November 15, 2016:
More and more countries are moving towards nationalism. Protectionism regarding manufacturing, jobs and international trade is on the rise. Surely, this is not a new trend. What’s new, or rather, what we’re seeing a reemergence of, is more and more rich or ‘developed’ countries embracing such ideals. That the U.K successfully voted to leave the European Union (EU), and that an electoral candidate in the USA could campaign and win an election on the basis of promises to become more nationalistic is a sure sign of how far we’ve come from being ‘global citizens’.
What’s ironic is that some of these same countries came out strongly against poorer countries who espoused the very ideas they are now promoting. The U.K., France, and the USA, all having great wealth and global status, and are power brokers in international organisations such as the World Bank, the International Monetary Fund (IMF) and the World Trade Organisation (WTO), have, in the past, implemented policies restricting poorer or ‘developing’ countries in their trade deals, and manufacturing and production policies, thereby preventing them from becoming what these powerful countries now are – essentially nationalistic.
The truth is that nationalism was an important part of the process of wealthy nations industrialising. How else would they have experienced that boom in their economies, which propelled them to the status they now enjoy, if they hadn’t had some level of protectionism – providing jobs for their citizens, providing incentives for their farmers, producing what they consumed and consuming what they produced? Well, there were other factors such as wealth creation on the backs of former colonies, however, I won’t get into that here.
Yet, after achieving a high level of comfort with robust economies, manufacturing and production sectors, it was decided that the world needed to become more ‘open’ and international trade needed to be ‘free’ from restrictions and preferential treatment of any country. ‘Free movement’ became a catch phrase and was at the foundation of groups such as the EU and the Caribbean Community (Caricom). Individuals would, in theory, be able to move freely within their economic trading zones for education and work. This was meant to provide an equal playing field for all involved, yet it has been more equal for some than for others.
On preferential treatment, in the context of international trade, it had a specific purpose. It was meant to be a form of aid from rich countries extended to poorer countries, assisting them to lift themselves out of poverty. And it did provide benefits to poorer countries for a while. The trade deal between the EU and (African, Caribbean and Pacific) ACP countries for the trade of bananas was such a programme that provided great benefits to ACP member states. The EU would pay a higher price for bananas from ACP countries than from other countries.
But the WTO would put an end to such arrangements, promoting free trade and the idea of comparative advantage – that is, producing goods or services that are most efficiently produced. In other words, “pull yourself up by the bootstraps!” With restrictions on government subsidies as part of the conditionalities for loans from, say, the IMF, farmers in poorer countries would bear a higher cost of production than those in richer countries who would receive incentives from their governments to produce. Poor farmers have no choice but to set their prices at a level at which they can make a profit.
With a higher cost of production, what do we expect of the prices of such goods? That’s right, they’re higher than that of competitors who can produce more cheaply, even more so when we consider economies of scale – where the cost of production declines as more goods are produced. Small farmers can’t compete on a level playing field and no matter how efficiently they produce, they are at a competitive disadvantage. This has led to stagnation of many developing economies as many factories were forced to close down and farmers’ produce going unsold, forcing them to abandon their farms.
Free trade also meant that international producers and multinational corporations – from the same rich countries – could flood the markets of these poorer countries with cheap goods, completely shutting out small-scale producers out of the market as they were unable to compete. This was what several developing nations feared when they aspired to nationalism, or nationalistic ideals. They weren’t being selfish or up to anything untoward, they just wanted a fair chance to grow as these rich countries had had before them.
Many developing countries were labeled socialist, for leaning towards nationalism by rich countries. The Cold War heightened fears of poorer countries aligning with the USSR and embracingcommunism. They faced threats of embargoes, many were destabilised, and many of the governments who promoted nationalistic ideals lost power. At the same time, the USA helped to prop up authoritarian regimes in many parts of Africa, which led to the hoarding of resources, increased poverty and civil wars.
Now after all the effort put into preventing nationalism outside of their borders, colour me and everyone else surprised when the USA decides that they would be better off embracing nationalism. The champion of globalisation and free trade is now promoting the opposite. Why now? After all, the USA and similar countries benefit greatly from being open; from attracting immigrants who work for cheap wages and perform jobs most other Americans don’t want to do – mainly in in the service sectors, caregiving, farm work, and so on. They benefit from shipping jobs abroad for, again, cheap labour. Of course, this is ethically questionable, however, for those employed by these means, it helps them a great deal, but at the expense of US citizens who demand higher wages.
Security threats are, understandably, one of the reasons behind this shift in ideals. Terrorism poses a threat to every country, – rich and poor – which necessitates increased border protection and screening of individuals. I can’t fault any country for doing what they think is necessary to keep their citizens safe. Also, having immigrants (mainly illegal) providing cheap labour, which may contribute to the unemployment of citizens as a result of them not being able to compete with the cheap labour immigrants provide is a genuine cause for concern.
But there’s an eerie similarity between the current situation the USA now faces regarding competition, and that which developing countries faced back in the early 90s. The only difference is that developing countries faced unequal competition in terms of cheap goods, while the USA faces it in terms of cheap labour. Another difference, and important one at that, is that developing countries had little power to challenge what was thrust upon them. The USA, on the other hand, has the might to protect their citizens from external threats. They essentially forced poorer countries to comply with rules that they are now embarking on changing.
Many Caribbean, South American and African countries had (and still have) no such power to resist cheap goods or cheap labour marginalising their citizens. They complied – for the most part – to avoid embargoes and other sanctions. Not so for the global hegemony. History has shown usthat the USA gets what the USA wants. When they said free trade, free trade it was. When they said no to nationalism and yes to globalisation, that became the status quo. So we can be certain that if they change their minds because it no longer benefits them, and embrace nationalism, then that’s the way it’s going to be.
Jackass seh di worl nuh level.