Daniel Hannan: The Conservative case for globalisation in six simple points

Lord Hannan of Kingsclere was a Conservative MEP from 1999 to 2020 and is now President of the Institute for Free Trade.

Let me take up David Gauke’s challenge. “Conservatives”, the former Justice Minister wrote here on Monday, “should make the case for globalisation because it’s the right thing to do”.

Quite. The Gawkster has always been an eloquent supporter of free markets, and I was delighted when he took my advice and rejoined the Conservative Party.

But how to go about it? “Globalist” has become a term of abuse. To people on both sides of the political divide, it suggests pin-striped spivs who want mass immigration, have no empathy for manual workers and feel at home only in Davos. The original meaning of globalisation – extending markets so that we get a wider choice as consumers while specialising more as producers, thereby becoming richer – has been lost. We need to come up with a new word.

Whatever we call it, though, it rests on a number of arguments that, because counter-intuitive, are unpopular. Saying things that are true, but that contradict people’s gut intuitions, is never easy. Let me list some of those things.

The world has become richer as a result of globalisation

Hans Rosling was fond of using bananas to illustrate human beings’ irrational pessimism. He would offer people multiple choice answers about the state of the world. How many kids are vaccinated against measles? What has happened to the poverty rate over the past decade? How many girls complete secondary education?

Invariably, respondents would perform worse than if he had written the answers on bananas and let chimpanzees pick them at random. If you want to see how much healthier and happier we are as direct result of global capitalism, please look at Our World in Data or, even better, at Human Progress.

The biggest benefits have been for the poor

Imagine your grandfather’s grandfather being transported to the home of the richest man on the planet (this is not an original thought-experiment of mine, but I can’t remember who first came up with it). What would he be most surprised by? Not the size of the house or the fact that the owner had a chauffeur or a yacht.

No, what would astonish your time-travelling ancestor would be the fact that touching a switch brought daylight indoors, that twiddling a dial produced clean drinking water, that pushing a lever on a WC took human waste far away – the things, in other words, that are enjoyed by almost everyone. We are, when it comes to the real essentials, more equal than any past generation.

Blue-collar workers have not been left behind

In 2013 two economists, Christoph Lakner and Branko Milanovic, published what became known as the elephant curve. It purported to show that, while globalisation had been good for the rich (the tip of the trunk) and for the global masses (the body of the elephant), there was a dip in between representing the second quintile, roughly corresponding to blue-collar workers in developed countries.

That graph has passed into popular consciousness. Lots of people “know” that globalisation has devastated working-class communities in the West. But it isn’t true.

Yes, if you measure only income, the entry into the global market place of hundreds of millions of workers liberated from communism had some impact on wages. But look at the other side of the equation: being able to buy more for less. More TV channels, a wider and fresher selection of foods, medicines that did not exist 30 years ago, phones that give us more information than an entire government could have done.

In any case, we have a false memory of what factory wages used to be. Johan Norberg has shown that the average full-time car worker in Detroit in the 1950s earned fractionally less than an Amazon warehouse worker today.

Free trade does not destroy jobs

New technologies make some jobs obsolete. Telephones did for telegraphists, email did for typists. But the overall number of jobs keeps growing, as the time freed up by new technologies releases people to invent, make and sell other things.

This process has very little to do with trade and, in any event, cannot be reversed – at least not without a cataclysmic decline in living standards. Once a mechanical digger has been invented, lines of men with shovels become redundant.

It does not matter where the digger was invented or manufactured. The only way of bringing back the men with shovels would be to ban all diggers which, I hope you can see, would leave everyone poorer.

There is nothing special about manufacturing

The idea that working on the production line at a car factory is a more real job than driving a car is intuitive but wrong. The transition from manufacture to services, like the transition from agriculture to manufacture, led to a rise in living standards.

In any case, it is hard to distinguish the two things. Ask yourself, as you read my words on your screen, which bits of the overall product count as goods and which as services.

Imports are good

A trade deficit must be matched by a capital surplus, and vice versa. A foreigner who holds sterling can ultimately do one of only two things with it: buy British exports, or buy assets in Britain. Politicians like to celebrate both inward investment and export successes, and both are indeed good things to the extent that they show a global economy operating properly.

But, by mathematical logic, the more you have of one, the less you will have of the other. Donald Trump’s failure to grasp this point is about to plunge the US into recession.

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I could go on. Self-sufficiency is not the same thing as security of supply. Jobs are a cost, not a benefit. Cheap products are a good thing. You can’t “put people before profits”, because profits have no meaning except as a measure of improving people’s lives. Politicians don’t demonstrate their concern for something by regulating it. Lower tax rates often mean higher tax revenue.

These arguments were never easy to make, because it is human nature to start with our hunches and then reason backwards. That is especially true in our online, vibes-driven age.

But Gauke is right: Conservatives have to make these arguments. Because, as sure as eggs is eggs, the high-spend, high-tax policies that we are currently pursuing will lead to a collapse. We need to prime people now so that, when it happens, they will understand why.