Debate between Solow, Bhagwati and Krugman on Globalization

Right now we’re engaged in a veritable orgy of regressive re-distribution of income… we have an administration whole-heartedly dedicated toward giving more power to the powerful and more wealth to the wealthy..” - Robert Solow

There is great webcast of a recent discussion between Bhagwati, Solow and Krugman on the globalization and the human cost of trade liberalization.

Sylvia Nasar introduced the professors and commented a little bit on the history of globalization; this lecture by Anne Krueger can be said to be an expanded version of Nasar’s comments.

Solow focused more on the distributional aspect of globalization;

"The scenario begins with the discovery of a giant pool of labor -- much like the discovery of a natural resource -- in a foreign country. This discovery, Solow said, is probably good for the world and even for the United States, where consumers will enjoy lower prices. But it might not benefit all Americans, he noted. Unskilled workers could find themselves without even low-paying jobs. Of course, the country could redistribute the wealth from those who benefit to those who don’t. “The normal answer given by economists is that there will be winners and losers, but the winners will be able to compensate the losers,” he explained."

Bhagwati pointed out that these days every trader all over the world is worried about competition from overseas; even as far as in Ghana they’re are worried about cheap Chinese texttile imports. Bhagwati doubts we could deal with the issue through distribution alone.

Krugman admitting being a “tortured soul” on the subject of globalization and talked about different experiences of trade liberalization outcome in Latin America and East Asia; ‘in Mexico trade liberalization has been associated with increased inequality’.

During the discussion period, one student questioned given the “race to the bottom” that occurs when countries try to produce goods at the lowest possible cost, “I fail to understand why some degree of protectionism is a bad thing”.

Well even in the US the experience is very mixed as Bradford Plumer points out;

“According to a 1999 report, the vast majority of garment shops in San Francisco, despite being mostly non-unionized, still manage to pay the city minimum of $8.15 an hour and comply with labor laws, while in New York unionized workers were making under $5.15 an hour and repeatedly subject to wage and hour violations. The United States, meanwhile, imports billions of dollars of clothes from Northern Italy each year, where garment workers make two or three times what their counterparts in New York make. So it's not clear that globalization always has to create a race to the bottom.”

An earlier related post; Going to Harvard Can Lead to Rising Inequality

Pages

Powered by Movable Type 5.02

About this Entry

This page contains a single entry by Paul published on May 7, 2006 2:00 AM.

British Empire and Astronomy was the previous entry in this blog.

Lawmakers tell FTC to Define Price Gouging is the next entry in this blog.

Find recent content on the main index or look in the archives to find all content.