1347 was a lousy year for Globalism. 670 years later, we are having the same argument.
The Hundred Years War was a “melee of din and disorder” according to historian Simon Schama. England and France were bickering over disputed land dating back to William the Conqueror. The world’s first global credit meltdown occurred when Genoese bankers gambled on good times, which never came. Angry depositors thanked them by shattering the benches where the bankers sat. The Italian phrase for this was banca rotta, or “broken bench,” which gave us our modern term, ‘bankruptcy.’
Just when Middle Agers thought things couldn’t get any worse, in 1347 they did. Enterprising Mongols turned global entrepreneurs arrived in Sicily aboard 12 ships laden with leathers and spice. There would be a stowaway on board as well, a strain of virulent flea infested in the coats of the ship’s rats. As the ships pulled into port it became obvious something was wrong. Most of the sailors were dead. The Sicilians called it the ‘black death’ because the ships sailed from the Black Sea. The infection coursed through the local population before it spread widely, killing as much as 35 percent of the known world.
In this manner, the 14th Century Bubonic Plague (from which we get a child’s lament of ‘booboo’) gave birth to the world’s first anti-globalism outcry. In their ignorance, people believed it was a punishment for excesses including wealth, sexual mores, heretical beliefs. Purging society of anything smacking of elitism or globalism was the answer and brought about changes in behavior from the rebirth of religious fanaticism to the massacre of foreign ethnic minorities. Although even a crude diagnosis could have linked the problem to sanitation and population density, the blame was placed ultimately, of course, on the business of global trade.
If you were born in the medieval era (Latin for “Middle Ages”), this was not an entirely absurd reaction. Without anything resembling science, the sudden appearance of mayhem, death, the total destruction of villages, quarantines on a massive scale, and a clear warning to avoid foreign goods aboard ships — well, like the plague — people acted first and thought second.
While we don’t worry about the plague any longer (there are a few hundred reported cases a year, however), anti-globalism ignorance continues to plague us.
When In Doubt, We Doubt Business
Not much has changed, according to Joseph E. Stiglitz, professor of economics at Columbia University and former chief economist of the World Bank. He writes in Globalization and Its Discontents, “International bureaucrats — the faceless symbols of the world economic order — are under attack everywhere. . . . Virtually every major meeting of the International Monetary Fund, the World Bank, and the World Trade Organization is now the scene of conflict and turmoil.”
We have another full blown Globalism crisis on our hands today. A glance at the tweet feed of an ardent Donald Trump or Bernie Sanders supporter will find one theme in common. They are virulent anti-globalism activists. Blame for most of our economic ills including income inequality, massive underemployment in the United States heartland, environmental distress from climate change to overdevelopment, are all attributed to global business. Ignorance plays a leading role, once again.
Globalism Needs To Prove Itself
Just as those that perished in the plague would be hard pressed to recognize the benefits of global trade, people similarly fail to understand the logic of better times in some distant future or foreign country in return for losing jobs in their own villages today. Because Globalism’s outcomes are inconsistent and winners and losers can appear like lottery draws, it is hard for the average non-economist to cozy up to global business. Unlike famine, unemployment, outsourcing, downsizing, contamination, and child labor, Globalism has no face, certainly not a cute one, and that gives it a world class perception problem. Nationalism is offered in its place, ‘let’s take care of our own first’ and it is increasingly hard for business to argue with, which explains factories waltzing back to the United States from Mexico and Asia.
House Minority Leader Nance Pelosi, the archbishop of the Democratic left, recently made the following statement to her Party stalwarts: “What we want is a better connection of our message to…a plan that will create good-paying jobs in America’s communities.”
It does not take a political science Ph.D. to parse this statement. The language is code for ‘America first’. The message to her colleagues is, we will be measured by our ability to create American jobs, and Globalism can take a hike.
Don’t Leave Out The Good Parts
The United States is the world’s fourth most globalized country, behind Singapore, Switzerland, and Ireland, all countries known for peaceable policies and modern economies. These plaudits are more likely to appeal to the readers of Foreign Affairs Quarterly than they are to the average coupon clipper in Saginaw. Misleading society about the pros and cons of global trade is only part of our collective failure. The other is to assure the world that everyone will get a chance, and naturally, to create a safety net for those who for whatever reason don’t.
Asynchronicity is Globalism’s main problem. It is like a bank that charges you interest before offering a loan because it does not lift all boats at the same time. But economies with more emphasis on globalism tend to support accountability in the private and public sectors. These nations are more likely to maintain courts that recognize property rights and enforce the rule of law. Their governments are less corrupt. Women and children do better. Education thrives, and quality of life improves. They declare fewer wars. Terrorism does not originate there.
Business Needs Retraining
Business is global in an irrevocable way. The S&P 500, which represents the largest companies in the United States, generates 48% of its revenue overseas. By definition, anything that attacks globalism is attacking American business. That is why we must take great care not to enter into a trade war with the rest of the world, a habit that we fell into during the 1930’s with the Smoot-Hawley Tariff act, which ignited the Great Depression.
The solution today isn’t to de-globalize any more than it was for the Medieval Italians. What would fix globalization is more effective leadership that does global the right way this time. Let’s start by developing a new set of skills and sensitivities wired to anticipate disconnects and discontents. As GE’s Jeff Immelt says, “We tend to think of globalization as a philosophy, but it is much more about what you do on the ground. Success requires hundreds of little things, and decisions made with a local context.” (for more from Jeff Immelt, see our interview).
Recognize that being global is a commitment to driving profits in the long run but a responsibility to deliver measurable, practical value in the early going. Don’t close your factory in one location and open in another just because your CFO says the dollar/peso ratio is favorable. You are making a commitment to someone’s life in that region, and just as plainly, in the region you depart. You can’t simply look at a spreadsheet and understand what Immelt calls the facts on the ground. These are lives you are changing. Start thinking like an entrepreneur not like a financier.
Think Global, Act Local.
Harvard’s Ted Levitt wrote the pithy tagline above in a 1983 HBR article, and it is a mantra for global companies that want to be successful around the world.
The image above is of Richard Adkerson, chief executive of global mining giant Freeport-McMoRan, with his employees and their families at the time the company was operating in the Democratic Republic of the Congo, and is symbolic of Levitt’s instruction. Adkerson commented to me in our interview that when working with indigenous people, the company has to reach further than the fine print of their agreement with host governments. The company doesn’t just mine for copper, it brings clean water, education, HIV vaccines to the region while making environmental safety an overriding business concern.
In Adkerson’s terms, “We’ve learned that while we have to adhere to the laws and the terms of our arrangements, we can’t turn a blind eye to the local communities. We have to go beyond the terms of our contract. Take a country that has such a desperate history as the Democratic Republic of Congo — 65 million people with a $14 billion GNP. We had 8,000 people working for us, 35 villages that we brought fresh water to, we dealt with malaria and HIV-AIDS in effective ways. This aspect is a great satisfaction in our work.”
The implication is a simple one: business needs to be retrained for a new more enlightened form of globalization. Ultimately, ensuring that the enterprise is smart, sustainable, and responsible over the long haul is the best, most practical way to fulfill Levitt’s thesis of “think global, act local”.
Even the plague had a bright side, at least for survivors.
Wages and opportunities rose for the able-bodied including women, who now were given the chance to learn new skills in a scarce labor environment. Medieval overlords, while not exactly holding 360 feedback sessions, made efforts to be more congenial, and indentured servitude started to vanish. People left declining villages to find better opportunities, and so language and culture were spread and society began to homogenize, skills became transportable and the resume’ took the place of family connections. Small, poor farms and estates were deeded by the deceased to the few remaining inheritors, increasing the wealth of commoners and nobles alike. These changed circumstances set the stage for the Renaissance, the flourishing of science and global trade, and ultimately our modern world.
* For anyone interested in the history of the plague and its effect on the modern world, I recommend Simon Schama’s History of Britain, volume I.
Jeff Cunningham is a global leadership advocate, which he calls the most valuable natural resource in the world.
He is a Professor at ASU’s Thunderbird School of Global Management and was the former publisher of Forbes Magazine, an internet CEO and venture capital partner.
He is a chronicler of iconic leaders. As an interviewer/host, he created a YouTube interview series now co-produced by @Thunderbird, Iconic Voices, featuring mega moguls like Warren Buffett to Jeff Immelt at IconicVoices.TV. His articles are posted to LinkedIn and Medium via TheArtofLeaders.com.
His career experience includes publisher of Forbes Magazine; founder of Directorship Magazine; CEO of Zip2 (founded by Elon Musk), Myway.com, and CareerTrack.com; venture partner with Schroders. He serves as a trustee of the McCain Institute and previously as a trustee of CSIS and Middle East Institute, and as an advisor to the Nobel Peace Prize Committee.
He has also been a board director of 10 public companies.