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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