Is Covid-19 proof that globalisation needs to be curbed?


  • Focus
  • Sunday, 03 May 2020

People might blame their lack of money on globalisation nowadays but this commentator maintains that it is debt that causes problems. — Filepic/AFP

The Covid-19 pandemic continues to spread worldwide. As at May 2, the number of infections reached more than three million and the death toll was more than 200,000. The fact that the outbreak spread so quickly from Wuhan in China – it was first reported there in December 2019 – to the rest of the world has led some people to argue that it proves that globalisation is the main culprit behind the spread of the disease and should therefore be curbed.

There are problems with this proposition.

Globalisation is commonly understood to refer to the internationalisation of human activities on a large scale, especially in economics and trade. But it’s now new. International trade has been taking place for centuries, of course. Marco Polo travelled from Italy to China in the 13th century to conduct trade, for instance, while Admiral Zheng He is said to have sailed from China to the African continent in the 15th century for the same reason. Trade between the Middle East and South-East Asia has been occurring for centuries too.

In other words, international trade that has been going on since time immemorial and cannot be stopped because humans have long realised its benefits. Without international trade, Malaysians would not be able to enjoy, for instance, fruits such as apples, dates and grapes from other climes. Similarly, we would not be able to use technology invented elsewhere, such as computers and smartphones, if there is no international trade, or globalisation.

Moreover, if we argue that all transmissions of contagious diseases can be prevented by eradicating international interactions between human beings permanently, then by right we should prevent any form of human interaction even at local levels to prevent the spread diseases. But we know that is impractical unless it is for a very limited time. It simply isn’t in human nature to live without interacting with one another.

It is clear that eradicating globalisation is simply not logical because it is contrary to human nature. But why do some people have such negative impressions of globalisation despite it’s long history and many benefits?

The answer is that, nowadays, people feel that many of their economic problems are caused by foreigners or foreign companies. For example, in the retail sector, multinational hypermarkets are seen as a threat to local retailers, especially the small shops. In employment, workers from other countries seemingly narrow opportunities for locals.

Negative sentiment against foreigners is not unique to Malaysia. In the United States, negativity towards foreigners has become very strong after companies in various sectors closed down, unable to compete internationally. Many Americans also feel immigrants affect employment opportunities for locals. That is one reason why Americans elected Donald Trump as president: A promise to protect Americans from “foreign threats” was his main campaign message.

In Malaysia, some people resent Chinese visitors not only because they associate them with Covid-19 but also for displacing locals in places such as Penang and Johor Baru. Others are very negative towards migrant workers who they feel are taking away jobs and business opportunities. Such sentiments are prompted by the economic problems people are facing. Nowadays, many in the lower income group don’t make enough to sustain their families. Those who do not have jobs find it frustrating to see employers hiring foreigners willing to work for less pay.

But the key factor in their problems is not foreigners but the economic system that constantly oppresses the lower income group, especially less skilled workers. They are the first group to be dismissed or replaced by foreign workers if their companies face financial difficulties.

People may be unaware that the financial problems faced by companies everywhere in the world are the result of an excessive dependence on debt provided by the banking industry.

As a result of the operation and expansion of the banking industry, many companies have borrowed money (gone into debt) to grow in size and then compete mercilessly with one another. Because banks can easily lend money (since money is no longer in the form of physical gold and silver but rather mere electronic records of loans), the banking industry has managed to provide huge loans, especially to large companies. This is why companies are becoming larger and are able to extend operations beyond the shores of their own countries.

As a result, many large companies share the same sectors and they will then borrow huge, and often times excessive, amounts of money from the banking industry, leading to even more extremely intense competition.

The situation is akin to intense competition among steroid-laden athletes. Although steroids can improve athletes’ performances, we also know that in the long run athletes who use steroids will have many health problems and may even die from using them. In the business world, funds obtained from banks are steroids that help to boost business performance and size. But the high indebtedness will cause many problems in the long run. These problems will become more serious in the face of the current economic downturn caused by the Covid-19 pandemic.

Debts are a financial burden that will put pressure on management to reduce operating costs, including by lowering wages and salaries to a minimum. Another alternative is to hire foreign workers because they usually do not have families with them and are willing to work for lower wages compared with locals who have families and more commitments. As a result, these foreign workers become a serious threat to the employment opportunities of locals.

All of this has made locals very negative towards foreigners, as if they are the cause of all the problems when in actual case the root of the problem is an economy that is overly reliant on debt. As economic problems get worse following the Covid-19 outbreak and the movement control order (MCO) measures taken by the government to control it, anger towards foreigners will be further exacerbated.

The long-term solution to these problems are not the ones Trump is advocating in the United States, which is to expel foreign nationals or block imports. Those moves are likely to cause further problems, as the absence of foreign, low-cost labour will make the cost of wages soar for most companies. In addition, restricting the import of foreign products, especially from low-cost countries, will also increase the prices of goods in stores.

The real long-term solution is to change the nature of the economic system by making it less reliant on debt provided by the banking industry. Equity funding should be further encouraged to supplant debt. Society must be educated to realise that as long as the banking industry continues to expand, problems will not be resolved and social and economic misery will always be present, especially among the lower income group of people.

Without this awareness, people will always be confused and mistakenly resent parties that are not the main cause of their problems. The attitude of hating foreigners just because they are foreigners is not only wrong in terms of facts but also wrong from religious and humanitarian perspectives. This xenophobic attitude must be stopped before it becomes uncontrollable and leads to violence.

Ultimately, the negative attitude towards globalisation is not only misguided but also detrimental to all parties, apart from not having any religious or humanitarian basis. On the other hand, a negative attitude towards debt does have a basis in religion and common sense.


Mohd Nazari Ismail is a professor in Universiti Malaya’s Faculty of Business and Accounting.

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migrant labour , xenophobia , banking system , debt

   

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