Globalization's losers: Some points of view

economics ▪ policy ▪

The Financial Times recently opened a virtual forum (read: a blog) to allow invited guests to comment on a particular policy issue. One is hosted by Martin Wolf, and a most recent session was entitled We must act to share the gains with globalisation’s losers:

Globalisation remains the great economic story of our era. It is also the great political story. The big question remains how likely is a reversal of our era’s move towards a more integrated global economy. History suggests, alas, that the onward march towards integration is not inevitable: economics may propose, but politics dispose.

This was the issue raised by Ben Bernanke, chairman of the Federal Reserve, in his address to this year’s annual economic symposium organised by the Federal Reserve bank of Kansas City at Jackson Hole, Wyoming. At the end of a brief overview of the history of economic integration, Mr Bernanke argued that “the social and political opposition to openness can be strong. Although this opposition has many sources... much of it arises because changes in the patterns of production are likely to threaten the livelihoods of some workers and the profits of some firms, even when these changes lead to greater productivity and output overall”. The need, he suggests, is to ensure that the benefits of integration are sufficiently widely shared.

Mr Bernanke concentrates, implicitly, on the politics of the high-income countries; and, second, he devotes attention to trade in goods and services. He is right to do so. The US and Europe remain the core of the global economy. Equally, nothing is more politically sensitive than trade.

The comments from policy-oriented economists are excellent, though I particularly like Paul Seabright's (on opening up migration) and Edmund Phelps's (on a particular type of redistribution policy). Meanwhile, Andrew Smithers's comment give a good heads-up on the problem of global macroeconomic imbalances.