On the one hand, American multinationals have to push harder for liberalization of trade, finance, and immigration, even as the political headwinds grow stronger. If they don’t do this — if they do not champion globalization — no one else will.
But on the other hand, multinationals will have to work with governments to achieve the best balance between openness and security. Business and the public sector can collaborate, for example, on harmonizing important rules of global commerce, such as antitrust regulations or intellectual property rights. Improving the condition of communities in which they operate ought to be an integral feature of businesses’ strategy, not out of altruism, but out of self-interest in promoting an environment that at least lessens the chance of becoming a political target.
For government and business, there is a very compelling case for collaborative action. Without underestimating the life-and-death importance of successfully combating terrorism, we should not forget that economic development and progress — and the economic ties among nations that reinforce them — are at the heart of what most societies care about. A long war against terrorism that ignores or undermines that will be counterproductive and probably unsustainable. If economic conditions do not improve for most of the people of the world, the kind of global capitalism that has allowed industrial nations to prosper will cease to exist.
We are closer to that breaking point than we have been in a long time, given the diversion of efforts toward rooting out terrorism around the world.
A Cooperation Agenda
Government–business collaboration can take many forms, from the grand to the particular. There are, for example, some technical fixes that can help keep the global commercial system from unnecessarily grinding down. CEOs and government officials ought to join forces to streamline enhanced customs inspections, to impose as few obstacles as possible in the global commercial logistical system. They can do this with certain embedded technology that allows government officials to inspect cargo long before it crosses borders.
Executives and officials also should cooperate on security issues relating to the nation’s information infrastructure, an area where national security, commercial interests, and such social concerns as privacy all overlap. The entire policy of homeland security, dependent as it is on taking into account the workings of the national economy that we so frequently take for granted — the system of transportation, communications, the public health infrastructure, etc. — also needs to be a collaborative effort between the public and private sectors.
CEOs and top government officials should put their heads together to develop a strategy for economic development that isn’t simply a series of short-term political payoffs, but builds a solid foundation for market economies to take advantage of the global system. There is a lot to do to strengthen international institutions like the IMF, WTO, and World Bank, as well as to develop new rules for cyberspace and stronger systems for public health — to take the most obvious examples.
Two immediate measures can be enormously helpful. First, because foreign investment in developing countries will fall as companies and institutional investors shy away from all kinds of risk, we need to develop more mechanisms to provide political risk insurance — something that used to exist but was being whittled away as the world seemed to be getting safer and as the role of governments was diminishing in finance. Second, there ought to be an acceleration of efforts to strengthen corporate governance of all kinds — from implementing sounder accounting to protecting investors. In an atmosphere of risk, such mechanisms enhance investment flows, and every little bit will help now.