The Economic Costs of Political Alignment
This week the world celebrated 25th anniversary of the fall of Berlin Wall, an undoubtedly momentous event that signaled that the Cold War, and along with it the half-century economic division of the war, was coming to a precipitous, and some say, fortuitous, end. News media outlets around the world spent pages of prime printed real estate to discuss the implication of the event for the modern world, especially in the context of continued economic disparities across the old East-West German border. The reports made no qualms about highlighting the long painfulness that followed initial euphoria of unification.
The economic consequences of political unification in Germany discussed among these media outlets are made all the more relevant by the fact that the past week also saw the gathering of 21 head of states in the Pacific Rim for the APEC Forum held in Beijing. Through all the diplomatic pageantry, the enduring theme, as was the case for past years in regional forums as such, remained the illusive but increasingly concrete idea of "economic integration through political alignment." The like of Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RCEP) are drawing attentions from all around.
What is particularly amazing, outside the unwieldy acronyms and their accompanying lofty goals, are the genuine political drives of their respective participating member nations. A slew of concluded agreements in the recent days demonstrate that, in these time of economic downturns, political objections to common economic grounds have never been weaker: Sino-Korean FTA, Sino-Russian gas deal, Sino-American climate deal, announcement of FTA of Asia-Pacific (FTAAP) and the New overland/maritime Silk Road initiatives...the list goes on and on. As the case of Cold War's end, the economic is trumping the political.
But as much as the contemporary mainstream continue to argue that maximization of global economic complementarities, institutionalized through written agreements, are good for everyone, there is plenty of room for skepticism. As previously argued in the case of Taiwanese protests, economic integration is bound to bring its set of vocal "losers" who will use their collective political voice to stall and even roll back globalization. But even when the "losers" are appeased through government-led redistribution of wealth to offset damages of economic globalization, there are other risks that can derail popular support for it.
For this, the German unification example presents a powerful illustration. A unified Germany 25 years later, despite lingering pains from unification, has become undoubtedly the economic leader of the European Union, a state that has provided the engine for growth in an organization seemingly perpetually suffering from one economic problem after another. Yet, the German economic dominance has met more outright resentment from fellow Europeans, making the environment at least superficially hostile for the Germans in the short terms, and if anything, more negative repercussions of conflicts in the longer term.
The same can easily be foreseen on the negotiation tables of APEC and Eurasia. Even the least controversial and the perceivedly fairest political alignments have smaller and larger players, ones who can dictate the terms and the rules of the game. Just as is the case for Germans in EU, the economic leaders who provide the funds and means for mutual growth are not destined to be loved, but largely hated and derided. In both cases, at least at first sight, the general populace has put loss of economic independence as a cost that cannot be sufficiently compensated by the benefits of a unified economic community.
If anything, the benefits of the so-called economic integration are highly debatable. National governments may approve free flows of goods, services, and capital without incurring tariffs to reduce their competitiveness, but none has the political will to do the same for labor. Citizens care about dubious concepts of "homogeneous national culture" to the point that they happily choose rejecting pools of highly skilled immigrants over potential changes in demography. This is increasingly true in Europe where immigration is used to fulfill nationalistic means, and will surely be repeatedly in other parts of the world.
And lastly, making the global economic pie does not take away the ultimate issue of he gets the bigger share of the pie. Nations, as people, are greedy creatures. Economic growth in itself is not satisfying if others are growing much faster. This has been true in modern-day eastern Germany, the economic pariahs of southern Europe, and the economic fringes of the Asia Pacific. A win-win situation does not mean everyone wins equally, and objections to the lack of equality there are at times justifiable. Such conflicts are highly inflammatory costs of economic integration. Political alignment can always be sabotaged by them.
The economic consequences of political unification in Germany discussed among these media outlets are made all the more relevant by the fact that the past week also saw the gathering of 21 head of states in the Pacific Rim for the APEC Forum held in Beijing. Through all the diplomatic pageantry, the enduring theme, as was the case for past years in regional forums as such, remained the illusive but increasingly concrete idea of "economic integration through political alignment." The like of Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RCEP) are drawing attentions from all around.
What is particularly amazing, outside the unwieldy acronyms and their accompanying lofty goals, are the genuine political drives of their respective participating member nations. A slew of concluded agreements in the recent days demonstrate that, in these time of economic downturns, political objections to common economic grounds have never been weaker: Sino-Korean FTA, Sino-Russian gas deal, Sino-American climate deal, announcement of FTA of Asia-Pacific (FTAAP) and the New overland/maritime Silk Road initiatives...the list goes on and on. As the case of Cold War's end, the economic is trumping the political.
But as much as the contemporary mainstream continue to argue that maximization of global economic complementarities, institutionalized through written agreements, are good for everyone, there is plenty of room for skepticism. As previously argued in the case of Taiwanese protests, economic integration is bound to bring its set of vocal "losers" who will use their collective political voice to stall and even roll back globalization. But even when the "losers" are appeased through government-led redistribution of wealth to offset damages of economic globalization, there are other risks that can derail popular support for it.
For this, the German unification example presents a powerful illustration. A unified Germany 25 years later, despite lingering pains from unification, has become undoubtedly the economic leader of the European Union, a state that has provided the engine for growth in an organization seemingly perpetually suffering from one economic problem after another. Yet, the German economic dominance has met more outright resentment from fellow Europeans, making the environment at least superficially hostile for the Germans in the short terms, and if anything, more negative repercussions of conflicts in the longer term.
The same can easily be foreseen on the negotiation tables of APEC and Eurasia. Even the least controversial and the perceivedly fairest political alignments have smaller and larger players, ones who can dictate the terms and the rules of the game. Just as is the case for Germans in EU, the economic leaders who provide the funds and means for mutual growth are not destined to be loved, but largely hated and derided. In both cases, at least at first sight, the general populace has put loss of economic independence as a cost that cannot be sufficiently compensated by the benefits of a unified economic community.
If anything, the benefits of the so-called economic integration are highly debatable. National governments may approve free flows of goods, services, and capital without incurring tariffs to reduce their competitiveness, but none has the political will to do the same for labor. Citizens care about dubious concepts of "homogeneous national culture" to the point that they happily choose rejecting pools of highly skilled immigrants over potential changes in demography. This is increasingly true in Europe where immigration is used to fulfill nationalistic means, and will surely be repeatedly in other parts of the world.
And lastly, making the global economic pie does not take away the ultimate issue of he gets the bigger share of the pie. Nations, as people, are greedy creatures. Economic growth in itself is not satisfying if others are growing much faster. This has been true in modern-day eastern Germany, the economic pariahs of southern Europe, and the economic fringes of the Asia Pacific. A win-win situation does not mean everyone wins equally, and objections to the lack of equality there are at times justifiable. Such conflicts are highly inflammatory costs of economic integration. Political alignment can always be sabotaged by them.
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