It is not the first time that globalization has backtracked. Economic historian Harold James has identified seven globalization crises since 1850, some of them severe. While each of these has led to a new phase of globalization, he is by no means certain that past winners of globalization will also be future winners.
As a regular “export world champion”, Germany has so far been a globalization winner. German politicians have at least verbally acknowledged that maintaining this position is a challenge.
There is a lot of talk about reducing dependencies on China in particular and bringing production of critical products back to Europe and Germany. The subsidies are intended to compensate for the sometimes considerable cost disadvantages of local production compared to imports.
No less challenging is guaranteeing access to energy and critical raw materials: given the Chinese strategy of establishing a monopoly in some areas, it will not only be expensive to develop other sources, but it will also take years.
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Economic essays warn in their latest report rightly consistent action. However, given the prevailing attitude in Germany of not wanting to use local deposits – from natural gas to lithium – it is likely that dependence on other countries will remain and will increasingly prove to be a competitive disadvantage.
After all, the Bundestag has finally ratified the free trade agreement with Canada. Further deals, especially with the US, must quickly follow, because with whom else should we trade freely in a deglobalized world if not with countries that share our values?
>>Read here: Signs of life from a trading powerhouse: How the traffic light, of all things, got the Ceta deal through
At the same time, we must recognize that it will not be possible for the time being to implement our understanding of human rights globally. We will have to continue to trade with countries that have different values from ours, as the recent gas deal with Qatar underlines. Other states are much more pragmatic, as the USA and France are demonstrating towards Venezuela. This need not be a disadvantage, as exchanging goods reduces costs the risk of military conflicts.
Measures such as free trade agreements, a secure supply of raw materials and a reduction in dependencies but not enough to ensure prosperity in Germany. To generate high long-term free trade incomes, you need to belong to the top team in high-margin sustainable business areas.
According to expert opinions, we have a clear lead only in traditional technologies and lag behind in future technologies such as Internet of Things, Big Data and Artificial Intelligence.
More investment in education is needed
At the same time, the risks for traditional areas are clear. The automotive industry is in the midst of a fundamental change and the concern that considerable production capacity will be lost in Germany is justified. In other sectors, too, we weren’t under pressure until after the energy cost shock.
>>Read here: Buyers’ strike: Will German car dealerships soon be in crisis?
If we also want to be protagonists in the next phase of globalization, it is urgent to definitively reduce energy costs and, above all, invest more in education, research and innovation.
There is no lack of speeches by politicians on this issue, but there is a lack of actions. That according to data from the Ifo Institute almost one in four young people in Germany leaves school without basic skills is not only a crime against the future generation, but also a first-class warning sign.
If politicians are serious about their desire to export Western values to the world, they must ensure that we remain a strong trading nation. Economic strength is the best basis for human rights policy. It would be nice if the traffic light recognized this.
Daniel Stelter is the founder of the discussion forum beyond the obvious, specializing in strategy and macroeconomics, as well as a management consultant and author. Every Sunday he gets up www.think-bto.com his online podcast.
Moreover: Supply Chain Risk – How the lack of raw materials is slowing down the German automotive industry
