Globalisation creates losers, but studies show that it creates more wealth then it destroys. The trouble is that perhaps the gains enjoyed by the winners have not trickled down to benefit as many people as they could. And that is now becoming dangerous.
In an interview with NBC Television, Donald Trump said that he wanted to levy taxes on goods produced by US companies of between 15% and 35% if they move production to outside of the United States.
He also described the World Trade Organisation (WTO) as a disaster. When told by his interviewer, Chuck Todd that his ideas on taxes would not go down well with the WTO he said: “Then we’re going to renegotiate or we’re going to pull out.”
According to the US Peterson Institute, deeper engagement since World War Two, caused by trade agreements, and improvements in transportation and communication technologies has increased US GDP per capita by $10,000.
But there might be a wider benefit from international trade and globalisation, it promotes peace.
Consider the last great phase of protectionism. In the 1930s, a phase of global protectionism was kicked off by the US when it passed The Smoot-Hawley-Act, which imposed tariffs on 20,000 goods imported into the US. This Act did not cause the US Great Depression, rather it was a reaction to it. But it surely made things much worse. Neither did the rise in global protectionism lead to World War Two, but it didn’t help. The fact is, countries are less likely to go to war if they rely on trading with each other.