60 Minutes | Society

India has to go for more globalisation: Fareed Zakaria

Fareed Zakaria.   | Photo Credit: Illustration: R. Rajesh

Famous for his popular CNN show, Fareed Zakaria GPS, and his columns, Fareed Zakaria is a well-known commentator on international affairs. His latest book, Ten Lessons for a Post-Pandemic World, is a no-nonsense reality check on the world after COVID-19 full of candid simplicity and pithy philosophies. In an interview, Zakaria speaks about the the virus, the book and the lessons it offers. Excerpts:

Among the lessons you offer, ‘Globalisation Is Not Dead’ and ‘The World Is Becoming Bipolar’ are two of the most intriguing. Hasn’t COVID-19 delivered a devastating blow to globalisation?

The pandemic is a peculiar thing. It is paradoxical. By nature it’s global, but the effect politically was to make everyone turn inward, more local, more national, in their orientation. But the world we live in now is so deeply interconnected by trade and investment capital flows that it would be unthinkable to unravel all that. The truth is that we need all these desperately.

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First of all, in an emergency like this, the only reason we were able to provide all the equipment and medicines to everybody around the world was that we had global supply chains. We in the U.S. ended up relying on China for a lot of the medical equipment in the first few months. Scientists are able to move much faster on this vaccine because science has now become largely a kind of globalised enterprise.

And the most important reason is that countries are looking for growth, particularly now with the effect of the pandemic. Now, the fastest way to boost your economy is to have a larger market to play in. And that means actually going in the direction of more trade, more openness than less. And, in fact, in the Indian context, you can see that the serious measures Prime Minister Modi has taken have been actually in the direction of liberalisation while he talked a good game about buying local, etc.

The next phases are going to involve more global cooperation than less. The IMF will become more active in the world, not less. There will be a greater push to find ways to forge more free trade agreements. The broad thrust of the direction the world has been going in for hundreds of years and in particular for the last 75 years is not going to be reversed by this pandemic.

There is the understandable natural inclination to want to control and to want to have a greater degree of autonomy because you feel buffeted by these trends. But, look, for India, this idea of local manufacturing, swadeshi products, import-substitution, etc. is not a theoretical issue. That is the India I grew up in. It was a recipe for stagnation and corruption. So I very much hope that India will not try this experiment again. It has to go for more globalisation.

But if the world is going bipolar, between the U.S. and China, won’t that Cold War impact the very idea of globalisation?

There are a lot of concerns about being overly reliant on China. That is not an argument against globalisation, but against being reliant on one single market or country, and it’s more for geopolitical reasons.

Even from a business point of view, one can understand the rationale. You don’t want to put all your eggs in one basket. So you diversify. That has been actually an ongoing process over the last 10 years anyway, as China has become a higher-wage economy. As a result, companies have been starting to diversify to places like India, Bangladesh, Mexico and so on. But that’s still globalisation.

Fareed Zakaria at the World Economic Forum in Davos, Switzerland, January 2013.

Fareed Zakaria at the World Economic Forum in Davos, Switzerland, January 2013.   | Photo Credit: Wiki Commons

China and the U.S. are in a league of their own, economically and militarily. Everyone else is one step below. That is going to define the nature of the new world for the next generation at least.

The question, then, is how do we manage such a world? An open system and an open global economy can easily survive with a certain degree of economic and technological competition. Japan and the US in the 1980s were highly competitive on many of these issues.

But the key is not to allow it to morph into the kind of highly divisive, destructive competition that characterised the U.S. and the Soviet Union. All the things that fuelled the last 40 years of global growth will become much more difficult if there is a new Cold War.

COVID-19 has exposed the chinks in capitalism and its structures. Has capitalism failed?

It’s not that capitalism has failed; the apostles of capitalism have always neglected the fact that capitalism is not enough. Think about the response to the Great Depression, in the 1930s: Franklin Roosevelt understood that in order to save capitalism, you have to put in place measures like unemployment insurance, social security and regulation of labour, and allow unions.

I would argue that the 20th century ended in the triumph of social-democratic capitalism over both socialism and capitalism. In the Western world, we have a genuinely mixed economy; production of wealth and the allocation of resources are done almost entirely by the market, but very strong social protections are put in place using tax money. That model is quite stable and is going to endure.

But the real challenge for the pandemic has been a different issue: the quality of the state. Do you have a competent bureaucracy? The places that turned upside down during the pandemic were all places with weak or dysfunctional states — Belgium, Spain, Italy. But places with strong capable states, such as Germany, Denmark, Taiwan, South Korea, have done well.

But if we look at the financial meltdown of 2008-09, where austerity was the preferred panacea, how can we be optimistic about the world turning towards a mixed economic model now?

My optimism comes from that fact that I think people learn from their mistakes. Most people would now regard the austerity of the European Union and of the IMF, World Bank, etc., after the global financial crisis as a mistake. And it’s clear that the countries that did best after the crisis were the U.S. and China, which were aggressively engaged in both monetary and fiscal stimulus.

So, in the post-COVID-19 world, what we need to do is to spend money, and spend it differently. Allow banks to lend to other kinds of enterprises, and that money will eventually flow down to the average person. We need much more direct support for poor people everywhere.

The writer is editor of number13.in, an explainer portal.

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