When Globalization Eats Its Young

PRINCETON – Evidence that globalization is reversing continues to pile up: trade and international capital flows are sluggish, and migration is increasingly being restricted. These trends emerged in the aftermath of the 2008 financial crisis, so they can’t be blamed on a new populist backlash against globalization. Rather, their source can be traced to national authorities’ failure to take the logic of globalization seriously.

In a year when the United Kingdom voted to “Brexit” from the European Union, and Republicans in the United States chose Donald Trump as their presidential candidate, anti-globalization populism does seem ubiquitous. But while it is tempting to see populism as a cause of global economic woes, the movement has, in fact, had only limited political successes so far.

After all, the world economy is not sputtering because Poland and Hungary have populist right-wing governments committed to reasserting national sovereignty. Left-wing populism, for its part, has even less to brag about: Fidel Castro is fading away in Cuba; Argentina is recovering from catastrophic mismanagement under the Néstor Kirchner and Cristina Fernández de Kirchner presidencies; and Venezuela’s economy has imploded under President Nicolás Maduro.

Globalization is beleaguered partly because of decisions made by governments under the auspices of an open international order. But, more important, it is suffering as a result of judicial and quasi-judicial decisions to impose large financial penalties on foreign corporations.