Making Globalization Work, with Joseph Stiglitz

Event Title: Making Globalization Work
Sponsor(s): Center for Strategic and International Studies
Location: CSIS
Date: September 27, 2006
Time: 10:00 AM - 12:00 PM
Approximate number of Attendees: 150
Intern Attending: Kristin Broyhill

Featured Speaker: Joseph E Stiglitz, Nobel Laureate and professor of economics, Columbia University, author of Making Globalization Work.

Joseph Stiglitz’s recent book, Making Globalization Work, highlights the fact that regardless of economic theories, globalization has caused domestic and international wealth disparities to widen, even as states’ GDPs rise. Stiglitz stated that this trend is not a result of globalization itself; it is a result of how globalization is managed. He went on to say that unless world leaders restructure its management; politically, economically and environmentally, the possibility of a globalization backlash remains high.

The reconstruction of free trade is imperative to ensure the economic success of globalization. Free trade must become free, not littered with stipulations favoring the interests of campaign contributors verses the interests of the involved states. Although some economies have experienced incredible growth, such as Mexico, China and India, others, (i.e. the majority of Latin America), have been adversely affected, experiencing even more instability, weakened markets and zero or negative economic growth.

Until the gains of globalization reflected in a country’s GDP are realized by the entire population, globalization will face harsh criticism and, eventually, backlash. These statistics are illustrated by the experience of the US, where from 1976 to 2006 the GDP has increased over ten trillion dollars while the median income value has fallen thirty percent.

On the political side, the debt of the developing world has dramatically increased due to poor management. Although each country is responsible for its own development, lending countries can help halt corruption and ensure their aid money is spent wisely by supporting and enforcing policies of transparency and accountability throughout the lendee’s government, banks and businesses.

From an environmental perspective, long term environmental preservation tends to be sacrificed for short term economic success. However, if environmental destruction is not reversed, effects, such as global warming, will threaten the political and economic security of both the developed and developing worlds. Environmental compacts, such as the Kyoto Protocol, must be supported and enforced. Stiglitz suggested simultaneously aiding the developing countries and the environment by compensating those countries that contribute to the welfare of the environment. For example, since carbon now has a dollar value, Brazil can be compensated for the amount of carbon their rainforests take out of the air per year, improving development and encouraging preservation and re-growth of the rainforest.

To conclude, Stiglitz reiterated that because globalization is consistently changing, states and their policies must be proactive, not reactive, in order to prevent future crises; in doing so they will be saving costs, environments and lives.