The International Labor Office recently published a report from its World Commission on the Social Dimension of Globalisation A Fair Globalisation: Creating Opportunities for All. The ILO’s "World Commission" is hubristically titled, as is its assertion that it invited antagonistic opinions to reach its conclusions.
I doubt that if any free trade economist was on the Commission it could have published a single report without including a minority opinion. Like many of the pressure groups that oppose corporations and economic liberalisation on apparently moral grounds, the ILO report wants policy changes to ensure that globalisation becomes "a positive force for all people and all countries," since it believes that at the moment it benefits the elite from the rich world. In particular the ILO Report wants reform at the World Trade Organisation to protect the poor. They draw their conclusions mainly from the alleged increase in inequality between rich and poor countries.
Of course inequality measures are irrelevant and misleading. But the ILO, and all the pressure groups they support, imply that the reason that countries like poor countries like Indonesia grow slower than richer countries like Britain, is because Britain is part of the elite, and distorts the world trade environment in its favour: "the process of globalisation is generating unbalanced outcomes, both within and between countries."
But nowhere does the Report provide a justification for why globalisation has caused poor growth. It just relies on measures of inequality as if they were the cause of all ills. For while wealthy countries continue to grow the Report claims that: "in terms of per capita income growth, only 16 developing countries grew at more than 3 per cent per annum between 1985 and 2000. In contrast, 55 developing countries grew at less than 2 per cent per annum, and of these 23 suffered negative growth." The belief that poor countries are prevented from performing by their rich and powerful counterparts has a long and undistinguished history, but with no intellectual support. Indeed, the Report acknowledges that many problems have nothing to do with international trade or globalisation at all.
Cuba under Castro, Venezuela under Chavez, Iraq under Saddam, North Korea under Kim, Zimbabwe under Mugabe and myriad countries (adding up to the 23 imploding nations identified by the Report) have all failed because they are "dysfunctional states torn apart by civil strife, authoritarian governments of various hues and States with democratic but severe inadequacies in terms of the policies and institutions required to support a well-functioning market economy," says the Report.
The Report fails to explain why China, by opening up to globalisation, has developed so rapidly in the past 25 years. The reason is that China along with the other successful economies have all shared a move towards the market economy, one in which private property rights, free enterprise and competition increasingly took the place of state ownership, planning and protection. They chose, however haltingly, the path of economic liberalisation and international integration.
Perhaps even more importantly is that there are no examples of countries that have risen in the ranks of global living standards while being less open to trade and capital in the 1990s than in the 1960s.
Roger Bate is a visiting fellow at the American Enterprise Institute.