CBS Professor Talks Growing Globalization Blues

Columbia Business School published an op-ed by Joseph E. Stieglitz — Nobel laureate in economics, chief economist at the Roosevelt Institute, and Columbia professor — this week, in which he elucidates the major thesis in his recent book, Rewriting the Rules of the American Economy with regard to increased opposition to globalizing reforms.

Stiglitz notes that the populations of developing countries believed for decades that globalization would “increase overall well-being.” But now it seems there’s an exponential growth of dissenting Western voices joining fellow opponents of globalizing reforms in emerging markets. According to a recent Roosevelt Institute study, trade is “among the major sources of discontent for a large share of Americans” and Europeans, as well.

Neoliberal economists—proponents of globalization—argue that this “discontent is a matter for psychiatrists, not economists.” But the data is plain as day: people are flailing, financially speaking. When one adjusts for inflation, “median income for full-time male works is lower than it was 42 years ago and at the bottom, real wages are comparable to their level 60 years ago” in the U.S.

Stiglitz attempts to clarify some of the mysterious forces surrounding this complex issue. Many neoliberal economists believe—simplistically, according to Stiglitz—that “free trade equalizes the wages of unskilled workers around the world” without considering the very real social and economic consequences.

Stiglitz explains that importing goods from China reduces the demand for unskilled workers in Europe and the United States. “If there were no transportation costs, and if [we] had no other source of competitive advantage, eventually it would be as if Chinese workers continued to migrate until wage differences had been eliminated entirely.”

One of the major consequences of globalization is a rapid and pervasive loss of faith in the government, which many believe reached an apotheosis with the 2008 financial crisis and continues on with Obama’s proposed Trans-Pacific and the Transatlantic Trade and Investment Partnerships. Stiglitz argues that “if globalization is to benefit most members of society, strong social protection measures must be in place,” like those taken by Scandinavian countries. “Advanced countries…pushed for policies that restructured markets in ways that increased inequality. The rules of the game were rewritten to advance the interests of banks and corporations – the rich and powerful – at the expense of everyone else.”

Stiglitz believes the problem lies in “how the process was being managed,” rather than globalization itself. Fifteen years since publishing Globalization and its Discontents, Stiglitz believes “the new discontents have brought that message home to the advanced economies.”

regions: New York City

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