OZY | March 18, 2014
Interview with Carlos Watson
Parag Khanna has some trouble telling you what he does, so when we asked, we felt a little bad for replicating one of those embarrassing cocktail party moments in real life. But it’s true that it’s hard to say, precisely. The best-selling author, globalization analyst, senior fellow at the New America Foundation, and self-described “ideas entrepreneur” has lived in some of the most global cities on earth, from Dubai to London to Singapore. He may be the next Tom Friedman.
Titles aside, to us, he’s good proof that being nerdy pays off. Khanna might have spent his life bopping around think tanks but for a stroke of happenstance in 2007, when General Stanley McChrystal called him up to help work on black ops in Iraq and Afghanistan. Khanna became McChrystal’s right-hand researcher. Which is a pretty great lesson in teeth-cutting and the sharp edges of globalization. OZY nerded out with Khanna, who spoke to us from Singapore (duh) about some alternate vocabulary to the whole flattening-world thing; how a new kind of passport might have prevented the Malaysian airplane debacle; and his Bollywood fanboy status.
You’ve taken popular notions of globalization to a new place — some might call it the logical extension of those ideas. What’s up next on your radar, and the radar of others who pay attention to how globalization manifests?
There are these new kinds of companies I’m paying an increasing amount of attention to. Metanational companies, very different from multinationals — for instance, commodities traders; stateless corporations, basically. They have some obviously nominal physical presence, but mostly what they do is play markets. They don’t own physical assets so much as control supply chains. A number of technology companies are metanationals — the more they distribute their R&D, their workforce, the distribution of their revenues. Once they balance out their global footprint, they sort of de-Americanize; they become metanationals as well. In really every single area, you’ve got these companies that are becoming effectively stateless.
What does decentralization mean for markets?
I continue to remain fascinated by diffusion of power, even while everyone is talking about the great China story. There are more and more regional institutions and clusters, for example. So it’s a very important geopolitical trend that I look at really carefully. I’ve been shocked at the pessimism about emerging markets, because it ignores so much. That reflects a view of only looking at short-term portfolio capital. It misses how much more liquidity there is in sovereign and corporate bond markets in so many parts of the world. Sure, if you’re in Turkey and you have just purely credit-fueled consumption, then you are going to hit a wall. If you’re in Indonesia, which has massive short-term U.S. dollar debt exposure, you’re going to be in trouble. Or if you’re Ukraine, which may wind up get carved up by Russia, your economy is going to take a hit. But by and large, emerging markets are way more resilient than what people appreciate.
So that’s the private sector. What about for governance? What’s the most important impact globalization will have on the public sector?
Cities are increasingly not only, obviously, centers of the world economy and innovation and demographics — but increasingly cities really run their own diplomacy. They really have their own international trade and economic relations. I look at this a couple of ways. One is that cities have now seen security issues like the Mumbai terrorist attacks and the Boston bombing, and they realize that they need to have their own militias in some way, and they are working on negotiating building that capacity. In the same way that New York City has the ability to have in a way a more or less provincial or urban police — not a police force — but almost like a military unit, because they really can’t trust their federal governments to provide for their security.
So what does that mean for geopolitics, and, dare we say it, world order?
Well, one of the things that I’m writing about increasingly is what I have called “the Great Dilution” — the end of the nation-state from a demographic standpoint. The nation-state is obviously a centuries-old European idea, but it’s in precisely [old Europe] where the demographic balance is shifting so much that they are gradually ceasing to be nation-states…. And that’s precisely because the wealthier countries are, the more they have lower fertility rates. And more and more they wind up needing immigration.
Combine that with the extension of the European Union, which is letting in people from within Europe and outside of Europe — Arabs, Slavs, Turks, Africans, South Asians and others — and, well, the political complexion is changing. Germany has a Vietnamese minister of health; Finland has its first Kenyan member of parliament. And you’ve got Turks and Romanians, and Bulgarians and so forth comprising, or growing single digits of their percentage of the populations of Italy, France and other countries. Dilution is a global phenomenon, and it’s really challenging politics at the time when there’s economic austerity and constraints. There is good potential for fighting over spoils among ethnic communities that are competing for a pie that is not growing as fast as it used to grow. What’s interesting to me is that it’s on that city level, not just the national level, because there are cities that are so diverse and you really can’t say that they belong to one place … New York is one; London is another obvious one — there, one city of 10 million people subsidizes the whole country of 50 million people in the U.K. And of course, Dubai and Singapore and Toronto, the three cities with the highest percentage of foreign-born residents in the world, and the largest number of non-citizen residents.
Which gives rise to a whole host of policy questions…
Yes. These governments have to have a whole other model of what are the rights and obligations, the duties, the expectations of the people who live here — of residence? And how do we create a different scale for that? Does a passport matter, or are we now at some entirely other kind of sense of belonging? You can explain so much of politics today by looking at this great dilution.
And you have a specific answer to that?
Well, I’m thinking of an idea of a global passport that sort of came back into my head the other day because of this tragic Malaysian airplane disappearance. Let’s just assume for a minute that it was in fact a hijacking, in which case you may have had two [hijackers] on European passports. Europeans can travel anywhere they want, visa-free more or less. Which means that the passport is not good enough information. The idea that a European passport can be thought of as this form of gold-standard identification — well, that’s not that true because you really need to know more about the person than just their nationality. Here, you may have had two [legally European] individuals who — let’s assume again for the sake of the argument — were radical Islamist of Malaysian origin or Thai origin from the Muslim region of southern Thailand.
Most people in the world will be willing to go for this idea of a global passport because most people don’t come from Europe or from the U.S. or Singapore or Canada, which are the nations with the passports that allow you the most visa-free entry around the world.
My motivations for this idea had more to do with the mobility of talent coming from a Third World, whose passports don’t allow them the kind of mobility that they deserve. But this plane crash becomes yet another reason for precisely that. There’s a security standpoint. There was once this notion that, “Oh, the person is French, so let’s let them in, no problem, no visa required.” Maybe that won’t be the case anymore. Because what if… the person may be French, but what if he’s an Algerian guerrilla commander who got French citizenship? We’re going to need to individualize identity, which, in principle, is a beautiful thing. It’s this idea that our identity is not institutionally constrained or dictated by what country we happen to have been born in, but rather we can be treated and respected and identified as individuals.