Poor Choice: Why Globalization Didn’t Create 9/11

This article appeared in the New Republic on November 12, 2001.
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It's not surprising that the loony left blames globalization forthe September 11 attacks. But what's David Held's excuse? Held is aprominent and respected globalization theorist who teaches at theprominent and respected London School of Economics. Yet in a recentarticle published in the online magazine openDemocracy, he opined,"In our global age shaped by the flickering images of televisionand new information systems, the gross inequalities of life chancesfound in many of the world's regions feed a frenzy of anger,hostility and resentment... $(W$)ithout an attempt to anchorglobalisation in meaningful principles of social justice, there canbe no durable solution to the kind of crimes we have just seen."And then there's Robert Kaiser, an associate editor of TheWashington Post. "In the global village," he wrote in September,"the poor know how poor they are, and how much better the rich areliving. The resourceful poor won't accept their status passively,but try to change it. Millions of them have pursued that goal bysneaking into the United States, just as the perpetrators of lastweek's attacks did. They of course belong to a different category:the aggrieved who refuse to swallow their grievances."

Here, then, is the nonhysterical argument for globalization'sculpability. The worldwide spread of market forces has created bothwinners and losers--not just within countries, but among them aswell. The Muslim world is home to many of the losers. And, addinginsult to injury, world-shrinking communications technology ensuresthat those on the bottom are constantly bombarded with images ofthose on top. No wonder they hate us.

It's true, of course, that many countries in the Muslim worldare economic disasters. According to statistics compiled byeconomic historian Angus Maddison for the Organisation for EconomicCo-operation and Development, between 1985 and 1998, average percapita income declined in real terms in Iran, Iraq, Jordan, Qatar,Saudi Arabia, Syria, the United Arab Emirates, and Yemen. Bycontrast, it rose 30 percent in Israel, 50 percent in Uruguay, 90percent in Chile, and more than doubled in China, Thailand, andSouth Korea. Such absolute and relative decline surely feedsfeelings of inadequacy and hopelessness, thus heighteningfanaticism's appeal.

But where the argument falls apart is in blaming globalizationfor Muslim countries' economic woes. For the sad fact is that,while newly liberated market forces have indeed fomented dramaticchanges around the planet (mostly for the better), one place theyhaven't fomented dramatic--or even substantial--change is in theIslamic world. With a few notable exceptions--Turkey, Malaysia,Indonesia, some of the Gulf states--most Muslim countries have keptinternational economic integration at bay. Highly restrictivebarriers to trade and investment choke off the international flowsof goods, services, and capital. Nor has globalization reorderedthese countries internally. Pervasive economic controls stiflecompetition, while the institutional infrastructure on whichmarkets depend remains pathetically underdeveloped. Most Muslimcountries are more or less immune from globalization's creativedestruction. They live in self-imposed exile from the new globaleconomy. In other words, it is not globalization that fuels AlQaeda--but its opposite. For if the challenges of adapting toglobal economic integration are daunting, they pale in comparisonto the frustrations of living in the defunct and discreditedcollectivist past.

Afghanistan, Algeria, Iran, Iraq, Libya, Saudi Arabia, Sudan,Syria, and Yemen--all are under the microscope these days for theirties to Islamist terrorism. Guess what else they have in common?None belongs to the World Trade Organization--which, with 142members, is hardly an exclusive club. And that's just one symptomof their economic disengagement. The Fraser Institute's EconomicFreedom of the World report (co-published by my employer, the CatoInstitute) rates more than 100 countries based on the openness oftheir trade and investment policies. According to the "tradeopenness index" featured in the 2001 report, Pakistan, Bangladesh,Syria, Algeria, and Iran all rank in the bottom quintile ofcountries surveyed. Not a single Arab or South Asian country makesthe top half of the list. (Oman, at 59 out of 109 countries, rankshighest in the region.) Afghanistan, Iraq, Libya, Saudi Arabia,Sudan, and Yemen aren't even included in the report because of alack of reliable data.

While oil does provide an economic link between some MiddleEastern countries and the outside world, most other forms oftransnational commerce barely exist. In Egypt and Sudan, exportsequal around 2 percent of gross domestic product; in Pakistan andBangladesh, it's roughly 3 percent. By comparison, in emergingmarkets Mexico and Thailand, exports exceed 15 percent of GDP. Norare most Muslim countries attracting foreign investment. As of1998, just 2 percent of American direct investment occurred inAfrica and the Middle East, according to the oecd. The numbers aresimilar for the UK, Japan, France, and Germany.

Of course, globalization is about more than simply trade andinvestment. It also means domestic economic liberalization--theworldwide move from state-dominated models of economic developmentto more market-oriented policies--that is, macroeconomicstabilization, privatization of state-owned industries, eliminationof price and entry controls, and reform of legal institutions. And,on this score too, most Muslim countries have insulated themselves.Since independence, collectivism of one stripe or another hasdominated economic policymaking in the Islamic world. In Egypt,Syria, Iraq, and Libya, "Arab socialism" in various permutationswas the guiding ideology; in Iran, Shah Mohammad Reza Pahlavi'sWhite Revolution was followed by the ayatollahs' IslamicRevolution, and in the process government controls over economiclife grew from extensive to sweeping. While the past decade haswitnessed tentative moves by some countries--Egypt, forinstance--toward economic reform, the collectivist legacy remainslargely intact.

Consider two basic indicators of state involvement in thedomestic economy: the relative importance of state-ownedenterprises and the extent of price controls. The Economic Freedomof the World report rates countries on a scale from 0 to 10 withrespect to both criteria: Scores of 6, 8, and 10 indicateincreasingly market-oriented environments, while scores of 4, 2,and 0 identify progressively greater government ownership andcontrol. Out of 13 surveyed countries--Algeria, Bahrain,Bangladesh, Egypt, Iran, Jordan, Kuwait, Morocco, Oman, Pakistan,Syria, Tunisia, and the United Arab Emirates--only one, the UAE,earned solidly promarket scores (6 on state-owned enterprises, 8 onprice controls). Over 80 percent of the scores were 4 andbelow.

Globalization is a messy, disruptive process, but it can'texplain Islamist extremism because it hasn't touched most of theIslamic world. Indeed, that's a big part of the problem. Expandingmarkets may bring turmoil, but they also bring opportunity andhope--qualities in decidedly short supply in many Muslim countries.The once bright and exhilarating promises of centrally plannedmodernization have all long since faded, and no new vision ofprogress has yet taken hold. In that bleak twilight of despair, thetemptation to reject modernity altogether grows ever morealluring.