Translated material
Between cholera and plague
Russia needs to think about how to avoid the crises of globalization
Globalization can backfire on the leading powers - those who initiated, propagandized and promoted this very globalization. Commodity expansion on the part of rapidly developing countries, mainly in Southeast Asia, has already covered the markets of the countries of the “golden billion”, causing catastrophic damage to local producers. And hundreds of thousands of migrant workers, who are increasingly less likely to accept the standards of Western society, are undermining the foundations of established life. No one knows how to respond to these challenges of globalization, which is based on the freedom of movement of capital, goods, services and labor.“Maybe there will be an acceptable solution, but now the situation is alarming,” said Ruslan Grinberg, director of the Institute of International Economic and Political Studies of the Russian Academy of Sciences, speaking at the International University in Moscow yesterday. As for Russia, the economist has not yet drawn up similar alarming scenarios, but the problem of the dominance of imports to the detriment of domestic production can also hardly be left without serious attention.
In the second half of the 80s of the last century, it seemed that the civilized world had finally reached the level of a classless society and nothing could stop it from living decorously and richly in conditions of pluralistic democracy, a developed civil society and a social market economy. At the same time, it was believed that the rest of the world would gravitate toward high Western living standards. As Mr. Greenberg said, “the other five should have approached the golden billion.”
However, at the beginning of the 21st century, it turns out that theory has been beaten by practice: globalization has jeopardized the very high Western living standards.
The fact is, explains Ruslan Grinberg, that developing countries have learned to produce goods and services that are not inferior in quality to similar goods and services produced in leading countries. But at the same time, products from China or Vietnam are much cheaper, since they are produced under conditions of much lower social and labor standards. Salaries there are meager, people work 15-16 hours a day, few people are interested in their medical care, etc. It is clear that “south-eastern” goods of comparable quality that freely enter Western markets are bought. And local producers remain out of business. "The footwear industry is a dramatic example of the boomerang of globalization," says Mr. Greenberg. “Almost 100 thousand shoemakers in Western Europe have become unemployed.”
Today in the West they see only two ways to solve the problem, but any of them is dangerous and unpredictable. “We have a choice between cholera and plague,” Ruslan Grinberg quotes a fellow economist from Austria. The first path is associated with a return to protectionist measures, that is, closing the markets of leading countries to goods from developing countries. The second is a decrease in social standards in the countries of the “golden billion” (cuts in salaries, vacation days, etc.). This will lead to a decrease in the standard of living for which the West has been fighting for the last three hundred years.
"I don't know what the choice will be," Mr. Greenberg admits. But at the same time he warns against a return to protectionism. “If the line of returning to protectionist measures wins, it will have a negative impact on developed countries: prices will rise, and there will be less need to care about the quality of goods. The gap between developed and developing countries will also widen. There will be a period of economic fragmentation, as was the case in the 1930s,” he says.
Russia, in Mr. Greenberg’s opinion, looks “more or less decent” against this background, since the lion’s share of government earnings comes from raw materials. “We are fortunate to live in an era of fundamental excess of demand for these goods over supply. This will last a long time. Until they come up with a replacement for gasoline,” says the economist. However, in a world overflowing with goods and services, Russia, focused on raw material exports, faces other troubles. The main thing is loss of intellectual potential. Therefore, Ruslan Grinberg advocates, in particular, for the revival of the domestic aircraft industry. “We need to set priorities and preserve the country with a decent economy, including the production of aircraft,” he is confident. Moreover, there is less and less time left for “building priorities”, since if the current uncertainty continues, in five to six years, as the scientist believes, the country will finally lose its scientific and technical potential. And we will have to start from scratch.