Globalisation Begets Insecurity Begets Violence

It's just those failings which suggest to me that no capitalist should be let out of sight in the marketplace, c.i.

Setanta,

I understand your views and, as I attempted to outline in the post above, I disagree.

I fear the abuse of and by government more than I do the greed of energetic entrepreneurs. I doubt the ability of government to craft and maintain the body of regulation you call for with sufficient wisdom and balance, and I doubt even more its ability to enfore it effectively without the covert entry of the twin evils of bought manipulation and mindless bureaucratic obstruction.

Every entry of government regulation into an economic process creates the "favored" players and methods for which the regulation was envisaged, and, as well, the "penalized" ones directly prohibited and the many other simply unforseen by the drafters of the regulation. The adverse effects of this on the operation of the economy are enormous.

I have had plenty of experience with government regulations and regulators in both the energy and environmental fields, and have watched large sums and resources wasted on meaningless process, endless delay, mindless application of form over substance, and ocasionally blatant political interference by interest groups of all types, business and otherwise.

Government is a necessary instrument for the preservation of civil order, but, in general, the less we have of it, the better. It is certainly not able to efficiently manage something as complex and changing as the economic actiovities of people.

Beyond that, how would you achieve universal acceptance of uniform tax, labor, accounting, banking, environmental, etc. law and regulation? Even the EU has not managed all that. How would you achieve uniform enforcement? Sounds like belling the cat to me.

Set, I agree with you, but "greed" will be the power that sinks people and corporations. We just have to hope that the district attorney, SEC, and the auditors does a better job of policing the shenanigans of business.

Can you tell us more about Stiglitz's book, Iron lion Zion? I have been eyeing it off - any comments on its balance and scholarship?

You know George, that is the typical specious whine about "free market" capitalism that's been touted for more than century--since capitalists first began to fear that they might actually be held responsible for their actions.

The police don't catch all the criminals; cases go unsolved, people are wrongly arrested, corruption is regularly unearthed, venal and violent individuals become police officers--by your logic, we should do away with the police. Your logic would be laughably absurd, were the consequences not so very real. You're being robbed obscenely every time you tank up your vehicle--but no one is out there trying to apprehend the robbers, because they dwell in corporate board rooms, and keep their political cronies well oiled. If Dufus Harding holds up the liquor store, the cops are going to be all over him like ugly on an ape. But Enron can steall billions, and defraud thousands, tens of thousands of people, and the capitalists will start to profusely shed crocodile tears in the event that anyone attempts substantive reform which would seek to prevent a repeat of those particular scams. The basic logic is that small robbers are the target of strict enforcement, but the biggest thieves of all are not to be trammelled with, on the off-chance that some of their ill-gotten gains may trickle down to the rest of us. You say that bureaucrats are inept, obstructive, mindless in the application of their mandates? So are people in every other walk of life. Many doctors are incompetent to the point where people lose their lives under the knife or in the emergency room--no one suggests that we throw the baby out with the bath water, and dispense with them altogether.

Your argument has no legs.

Which book by Stiglitz have you read? He assesses free trade one way in his macroeconomics textbook and and another way (much more pessimistic) in his popular books like "Globalization and its discontents". Things like that strike me as a warning flag of intellectual dishonesty -- whether the culprit is Larry Lindsey or Joseph Stiglitz.


The effect of free trade is to equalize the cost of labor, capital, and land relative to their productivity. As a result, scarce factors like rich country labor, rich country rent, and poor country capital get cheaper while rich country capital, poor country labor, and poor country land get more expensive. I can see how one can make a case why free trade increases inequality in North America; I can't see how one could make the same case for South America.


So how do you explain that third world countries tend to elect free-traders in free elections, while the foes of trade -- like Zimbabwe's Robert Mugabe -- are deeply unpopular?


I agree that American China- and Japan bashing is ridiculous. But if the bashing were to stop, the consequence would be freer trade, not less free trade, with those countries. I agree with your argument, but it makes the opposite of the case you wish to make.


That doesn't change the fact that this perception is incorrect. I prefer it when policies are based on what is the case, not what "many people" perceive to be the case.

I think it is a worthwhile read. There is a myriad of books discussing globalization but you have probably noticed that most of them are written by 'outsiders' of the system. Stiglitz is not only a Nobel laureate in economics, he is also a former presidential advisor and the former chief economist of the World Bank. He left the World Bank, he claims at least, because he was becoming increasingly disillusioned with its policies. So, when someone of his calibre and experiance speaks out about the system, he commands a degree of authority in my mind. Admittedly, I am not much of an expert on economics, but I found it very interesting, if somewhat repetitive in parts and a little pessimistic, as Thomas said. It was one of the only economic books I have ever read, so I cannot really speak authoritativly on its content.

It certainly provided me with a good platform of knowledge, which allowed me to 'dig deeper' into other economic issues.....if that makes any sense.

That's what made me read the book -- and why I found it deeply disapointing. Stiglitz has stellar credentials, and he has earned them. But he also has failed to master the difficulties of talking to a lay audience. In his professional life Stiglitz usually talks to people who know the economic case for free trade in goods, services and assets. With these audiences, he can take this knowledge for granted and concentrate on the ways things go wrong in ways that aren't in the textbooks.

But you can't do that when writing an economics book for an audience of non-economists. You cannot assume that the general public understands where benefits from trade come from. You have to explain it. You cannot assume that in the past 100 years, every successful transition of third world countries into first world countries involved huge amounts of production for international markets. You have to explain it. After you have explained it, you can go on to talk about the Asian crisis, and how IMF and Worldbank fumbled it. But without that foundation, the reader will watch the third act of a play without knowing the first two.

Unfortunately, that's exactly what Stiglitz does. His book is called Globalization and its discontents, but that's a misnomer. He should have called it "The IMF and its discontents", on which he has a valid and interesting, if depressing, story to tell. I cannot recommend this book as a primer on Globalization. Paul Krugman has written a lot of understandable yet comprehensive articles in his pre-New-York-Times days. I think they serve this purpose much better -- even though Paul Krugman doesn't have a Nobel Prize yet. (But he'll probably get there.) Krugman's writings are archived on a site called www.pkarchive.org -- you will be especially interested in the sections on "Crises", "International Trade", and "Global".

For the libertarian/conservative side, the most competent advocate is Rudi Dornbusch's website at MIT .

Enjoy!

-- Thomas

Thomas, What I came out of reading Krugman is that Pearle is a very good dancer. LOL

I enjoy your avatarial connection to PK too, Thomas. I always smile at your present avatar.