In part I for this week’s meeting, I explained a little about what globalization is. I emphasized that the particular type of globalization we have was not inevitable; it was a choice that necessarily involved a particular vision of the role that government should play and the relative value of maximizing global economic integration over other possible priorities. The hyper globalization agenda that was adopted in the 1990s has had many benefits, something that liberals often underappreciate. But, the current system also has come with a lot of costs, which conservatives ignore at their peril, as these costs undermine public support for globalization, if for no other reason. In outline form (with more details to follow from me on Thursday night) here are the most obvious benefits and major problems associated with G, as I understand them. At the end I’ve added links to a few good articles of the issues.
BENEFITS OF GLOBALIZATION –
- Increased economic growth and prosperity for many due to the greater efficiency of letting production of goods and services flow to where they can most efficiently made. These greater efficiencies happen both between and within countries; e.g., The U.S. textile gets out-competed and collapses but resources flow into more efficient sectors that ultimately make the country as a whole better off. (Conservatives: It’s really not that simple in practice.)
- For poor countries, better access to foreign investment, export markets, foreign technology, and the many other benefits of global markets. (Liberals: Plugging in to the global economy is the only way many poor, disadvantaged nations will ever develop.)
- Cooperation replaces competition as the driving force of geopolitics. Economic relations between countries cease to be zero-sum. Exploitation of one nation by another is reduced (Conservatives: don’t be naïve about how inevitable these benefits are. The powerful exploit the powerless even in a rules-based system.)
- For consumers, low prices and a wider variety of goods and services to choose from; but, this is balanced by downward pressure on wages for many.
- A more stable world economy – in theory.
COSTS OF GLOBALIZATION –
- Growing instability. The most obvious and urgent. Reckless financial deregulation plus failure to create better transnational regulation have led to crash after crash: The 2008-09 one, Asian and Latin America, etc. Making finance as free as we freed trade in goods may have been a mistake – or at least premature and inappropriate for many countries. Even free trade may have made the world economy unstable all on its own.
- One-size-fits-all approach and inflexibility. Since the 1990s, there has been very little room for countries to deviate from the “Washington Consensus” of free trade/free finance, privatization, and deregulation. WTO compels it, and the IMF has imposed it. There’s a concern that maximizing global economic integration has become an end in itself, with little room under the rules for countries to exercise their own preferences for what kind of society they want to have.
- One-set-of-values-fits-all. Now that trade and investment barriers are practically eliminated (except for agriculture and a few other areas), why not focus on other social values, such as, say, health and safety concerns, or labor rights, or environmental protection? Why not focus as relentlessly on these areas as we did on ending tariffs and export subsidies?
- Lack of accountability and democratic control. Who’s in charge of globalization? Does it really serve the interests of regular people, even in rich nations like the U.S., or does it serve the wealthy and the multinational corporations?
- [I read mainly books and econ blogs, so I’m not sure what to link to. Here are a few.]
- We need a new consensus on trade and globalization (hostile, from a very liberal economist)
- A critique, and some respect, for Thomas Friedman’s “world is flat and that’s great” philosophy.
- The end of Neoliberalism?
- A spirited, if flippant, defense of free trade. He also says globalization’s impending death is greatly exaggerated.