Death of globalisation consensus

by Dave


Although economic globalisation has enabled unprecedented levels of
prosperity in advanced countries and has been a boon to hundreds of
millions of poor workers in China and elsewhere in Asia, it rests on
shaky pillars.

Unlike national markets, which tend to be
supported by domestic regulatory and political institutions, global
markets are only “weakly embedded”.

There is no global
anti-trust authority, no global lender of last resort, no global
regulator, no global safety nets, and, of course, no global democracy.
In other words, global markets suffer from weak governance, and
therefore from weak popular legitimacy.

[If] globalisation is in danger, who are its real enemies? There was a
time when global elites could comfort themselves with the thought that
opposition to the world trading regime consisted of violent anarchists,
self-serving protectionists, trade unionists, and ignorant, if
idealistic youth. Meanwhile, they regarded themselves as the true
progressives, because they understood that safeguarding and advancing
globalization was the best remedy against poverty and insecurity.

that self-assured attitude has all but disappeared, replaced by doubts,
questions, and scepticism. Gone also are the violent street protests
and mass movements against globalisation. What makes news nowadays is
the growing list of mainstream economists who are questioning
globalisation’s supposedly unmitigated virtues.

So we have
Paul Samuelson, the author of the post-war era’s landmark economics
textbook, reminding his fellow economists that China’s gains in
globalisation may well come at the expense of the US; Paul Krugman,
today’s foremost international trade theorist, arguing that trade with
low-income countries is no longer too small to have an effect on
inequality; Alan Blinder, a former US Federal Reserve vice-chairman,
worrying that international outsourcing will cause unprecedented
dislocations for the US labour force; Martin Wolf, the Financial Times
columnist and one of the most articulate advocates of globalisation,
writing of his disappointment with how financial globalisation has
turned out; and Larry Summers, the US Treasury chief and the Clinton
administration’s “Mr Globalisation”, musing about the dangers of a race
to the bottom in national regulations and the need for international
labour standards.

Today, the question is no longer: “Are you for or against
globalisation?” The question is: “What should the rules of
globalisation be?” The cheerleaders’ true sparring partners today are
not rock-throwing youths but their fellow intellectuals.