Globalization - Boom to Bust to War?

Globalization is an abstract notion, a construct of words and logic.  Like many abstract ideas it is sometimes difficult to judge the value of the notion in the swirling complexity of reality.  

Globalization at its core is rooted in the idea of free trade.  In theory if everyone could simply trade freely across borders we would all be better off.   The different circumstances of people around the world would allow everyone to make a living doing what their circumstances allow them to do most efficiently.

Reality keeps getting in the way.  Since the beginning of the Industrial Revolution the world economy has gone through repeated burst of globalization, which lead to aggravated income inequality, which leads to Nationalism as dissatisfied populations turn to leaders willing to pretend other groups are the problem, which leads to war or to idealistic communist notions that in the past have become the most abusive governments in the Modern era.

As an abstract idea it has just enough truth in it to make it very appealing to folks (like me) who live in a world where logic is relied upon because it is so time consuming and difficult to analyze the complex experiences we find in history.

Now I have lived through a big part of a globalization cycle.  I was born with the world starting over after the destruction of WW II (the cataclysmic end of the last big globalization cycle).  For the first five decades of my life the world was driven by ever expanding globalization ambitions.  Now, to the bewilderment of believers in globalization, we find ourselves in world at war with itself over religious difference internationally, and the most economically powerful western democracies are sinking into populist nationalism.

The theory of globalization is probably correct but incomplete, which has caused us to neglect much in the implementation.  The lesson of history is that globalization will eventually self destruct without focusing on two fundamental related motivational problems that trigger a "race to the bottom" - that will undermine support for globalization in the long term:

1.  The inability to recognize and control excessive disparities in income.
Jurisdictions buying into the notion "the winner takes all the spoils" create an underclass that will gradually become less and less attached to the existing status quo and eventually revolt (unless ruthlessly subjegated).

2.  The lack of a worldwide tax scheme.  Without a universal tax scheme powerful business interests use their influence and power to locate in the most tax friendly jurisdictions.  To attract the business jurisdictions keep taxes low, which limits their ability to provide much of their population with a decent standard of living.  This is great for businesses big enough to go where they get the best deal, and for the upper crust of society who benefit from those business.  But it undermines the economic situation of those in society don't own a piece of those businesses.

It also undermines the economic competitiveness of countries that aspire to provide for their population, since often their biggest businesses may move big parts of their operations to other jurisdictions not so concerned about providing for their population.  

Without a greater attention to income disparities and universal scheme of taxation stability and growth in the economies of the developed western democracies will be difficult to maintain.