Friday, December 08, 2006

From high above the ground: Stephen Roach on Globalization

Picture a bright blue ball just spinning, spinning free
Dizzy with eternity.
Paint it with a skin of sky, brush in some clouds and sea
Call it home for you and me.
A peaceful place or so it looks from space
A closer look reveals the human race.
Full of hope, full of grace, is the human face.
But afraid, we may lay our home to waste.
There's a fear down here we can't forget
Hasn't got a name just yet
Always awake, always around
Singing ashes, ashes all fall down.
John Perry Barlow

I can remember the first time I took a round-the-world business trip: business class seats, corporate charge card, first class accommodations, great meals, drinks in the evening and lots of meetings, passing of business cards and smiling.

It's a great way to do business.

But it's a horrible way to develop views on "the economy."

Ideas like globalization seem great while reading at 30,000ft with a nice cocktail, just served by an attentive stewardess, on the arm of your business class seat. I too was as enthralled with the idea as Stephen Roach seems to be when I was jet setting around.

Consider this passage from his latest report, Global Lessons: Notwithstanding the jet-lag and sleep deprivation, there’s nothing like the sheer exhilaration of peering into the inner sanctum of globalization. The more I travel the world, the less convinced I am that our “win-win” theories do this mega-trend justice. Nor do I believe that we should measure progress on the road to globalization by fixating on the quantitative metrics of surging cross-border flows of trade, capital, and information. In the end, globalization is more about the assimilation of shared values of a still very diverse world.

nothing like the sheer exhilaration of peering into the inner sanctum of globalization. And he's right. For people in his business, he is at the top, like a major league baseball player who just had his name called as a starter in the World Series.

Unlike baseball, however, which seeks only to entertain, these businessmen are, in theory at least, supposed to make the world a better place for the many. Sadly, it seems to me, from reading this and other panegyrics of his on globalization, that the beneficial end result of this incomplete experiment is assumed, which is usually a poor tactic when one is doing something new, and poorer still when it has been tried and failed.

Despite the facts of the last attempt, of which he is aware, Mr. Roach seems somewhat surprised at, in his words: the persistence of “localization” -- nations that remain more caught up in self-interest rather than in the collective benefits of an integrated global economy and world financial markets.

How foolish of national leaders to worry about the people in their nation at the expense of my jet-setting, er, um....I mean, the collective benefits of an integrated global economy.

In my view, these arguments of global utopia seemed more reasonable a century ago, before it had been tried and failed, disastrously. Perhaps he is right, but the only data we have suggests otherwise.

Einstein famously defined insanity as doing the same things and expecting different results. As trade tensions rise, military conflicts emerge and imbalances mount, the current experiment seems to me to be following a familiar path.

Perhaps this is tough to see from high above the ground.