We must not blame globalization for the risk-management failures of national governments
The centuries-long rise of free trade and globalization has created the healthiest and wealthiest world population in history. This indisputable truth is now being undermined with claims that the COVID-19 pandemic suggests this glorious economic history must now be replaced by new forms of anti-global nationalism and increased local self-sufficiency. Economists, politicians, business leaders,academics,bureaucrats,journalists and political activists are united by the coronavirus pandemic in a new movement — pandenomics — in which the great economic lessons and experience of the past few hundred years are buried. The Canada-U.S. clash over 3M face masks has only added fuel to the nationalist claims.
The snapshot analysis is this: COVID-19 demonstrates that globalization, with its freer movements, open markets and complex supply chains, helped bring on the pandemic and put nations such as Canada at risk.
As with much of pandenomic thinking, this framing of the crisis gets cause and effect exactly backwards. The COVID-19 pandemic is the product of bungled national government policies on a massive scale across the globe.
Before we get to the tip of the iceberg of evidence of national failure of risk management behind the coronavirus crisis, here’s a quick look at the trade issue, specifically the anti-free trade position supported in a column last Saturday by National Post’s founder, Conrad Black. Black, usually reality based, has long fantasized about a Canadian national auto company and other industrial strategy objectives, citing evidence from history. He again raised the auto idea in his column and at the same time advocated for a new national energy program. “We should build all the pipelines that have been projected, and assert the eminent domain of the national interest against native protesters and the government of Quebec, as necessary, to dispense with foreign oil imports and reduce fuel and gasoline costs for Canadians, including Quebecers.”
Since Canada is a relatively high-price oil producer, the chances of keeping oil and gasoline prices below world levels is zero. Such arguments also evade the role of free trade through history, much revered by Black. In the late 19th century, Britain’s wheat- and grain-growing sectors all but collapsed as Corn Law tariffs were reduced and imports surged. The imports came from Canada, America, Australia and elsewhere as new shipping and transport opened the world market.
In the course of a couple of decades, British lost a national farm industry, but in exchange gained immensely from lower grain costs in a global trade boom that enhanced global productivity and freed up consumer wealth to pay for new agriculture products from around the world. That’s how trade works.
And so it is with today’s globalized world trade system, which generates wealth that has allowed the world population to grow, as they say, exponentially over the past two centuries, with rising living and health standards.
Source: Terence Corcoran | Financial Post
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