Tuesday, November 6, 2007

Making Globalization Work

Joseph Stiglitz has managed to survive as the rarest of breeds: an establishment radical. During the Clinton years, he acted as the chairman of the Council of Economic Advisers. Afterwards, he left national politics to work with the World Bank as the Chief Economist. He won the Nobel Prize, for goodness sake. Throughout his time at the pinnacle of institutionalized power, Stiglitz has amazed/infuriated onlookers with his voice of dissent. His opinions are "radical" only in their context, however. Not a communist, anarchist, or socialist, he is a believer in markets and capitalism who wishes to transform the discussion of globalization from "Is it good or bad?" to "How can we make the most out of the globalization of the world".

Stiglitz wrote the inflammatory "Globalization and It's Discontents" after his experience with the World Bank. In it, he is very critical of the IMF policies and how undemocratic international financial institutions were pushing special interests at the cost of the developing countries. I read this book last year and really learned a lot. As a follow-up to that book, in "How to Make Globalization Work", Stiglitz wishes to move from critic to creator.

The major proposals set forth in this book seem reasonable to me. First and foremost, Stiglitz argues that we need to democratize the international governance of finance. The economic globalization of the world has taken place faster than the political globalization. Therefore, the democratic values so cherished in our nations are largely ignored in these crucial negotiations. Currently the WTO, IMF, and World Bank conduct their business in secrecy and with a disproportionate influence among it's members. To insure that the the developing world's voices are heard, we should demand more transparency and more equitable decision-making.

From this basic platform come several specific suggestions. Some of them are:
-Debt forgiveness of the poorest countries would enable them to invest more in development.
-The removal of agricultural subsidies in the developed world to provide opportunities for exports in the developing nations primary comparative advantage.
-A more narrow intellectual property protection to allow competitive development and give access to life-saving drugs for the millions in need.
-A recognition that global warming needs immediate attention. He proposes financial incentives to developing nations to NOT log their forests and an alternative to Kyoto that was based on taxation instead of national guidelines.

I believe that the thinking behind Stiglitz' proposals is solid. In fact, for all the tension between the "Kenynesian" and "Smith" camps, I would venture that Greenspan agrees with a large part of the economics. What seems to divide this two schools of thought more than the economics is the politics. Greenspan and the fundamentalist followers of Adam Smith tend to be more libertarian in their emphasis on individual rights and the lack of governmental intervention. Stiglitz and the Neo-Keynsians favor democratic governance as a means to provide for the community as a whole. This balancing act plays itself out in our Courts, our Senate floors, and, now it appears, in the Globalization. One of the things I appreciate about Stiglitz is his candor in accepting the reality of a politically-influenced economics.

This is a great read for anyone interested in learning how we can create a more humane globalization. It is decidedly "liberal", so know that going in. I consider myself fairly progessive and, still, at times I found the rights and respect due the developed countries were too-easily ignored. It does, however, do an excellent job of opening the discussion on globalization from it's current, limited perspective.

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