Is Globalization Headed for the Rocks? Perspectives from Left, Right, and Center

Event Title: Is Globalization Headed for the Rocks? Perspectives from Left, Right, and Center
Sponsor: Carnegie Endowment for International Peace
Location: Carnegie Endowment for International Peace
Date: November 2, 2006
Time: 3:00pm-5:00pm
Approximate number of attendees: 60
Intern attending: Ava Jones

Speakers: Dr. Kevin A. Hassett, Director of Economic Policy Studies and Resident Scholar at the American Enterprise Institute; Dr. Branko Milanovic, a lead economist in the World Bank’s research department; Dr. Thomas Palley, founder of Economics for Democratic & Open Societies.

The purpose of this seminar was to explore the challenges facing globalization from different perspectives and to explore possible solutions for those problems. From the right, Dr. Hassett started the discussion by defining the populist and neoclassical views. The populist view is that the economy ultimately harms the “little guy more.” The neoclassical view is about power; your value is determined by marginal product. He states that these views are in conflict and each has its limitations.

From the left, Dr. Milanovic talked about the span of income distribution in most countries. Massive income disparities lead to widespread inequality. Additionally, a person’s income potential tends to be largely determined by their location: what region of the world they happen to live in, what country they live in, and what region of that country they happen to reside in. Globalization in rich countries has dissimilar issues to poorer countries. He noted five key problems. The first is outsourcing pressure on employment, which impacts low and medium skilled jobs the most. Secondly, the welfare state is under stress. Third, there is an asymmetric relationship between capital and labor. Fourth, migration is more popular among better educated in rich countries. Lastly, there are key Border States today such as Greece, Spain, and Malaysia.

In terms of poorer countries and globalization, China and India are doing well. There is a continued output divergence despite policy convergence for transition countries. There is a sentiment that moral superiority denotes economic success and a loss of self respect for those who have failed. Dr. Milanovic suggests taking a global perspective that is not xenophobic, a modest redistribution, and free immigration.

Dr. Palley spoke from the radical center and his objective was to get to the root causes and symptoms. He posits that the radical center believes that globalization is more than just an economic project, it is political as well. He also believes that workers are boxed in because of globalization, less than full employment, small government, and labor market flexibility. The government is also boxed in because there is a loss of political will for making changes. He describes the radical center agenda as wanting to put CEO’s and corporations in the box instead of the workers. We need, “globalization and standards, full employment policy, a progressive government, to restore worker bargaining power, and create a corporate agenda that balances national interest.”