Saturday, March 17, 2018

Globalization vs. Nationalism: It's not your fault; it's our fault


In the 20+ years since the establishment of the WTO ushered in the era of free trade, the world has become more prosperous. And, that prosperity has been spread far and wide.  Billions of people in the developing world have moved out of extreme poverty.  The free exchange of goods, capital, and labor has created these opportunities under the umbrella of globalization.  Innovation, political leadership, social activism, entrepreneurship, and technology have all contributed.
As nations grow prosperous, their values change. First, as economies industrialize, the population moves away from “traditional values” in which religion, and deference to authority are important, and become more open to change. Second, as they grow wealthier, nations move away from values that emphasize the security of one’s family, or community, toward “values” that emphasize individual rights, not just for one’s own community, but also as a matter of principle, for everyone.
Of course, wealth creation does not automatically result in an equal distribution of rewards. Popular support for globalization has always rested on the premise that most would benefit, some could succeed beyond their wildest dreams through their own efforts, and a social safety net would protect temporary losers.
Among nationalists, those left behind economically see these trends as threats to normative values. Their shared sense of identity, norms, and history promotes trust within their cohort but not beyond.
This divergence in values has led to tribal behavior and polarization in developed countries.  Populist politicians – from Trump Republicans in the U.S. to the AfD in Germany and 5-Star Movement in Italy -- appeal to the emotions of those left behind with impossible promises of policies that will return to the good old days, while those with more cosmopolitan attitudes eschew the values that would support those policies.
“If you don’t behave according to your values, you will constantly be at odds with yourself. You’ll be in physical distress, treat others badly and destroy the relationships that you value most.” -- Excerpt from "The Reluctant CEO: Succeeding Without Losing Your Soul"
Today’s polarization is a result of how we, as a society, have chosen to manage globalization and technology.  Both political and business leaders share the blame. However, in this environment, business leaders -- who normally view themselves as problem solvers -- can no longer afford to view these circumstances as someone else’s problem.  Too many of our citizens feel we are off on the wrong track and socialism is now the preferred economic system among 44% of Millennials, an attitude that threatens our prosperity.
The right response lies in addressing these challenges head on.  For example:
  • The era of cost-based offshoring will be succeeded by geographically dispersed, technology-based systems, like 3-D printing, to broaden the base of people who can benefit from a capitalist system.
  • Technology platforms have evolved to support entrepreneurship that will decentralize the concentration of economic value in large, global enterprises.
  • Most importantly, as we approach full employment, businesses can address their biggest challenge (lack of qualified employee candidates) by investing in human capital.  An education system that focuses on point in time certification (degrees, certificate programs, etc.) could be replaced by continuous education and training.  Technology platforms, like EdX and Coursera, can support an initiative like this today.

Even if successful, these efforts will not be seen as a path to societal economic success unless business leaders own the narrative.  A national – or perhaps global – business alliance should take on the task of economic renewal, telling and retelling their story in order to overcome current political trends and societal attitudes that will, over time, undermine our economic foundation.  
The only question…

WHO WILL LEAD?