The Globalization Paradox: Democracy and the Future of the World Economyby Dani Rodrik
Pub. Date: 02/21/2011
Publisher: Norton, W. W. & Company, Inc.
From the mercantile monopolies of seventeenth-century empires to the modern-day authority of the WTO, IMF, and World Bank, the nations of the world have struggled to effectively harness globalization's promise. The economic narratives that underpinned these eras—the gold standard, the Bretton Woods regime, the "Washington Consensus"—brought great… See more details below
From the mercantile monopolies of seventeenth-century empires to the modern-day authority of the WTO, IMF, and World Bank, the nations of the world have struggled to effectively harness globalization's promise. The economic narratives that underpinned these eras—the gold standard, the Bretton Woods regime, the "Washington Consensus"—brought great success and great failure. In this eloquent challenge to the reigning wisdom on globalization, Dani Rodrik offers a new narrative, one that embraces an ineluctable tension: we cannot simultaneously pursue democracy, national self-determination, and economic globalization. When the social arrangements of democracies inevitably clash with the international demands of globalization, national priorities should take precedence. Combining history with insight, humor with good-natured critique, Rodrik's case for a customizable globalization supported by a light frame of international rules shows the way to a balanced prosperity as we confront today's global challenges in trade, finance, and labor markets.
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Table of Contents
Introduction: Recasting Globalization's Narrative ix
1 Of Markets and States: Globalization in History's Mirror 3
2 The Rise and Fall of the First Great Globalization 24
3 Why Doesn't Everyone Get the Case for Free Trade? 47
4 Bretton Woods, GATT, and the WTO: Trade in a Politicized World 67
5 Financial Globalization Follies 89
6 The Foxes and hedgehogs of Finance 112
7 Poor Countries in a Rich World 135
8 Trade Fundamentalism in the Tropics 159
9 The Political Trilemma of the World Economy 184
10 Is Global Governance Feasible? Is It Desirable? 207
11 Designing Capitalism 3.0 233
12 A Sane Globalization 251
Afterword: A Bedtime Story for Grown-ups 281
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Dani Rodrik, Professor of International Political Economy at Harvard University, argues against financial globalisation and for countries to put their people first through industrial policy. He points out that the Bretton Woods system was built on the belief that countries' domestic needs would and should trump the global economy's demands. Countries that rely on international finance do poorly. He writes, "The benefits of globalisation come to those who invest in domestic social capabilities. These investments in turn require some degree of support for domestic firms - protective tariffs, subsidies, undervalued currencies, cheap funding, and other kinds of government assistance . The deep integration model of globalisation overlooks this imperative. By restricting in the name of freer trade the scope for industrial policies needed to restructure and diversify national economies, it undercuts globalisation as a positive force for development." As Rodrik notes, "National democracy and deep globalisation are incompatible." Governments cannot meet both the demands of foreign creditors and the needs of their own people. He argues against trade fundamentalism, as expressed in World Trade Organization rules and in World Bank and IMF practice. Fixed exchange rates and capital mobility both enslave countries to other countries' monetary policies. Opening up to foreign economic intervention means facing greater risks, and less growth. More capital inflows do not mean more growth. In 1991, Argentina's Convertibility Law tied the peso to the dollar, strangling the economy, just as the euro is doing to Greece, Portugal, Cyprus, Italy and Spain. In 2001-2, Argentina defaulted on its foreign debt, reimposed capital controls, devalued the peso, froze utility prices, increased social spending, improved its tax collection and created import substitution industries. The markets screamed, but Argentina's economy grew by 63 per cent in six years, pulling 11 million people out of poverty.
A history of trade among countries since the 1800's. How today's governance of trade has changed the job market in this country to the extent our federal government no longer is in control of its domestic policies. Trade among countries takes priority over any domestic needs. Multinational Corporations have pushed for deregulation, free trade, low taxes, and relaxation of environmental protections. Rodrik claims we can either have globalization, a nation state or a democracy, but you cannot have all three. It also explains how Wall Street and the banks pushed for free flows of international capital and finance causing almost 400 financial crises worldwide, since 1971, when the US no longer backed its currency to gold. Wall Street's influence was thought to be needed by these countries. But that has changed since their hubris collapsed the world markets in 2008. China is the only country which has not allowed foreign international finance to help their economy grow. China will not fall victim to Wall Street's money games. This book will explain why unemployment is not going down and quite possibly where the job market will be going for you, and also your children. It debunks the rhetoric of today's governmental job creator's. A college degree may not be an assurance their job will not disappear to a foreign land. Today's job market can change so rapidly depending on market conditions. The question is how much education will be enough and what field will be needed to keep them out of the unemployment line. One idea maybe to have two totally different and unrelated fields of expertise.