half later, we are talking about Internet accessibility, but the fundamental truth of the transportation networks remains inviolable.
By 1905, Japan was a world power because of the policies that were implemented, we forget that because of the intervening two world wars. We forget too that there is no shame in looking at how other people do things, or in accepting the global reality. There’s only one closed society in the entire world, North Korea. Understanding this means understanding that you cannot break the relationships created by globalisation without harming the symbiosis between the actors – and hinder the movement of knowledge as well. Even if political leaders call emotively for countries to get off the carousel of globalisation, there has to be a realisation that you can’t stop it even if you wanted to. This is not a buffet meal where you can choose what you want. It’s a set menu and you eat what’s provided – or you don’t eat at all.
What can leaders do now to fix things for the future?
The bad news is that developing trade and investment comes at a cost; you need public funds to build roads and waterways, to educate your populace for the new demands of globalisation, but you can’t rely on taxes as you used to, because people and firms who feel overburdened by tax can afford to leave and work elsewhere. In the third world, there’s a high level of informal economies that are not just difficult to tax. It’s also impossible to extend protective rights to workers or for companies to access the finance they critically need to grow.
In the face of all these challenges, many countries just import readily skilled people rather than training their own. The local population look on with horror at foreigners doing ‘their’ jobs, but they are not trained to do the work. Over and above this, their social safety net has disappeared, their job security is no longer guaranteed and the state pension age is shifting ever upwards from 65. They want things to go back to the way their elders have told them it was, when things worked, when there weren’t so many immigrants. They don’t want to hear that the economic fundamentals that drove the last three decades of growth have dried up, chiefly the liberalisation of the once closed Chinese economy, but also our ability to leverage, mortgage and borrow whatever assets we had.
The future, though, will not involve less globalisation, but more. The price of globalisation will be a further loss of sovereignty as we make the movement of people, goods and services even more seamless – unless we go to the source and fix the problems that these people are fleeing from, not by building walls – literally and figuratively.
The answer is real leadership, with some hard truths; the first of which is to sell the idea that for the next generations to flourish, this generation must get ready for austerity and for the rules of engagement to be set by the more powerful countries, rather than our own players. There are no easy answers, there are certainly no quick fixes, and nationalism is a recipe only for disaster – on all time frames.
Professor Rajneesh Narula OBE is the John H. Dunning Chair of International Business Regulation at the Henley Business School, University of Reading, Professor Narula consults to the European Commission, the World Bank and a range of UN bodies and has taught and worked across Africa, Asia, Australia, the Middle East, South America and most of Europe.