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Stiglitz at the World Bank: Globalization as a riptide

Ignacio Hernandez's picture

Joseph Stiglitz presented today his new book “Making Globalization Work” in a packed auditorium at the World Bank.

 

Mr. Stiglitz rebuffs the image of globalization as the rising tide that lifts all boats at the same time. Globalization can be a riptide that destroys all non-prepared boats. Another classic metaphor he dismisses in his book is Adam Smith’s invisible hand: “… the reason that the invisible hand seems invisible is that it is not there.”  

 

Mr. Stiglitz writes: “I believe that globalization has the potential to bring enormous benefits to those in both the developing and the developed world. But the evidence is overwhelming that it has failed to live up to this potential”. In his presentation he acknowledged success stories such as China and India, but argued that failures are more prevalent:  Less growth in Latin America, NAFTA as a failure for the poor, more crises worldwide, money flowing from poor to rich countries and poor countries with more debt that they can manage.

 

One of the biggest problems, according to Mr. Stiglitz, is that economic globalization has outpaced political globalization, with the economic consequences of globalization having outpaced our ability to understand and shape globalization and to cope with these consequences through political processes. To make globalization work we have to acknowledge that there are losers, and we have to decide how we are going to deal with that.

 

In his book, much like in an anti-globalization protest where the “abolish the WTO” banner marches together with “save the turtles” and “ban Microsoft”, there is room for many different topics including trade, environment, patents, etc. I haven’t finished reading it, but so far it makes a good read, at the least providing food for thought.

 

 

Related: For a more positive view on globalization, read Ernesto Zedillo’s article in Forbes Magazine, Give Globalization a Hand.

Comments

We do not need any conspiracy theories to know Globalization did not evolve in any natural economic way. It has been an artificial economic forced march led by elite groupings in governments, large corporations and international entities surrounding the world banks. It is obvious that workers who are the core of any economy have no voice in the process. However, a new populism is rising in South American to challenge the process, but it has only begun. Actually, we should be preparing for the post-Globalization era using this new populism as a sign of things to come in the real world. History tells us what happens when workers have no voice. The main tool of Globalzation is so called Free Trade which is not really trade. The main commodities of Free Trade are workers who are put on a world trading block to compete with each other for the same jobs. Even if everyone in the world received an education and was provided a computer, it would meaningless, if everyone competes for the same jobs. There will always be someone who will work for less and companies who will do business for others reasons than the Free Enterprise system where profits are based on mark up and not on selling under costs to capture market shares. In lost worlds where farmers can only survive by raising poppies and other drug crops, Globalization stands out as a total failure and it is certainly not Free Enterprise. Furthermore, Free Trade is primarily based on moving production from place to place based on the cheapest labor markets. The factories do not really settle down in balances geopolitical setting lifting societies out of poverty. Many factories that were moved from the USA to Asia and then to Mexico are now being moved to places like China which feature state run monopolies with the their armies owning some of the companies. The main factor is the lowest cost of labor. The Chinese Liberation Army owns part of the giant shipping company COSCO. The COSCO logo can be seen flashing across our land on the large shipping contaners on our railroads. In the end nothing matches up to compare with the local value added economies that grew values from raw product through about five levels up to the retail level and then back down again recyling the money. Now the money spent at retail quickly fans out to the places where the products are made and the investments reside. The money does not stay in place to grow balanced economies as we did in the past. The Marshall Plan helped restore local value added economies in Europe and Asia after World War 2. It was based on the awesome industrial might of the USA. The USA was showing others how to duplicate success. Now economies are chopped up into pieces and sent around the world taking advantage of the impoverished labor markets without any standards. See Exploring the lost worlds in the Globalist Free Trade Flat World as presented by Thomas Friedman with Ray Tapajna, editor and artist of Tapart News and Art that Talks at http://tapearch.com/flatworld or http://tapsearch.com/flipflatworld and http://tapsearch.com/tapartnews/

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