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John Micklethwait
John Micklethwait

Talking Management

Globalization at the crossroads Add to ...

Karl Moore: This is Karl Moore, talking management for The Globe and Mail. Today, I'm delighted to speak to the editor-in-chief of The Economist, John Micklethwait.

Good morning, John.

John Micklethwait: Good morning.

KM: Welcome to Montreal.

JM: Well, it's great to be back here.

KM: John, you've written about globalization a great deal. You and Adrian [Wooldridge]have a book out on it [ A Future Perfect: The Challenge and Hidden Promise of Globalization ] Globalization, I've been teaching it for about 15 years, seems to morph off in different directions every so many years. Where do you see globalization going today?

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JM: Well, I think it's in a problem, to be honest. As I said earlier, what I see is this process which has brought gigantic wealth and, indeed, happiness to most people around the world. It's not - you know very well - it's not a perfect process. It's a savage, sometimes cruel one, but the basic sum of human happiness increases dramatically because of it. Because globalization is about the way the ideas, people, goods, services cross borders. That's fundamentally what it's about and that is a profoundly, to me, liberal thing.

And anything that gets in the way of that, tends to be bad and, in general - yes globalization does create pain for individual people, I'm not, in any way, trying to deny that - but, overall, the way in which it's able to help societies, particularly the emerging world, to leap ahead, I think that has been one of the great things of our lifetime. And, as I said, it's not just money, it's also ideas. And there is a correlation - I'm not necessarily one [who says]you can link that directly - between economic openness and political openness - I don't think it's a coincidence that, as the world has opened up economically, it has also opened up politically.

If you go to China - I was in China the other day - you know, China is a place where, God knows, it is not as politically free as we want, but as it keeps on opening up economically, on the whole, political freedom is coming in its wake, not nearly as much as we want, but, still, there is a movement in that direction and, I think, in the end it will take it all the way.

KM: A number of years ago, we looked at Moscow and Washington as being the two poles of the world. Do we see a bipolar world of Washington and Beijing? Is that the future?

JM: Well, that is the idea of the G2 [relationship between the United States and China] I think that actually, on the whole, that is an important but slightly dangerous idea. It is important because it seems to be having an effect beyond its actual sort of reality - i.e., that if you look at the actual numbers, the G2, if you had them, would be America and the [European Union] The EU would actually be bigger than America.

It does not work in that way, but I think that it has worked as a concept; both Washington and Beijing have jumped onto bits of it. The danger in that bit to me is that firstly it fixates America more on China. … America feels China much more than other places. If you are No. 1 and there is someone very clearly at No. 2 coming up on your shoulder, you do tend to feel that much more than other places. It has various other issues with China which have nothing to do with economics, which has nothing to do with openness, nothing to do with military power - all quite legitimate, in some ways. These all cloud one side of it.

Within China, I think that the G2 thing also has a sort of danger. You can see it a little bit in its attitude towards America. Each new American president, I think China expects them to do something stupid. It is kind of used to it - there is always going to be a degree of China-bashing when somebody new comes in. What is different I think now is that China feels in power, in part due to its G2 talk, that it is now big enough, it is important enough, that it does not have to take this. Yes, it will take something stupid but it is not going to take the full madness. It is not going to take ultimatums. I think that is the bit which the G2 thing changes. China sees itself more at a level of parity.

KM: We are looking at the G8 becoming the G20, it appears. Do you see that as a positive move or something worrisome?

JM: I think that is enormously positive. I think that if you looked at the challenges that Barack Obama faced when he came into office, I think the long-term ones were two. One is, does he save capitalism in some recognizable shape from what he actually got when he came in? That is the first one.

The second one is that, by the time that he leaves office, and let us give him the benefit of the doubt and assume that it is 2017, by the time that he leaves office, then whichever way you look at it, whatever numbers you run in whatever programs, there are countries like Brazil, India, China, Indonesia - these are going to account for a massively bigger amount of the world economy. If he has not somehow brought them into a broadly Western way, a broadly Western framework of running the world, then he will have failed. I think that it is literally that big. That will be held against Obama if he fails to do it.

It is partly a matter of institutions, it is partly a matter of G20 rather than of G8, UN security councils and all of those sorts of things, but it is also, I think, a matter of ideology, a matter of reselling something, because at the moment I think that many of those countries, when they think about American justice, they think about Guantanamo Bay, and when they think about American finance, they think about Lehman Brothers. There needs to be a twist to take it away from that. I do think that the G20 rather than the G8 is a big step forward.

KM: Brilliant. This has been Karl Moore, talking management for The Globe and Mail. Today, I have been speaking to the editor-in-chief of The Economist.

AFTERTHOUGHT: This week, I am continuing an experiment where I have asked two McGill MBAs to join me in reflecting on what was said during the course of the interview. This week, I would like to thank Jean-Pierre Croteau and Eric Lefebvre for their input as I prepared the following comments.

The definition of globalization offered by Mr. Micklethwait might be simple in words - globalization is the way ideas, people, goods and services cross borders - but this simplicity hides intricacies that challenge today's and tomorrow's leaders. The process is not new - some have traced the early beginnings of globalization back to the Roman Empire - and it has been the subject of intense scrutiny in the last three decades; however, the context in which globalization is happening has changed. In my experience, globalization seems to morph off in different directions on a fairly regular basis; this is partly why it fun to study it, because it never stands still. Mr. Micklethwait's belief is that globalization will ultimately result in more than just economic benefits, that it is a driver of human happiness. While we don't challenge the positives of globalization, it is the associated costs and externalities that need to be given greater thought.

What he is underlining are the changes that globalization has brought already, and the structural issues that leaders need to address in defining a new politico-economic framework; whether it is the emergent Washington-Beijing G2 or the more representative but difficult to navigate G20. He mentions the Westernization of emerging economies such as Brazil, India, China and Indonesia as the best option for the future, as well as a daunting trial that awaits the Obama administration. He correctly identifies two areas that Obama needs to address: American justice and finance. These must be addressed if Washington and its supporters want to convince and not coerce these emerging economies to join their ranks. This association between emerging and established economies will probably be achieved under new terms; otherwise, globalization's perception will tend toward neocolonialism. Emerging economies need to open up their markets if they desire foreign direct investment, but the successive crises of the last 20 years have found many of them to be selective in their openness, to protect their national economies, to try to remain self-sufficient and to disarm the superspecialization trap.

Whether they believe globalization fosters convergence or divergence, business and political leaders need to remain aware of the existing and coming changes that come with it. Globalization might be referred to as a concept or idea, but its effects are real and they offer incredible opportunities and potential global problems for savvy leaders, here and abroad.

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