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Think local, act global?

/ 05:07 AM January 24, 2020

The global economy, which is characterized by an integration of market economies, is facing fragmentation,” observes the government think tank Philippine Institute for Development Studies (PIDS) in its “Understanding the New Globalization” report. It further notes that disenchantment with globalization has led many large countries to turn inward. But this seeming tendency is undermining the world’s ability to provide for global public goods, or counteract global public “bads,” now so essential in the contemporary world that is the product of the “old” globalization and rapid technological change. What are global public goods, and what are examples of them? We must first distinguish between “public goods” and regular or “private” goods. Two attributes are critical in this distinction: nonrivalness and nonexcludability. A good is “rival” when those consuming it prevent others from doing so. That is, consumers are “rivals” in consuming the same specific good or service. When you buy and enjoy a hamburger or a massage, no one else can consume that same hamburger or massage. But for nonrival goods and services—like street lighting, a nice scenery or national defense—one can enjoy them without keeping others from simultaneously enjoying them as well.

A good or service is “excludable” if it is possible to prevent access by nonpaying consumers. For certain goods or services, this is not possible—street lighting and national defense are again examples—thus are “nonexcludable.” Some nonrival goods can be excludable (economists call them “club goods”); examples are cable TV broadcasts, a cinema movie showing, or even a nice scenery if the vantage point can be fenced off. Some rival goods can be nonexcludable, such as fish stocks in international waters or timber in public forests (called “common goods,” i.e., goods in the commons). A good or service must be both nonrival and nonexcludable to be called a public good.

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Public goods may be local (like street lighting, fire protection services) or national (national defense, monetary management by central banks), but there are also those that are global or international in scope. Contemporary examples are mitigation of climate change, prevention of international terrorism, and control of communicable diseases (with the new coronavirus being a current threat). Other examples are creation and maintenance of transnational infrastructures and facilities, such as the internet, cross-border power and transport networks.

Just as there are “bads” (as opposed to goods) at the local level like pollution, traffic congestion, excessive noise and unhealthy or unsafe food, there have also emerged global public bads. PIDS notes: “While trade and commerce have greatly improved human welfare… greater international trade may contribute to the globalization of pollution. Fake news and untruths are now easier to propagate with the ubiquity of the internet and social media, which may otherwise have been easier to manage with traditional mass media. Cheaper transportation costs have made international travel more accessible, which may facilitate the spread of communicable diseases.” Ample provision of global public goods and counteracting global public bads can only succeed with international cooperation, particularly with governments willingly synchronizing efforts in concerted action toward an agreed common direction.

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It is the likelihood of success in achieving such international cooperation that is now put into question under the “new globalization” trends that undermine previous progress toward greater cross-border cooperation and integration. Heightened protectionism, nationalism, and even isolationism in certain extreme cases hold great appeal to the people who have brought populist leaders of this generation into power. “Think global, act local” became a popular call in past years. But it appears far more difficult to reconcile the current trend to “think local” with the need to “act global,” in an era where providing for global public goods and counteracting global public bads are essential to the very welfare of individual nations.

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TAGS: Global Economy, Philippine Institute for Development Studies, Understanding the New Globalization
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