What are the key lessons to be taken from a study of 19th century Trade and Globalisation, for the 21st century?
Well the first is that poor countries can gain tremendously from emigration. By preventing countries from being able to send people overseas, we're making it more difficult for developing countries to catch up with us, in terms of living standards. The second point is that migration and trade, and other dimensions of Globalisation, affect income distribution in a variety of ways in different countries. In the late 19th century there were winners, for example unskilled workers in Ireland benefitted from so many of their compatriots emigrating; wages rose very quickly. On the other hand, European farmers tended to lose, as cheap food produce was imported from the States and the Ukraine for example. There were winners and losers.
The third point is that because there are winners and losers, you get political reactions. You have Governments responding to pressure by putting on tariffs or putting on immigration restrictions. If you want to maintain open markets, you have to be aware that there are winners and losers, and you have to put in place complementary policies supporting the incomes of those who lose, through one mechanism or another. That is what in fact happened in Europe in the 19th century. A lot of today's welfare programmes have their antecedents in that period. You have pension programmes, unemployment benefits programmes coming in, a variety of labour market regulations, protecting workers – and all of these things helped to maintain support for open markets and freer trade. In the context of developing countries, it benefits them to have open trade. If you look at India and China, both are growing quickly because of their exports, but at the same time there are tensions within both countries, which will force them to put in place safety nets etc to keep the whole process going.
You mentioned emigration as one of the lessons of the 19th century: is it essential in terms of developing countries?
In principle there are other elements of Globalisation that help substitute emigration. If you can attract capital, you don't have to send your labour out to foreign shores to work, but one thing we've learnt is that Capital doesn't always go to poor countries in search of cheap labour, in fact it rarely does. It's something that didn't really happen in the 19th Century, and doesn't really happen that much today either.
Ultimately what these countries need is economic growth, and that requires sensible policies at home. There are various things that aren't good for growth: civil Wars, dictatorships that don't guarantee property rights. Countries can't rely on international markets as a panacea for everything, they have to get their own house in order first. It is very clear though that once their house is in order, it's very difficult to grow when rich countries block their exports. I'd probably put, on a realistic political level, more stress on countries being allowed to export goods rather than labour, because there will always be barriers to immigration. If we restrict immigration, we have to look at scrapping things like the common agricultural policy. We have to stop prohibiting these countries from exporting the goods that they are qualified to export.
One of the major differences that we have in contrast to the 19th century is exactly that: we have the emergence of these large trading blocks like the EU and NAFTA.
That's one of the differences; another more relevant difference though is that the biggest country, the most important country in the 19th century Britain, provided pretty much unilaterally, an open market for developing countries. There were fewer obstacles to countries selling raw materials or food or whatever into Britain. Whereas today, the Europeans and Americans are systematically making it difficult for developing countries to grow through trade.
You've studied the relationship between equality/inequality and globalisation. What conclusions have you come to:is globalisation a force for equality or inequality in the end?
Well, the answer to that is that it all depends. It all depends what country, and what dimension of globalisation you want to look at. If you take the migration of unskilled labour, that will boost unskilled wages in poorer countries, which will be good for equality there, but it will lower unskilled wages or raise unskilled unemployment in richer countries – being bad for equality there. So it depends on country and the dimension that you're looking at. If Ireland imports lots of unskilled people it will have one effect, but for example if Ireland imports lots of cheaper skilled labour such as doctors, engineers etc that will have a completely different effect. So the bottom line is that you can't generalise.
Is it difficult as an economist to work in this area, now that the media has taken Globalisation as a buzz word?
No. I don't think so. Economists mostly write for each other, and the fact that the media takes an interest is great – it means people are interested. It's an ideological argument often, with people on the left and the right taking ideological positions, but you don't have to engage with that – our job is to show that the world is more complicated than they make it out to be.
One of the factors for the trade boom of the 19th century was technological innovation. It's arguable that the technological advancements of the 19th century have had a greater impact than those of today
Well, you have to take into account things like air transport, a 20th century invention. It doesn't have an impact on bulk goods like grain, but it makes it quicker to trade in high value goods like mail or people or fresh flowers from Central America. There's the internet that has revolutionised communication. However, the invention of the telegraph in the 19th century probably had a bigger percentage effect. It took 10 days to get a message across the Atlantic before the telegraph, and on the same day afterwards. That's a huge jump. If you think of the world before the railroads, and before steam power on the oceans. I wouldn't want to understate the impact of 20th century technological change, but if you look at the depth of change in the 19th century, it was probably more impressive.