Globalization has become a convenient scapegoat for deeper problems that require more thoughtful policy responses. The real culprits: skill-biased technological development, labor market deregulation, and weak productivity growth – particularly in Europe.
The Misdirected Blame
Populists promise that hemming off from trade and immigration will solve economic problems. Shearing identifies what actually caused the disruption that globalization gets blamed for:
Skill-biased technological development: Technology favoring skilled over unskilled workers, increasing returns to high earners. This happened regardless of trade policy.
Labor market deregulation: 1970s/80s reforms that diminished union power and worker bargaining position. Domestic policy choice, not international trade.
Weak productivity growth: Particularly in Europe over the past 15 years. A failure of investment and innovation, not a consequence of openness.
Why Scapegoating Persists
Blaming globalization is politically convenient because:
– It identifies an external enemy (foreign competition)
– It offers simple solutions (tariffs, border controls)
– It avoids hard domestic policy reforms
– It resonates emotionally with displaced workers
But closing borders won’t reverse technological change, restore union power, or fix productivity problems. The underlying issues remain.
The Honest Diagnosis
Trade created winners and losers. The policy failure was not managing the transition – not providing adequate retraining, adjustment assistance, or social insurance for those displaced. Blaming trade itself mistakes symptom for cause.
Key Takeaway
As workforce transformation analysis shows, the real challenge is adapting to technological change – not retreating from global integration.
Source: The Great Fracturing with Neil Shearing on The Business Engineer
