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Saving Globalization: Chile's Lagos Says One Dogma Can't Fit All Nations

Former Chilean president says political leaders need to figure out how to make trade fair

Globalization is under fire in some developed economies. But in parts of the Americas voters are embracing leaders looking to deepen integration and trade. Bloomberg Benchmark will publish a series of conversations with regional thought-leaders on the topic of globalization. We start with Ricardo Lagos, the first left-leaning president of Chile to be elected after military dictator Augusto Pinochet left office in 1990. Bloomberg's David Biller conducted the interview, which has been condensed.

What is the greatest challenge for leaders in Latin America and Chile promoting free trade now?

Globalization is here to stay and will be the 21st century reality, but doesn’t benefit every sector equally. As such, globalization has to have certain rules on an international level, but also globalization obliges every country in particular to ensure benefits reach all.

You are from the PPD party, which came from the Socialist party, but you signed several free trade agreements during your presidency. Why is it that Chile has such a fundamentally different view towards globalization than the rest of the region? Is that a product of the nation's size?

I'll refer to a phrase of Mandela, who said globalization is like winter. We know it’s coming. What you have to do is prepare and have dry firewood and also shelter. Facing this phenomenon, there are many different reactions, just as every trade agreement negotiation is different. If you're a big country, like Brazil, you defend the big internal market you have. When you're a small country like Chile, what we have to defend is very small. So it isn't true that one size fits all. It depends on every country. Chile decided to open itself to the world.

What is the optimal way for countries to handle immigration policy in a globalized world, particularly as humanitarian crises – like, perhaps Venezuela could become – provoke waves of refugees?

It can't be that everything is globalized except the right of a human being to change his residence. What’s happening in Europe is a result of the drama of Syria and the Middle East, and the others we know. How many Europeans that couldn't eat in the 19th century did Europe send to America? That's sometimes forgotten.

 

There's a click and you send billions of dollars from one country to another. If you attempt to treat the migratory phenomenon like an issue of domestic policy, you wind up building walls. 

What is the best way to distribute gains to the lowest social classes without deficit spending?

Distribution of revenue as measured by the Gini coefficient* in OECD countries before taxes averages 0.48 and after taxes is 0.32. In Latin America, there’s no difference before and after taxes. So inequality has to be significantly different after taxes versus before. There are tax systems that aren’t in accordance with the most elemental norms of a good tax system. And those of us who are presidents know how hard it is to broach this topic.

It's not about repeating the errors of the European nations that spend in excess. But yes, I think, there are measures. Of course, in Europe, why is there this complaint about migrants? Because they say these migrants will have access to the health system that we who live here pay for. But also migrants often allow them to resolve the demographic issue.

What is your favorite film that represents the success or failure of globalization and why?

The big topic of globalization is that it tends to homogenize tastes, cultural systems. How can countries defend their own cultural identities? The issue is very complex. Bollywood of India has a lot to do with that.

*The Gini coefficient is a measure of inequality with 1 being the most unequal and zero representing perfect equality.

 

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