Saturday, February 21, 2009

Deglob, Reglob?

For several years, disagrements at the WTO and other international organizations have been leading to pessimism about the sustainability of an integrated world economy.

Less than a year ago, peaking oil prices caused a lot of buzz that high transportation costs would spell the end of globalization.

This week, even the Economist is saying that the "integration of the world economy is in retreat on almost every front."

Criticism of globalization is rising everywhere. One China anlayst summed up the growing frustration in China by saying, "globalization was largely a fraud where Americans could endlessly consume and Chinese factories could endlessly manufacture without any adherence to economic fundamentals and creating a false and bloated version of prosperity and rising living standards."

The thing is, globalization is both desirable and necessary, and we simply can't go back. Without globalization rich countries still trade with each other, but poor countries are shut out or are unequal partners in any agreements they can get into. The WTO brings everyone to the table and even gives vetos to every member country, thus greatly reducing the ability of G20 countries to call all the shots.

Globalization increases prosperity for everyone and it levels the playing field, but it is also just an institutionalization of what is going to happen anyway. The only way global trade is going to stop is if civilization fails and we return to the dark ages. We are an integrated world. Some sorts of trade may become less affordable, but the movement of goods, capital, people and ideas will continue.

I'm for globalization, but I'd like to see some very major tweaks in the way we institutionalize it. We need better mechanisms for democratic control of economic activity. Globalization should be about responsible world governance, not a new way for national elites to circumvent their local laws to further enrich themselves. There should be more transparency and accountability. Globalization was supposed to make the world less vulnerable to business cycles, but it seems that the opposite has happened: world organizations should address this issue explicitly. In addition, transport should truly reflect costs, including the massive pollution caused by ships.



Larry Gambone said...

No one is against globalization in the sense of people working together. It is called solidarity, It is corporate globalization that we are against. It is corporate globalization that has failed, not solidarity. That corporate globalization has failed should be a relief as it was nothing more than a license to steal and tyrannize.

Yappa said...

Hi Larry Gambone -

I think of globalization as the international infrastructure of organizations and agreements that govern the trade, movement of capital, etc. In other words, the WTO, NAFTA, etc. My argument is that that infrastructure is necessary and desirable, but needs some tweaking.

Anonymous said...

'No one is against globalization in the sense of people working together. It is called solidarity...'

This seems horribly abstract and wrongheaded. Working together toward what purpose? There are plenty of purposes that get people working together of which almost no one would approve. 'Solidarity', in other words, is not necessarily a good thing; it all depends. I think the time has come for a bit more thinking outside the box, LB. Yappa is setting a good example.