The end of ‘consensus’ on globalization?

  1. When have election campaigns never been a barometer of rational thinking about trade? Much less, campaigns for party nomination where no contender need consider himself accountable for his rhetoric. If the recent Democrat campaign showed anything it is that the candidates were disingenuous on trade as they struggled to tie up Union backing. But the Republican candidate showed no such inclination to blame trade for the softening U.S. growth rate and Obama backed-off his more extreme positions quickly, too.
  2. As for the ‘sub-prime’ mortgage crisis ; that hardly shows the ‘inherent fragility of the financial markets’. If anything it demonstrates the reality of globalization that an extraordinary failure of common-sense prudential regulation in the USA could spread so quickly. More hopefully, it illustrates the responsiveness and collaboration of global financial regulatory institutions who have probably turned disaster into mere calamity.
  3. Finally, the rise in food prices is a ‘downside’ of interdependence only because, once again, the world is paying a price for inappropriate policies in the G8 countries (especially the USA’s bio-fuel subsidies). But the situation would be much worse for everyone if food markets were less integrated than they are. Shortages would be more critical without market interdependence; prices would be still more volatile. ‘Global transfer and compensation’ measures—whatever Rodrik means by that—are both unlikely (surely we know at least this by now) and at best a band-aid response to the policy errors that are one part of the explanation (they’ll do nothing to resolve the other problems such as drought, demographics and trade protection).

In an oddly messianic conclusion to his article, Rodrik expresses his hope that a ‘new Keynes’ can be found to provide new ‘intellectual underpinnings’ for globalization. How, precisely, would that help? Is there some new need for an ‘intellectual underpinning’ for the benefits of global trade and market integration? Why is some new individual contribution likely to make it all clear to us and better in the future? How will a new ‘intellectual underpinning’ change market behavior? How will an academic synthesis change firms’ or households’ opportunities for profit and growth? These are the forces that sustain globalization; not

Rodrik’s arguments ring hollow. Nothing demonstrates this more clearly than the irony of its syndication. His own weblog points to the version of his article on the death of consensus about globalization in Dubai’s Business 24|7 newspaper. A bizarre location to be calling globalization into doubt. It’s a bit like expressing doubts about Catholicism in L’Osservatore Romano.

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