Globalism's winners and losers: What Rodrik sees

Can sovereignty and globalization coexist in the shrinking world of the 21st century? As they jockey for mastery, who benefits and who suffers?

While attending a recent symposium at Harvard University I was struck by the compelling insights on the tension between those two powerful forces advanced by Dr. Dani Rodrik, currently the Ford Foundation Professor of International Political Economy at the Harvard Kennedy School.          

What was most riveting was the powerful synchronicity between Rodrik's thesis and the groundbreaking analysis found in Christophe Guilluy's book Twilight of the Elites (Yale University Press 2019), about which I’ve written four previous columns.      

Through over two decades of research and writing while at Harvard, and earlier at Columbia and Princeton's Institute for Advanced Study, Rodrik advanced the once controversial but now increasingly mainstream idea that excessive globalization had done serious damage not just to the principle of sovereignty but to national economies worldwide most especially in poorer nations. 

In his best-known work, Has Globalization Gone Too Far?  (1997)- Rodrik posits three interconnected ideas concerning tension between globalization and sovereignty: 

1. Trade undermines the bargaining power of workers who can be easily replaced by cheaper foreign labor.

2. Trade agreements create conflicts within and among nations over fundamental values e.g. labor laws, environmental regulations.

3. While trade makes citizens more vulnerable and reliant on social welfare, it also undermines governments' ability to provide that welfare by allowing the "footloose" wealthy to shield their money from taxation around the world.       

Shortly after the global financial crisis Rodrik greatly sharpened his critique in The Globalization Paradox (2011) a work that was an important influence on the research of France's Christophe Guilluy.  

Here Rodrik described how the mid-twentieth century consensus on economic policy which balanced the roles of national governments and multilateral agreements broke down in the 70's and 80's, and in a dramatic departure were replaced by a "free market fundamentalism" that de-emphasized the role of national governments and strongly advocated the lifting of restrictions on the flow of goods and money where ever possible.  

This new doctrine, warmly embraced by North American and Western European leaders, became informally known as the "Washington Consensus" and by the 1990's it had transformed economic policy around the world.        

Entities promoting this set of ideas—specifically, free trade, privatization of state enterprises, deregulation, and openness to foreign investment—included the World Bank, the International Monetary Fund, and the foreign aid establishments of the wealthier nations.  

Their intentions were the very best and their monetary commitments huge, but the results particularly in the poor countries of Latin America and sub-Saharan Africa were dismal. In many of these poorer countries economic output collapsed entirely.          

Rodrik demonstrated that "hyper-globalization" undermined the ability of countries to govern themselves and allowed multi-national corporations to set the rules for the world economy.  He also expressed the further concern that economists "too easily sneered at the public's concerns about globalization".          

So, if the globalist "Washington Consensus" was failing ordinary people in too many countries, what policies were working and where were they?          

Rodrik's early research showed how East Asian "miracle societies" (South Korea and Taiwan) transformed their economies extraordinarily swiftly not in spite of government protection of domestic industries but because of it.  He later demonstrated that the large economies that dramatically advanced in this period like China and India never adopted the "Washington Consensus".          

Another major problem was that the "rules-based order" that was supposed to equitably monitor global economic relations was routinely ignored by authoritarian regimes like China, Russia, and Iran who brazenly cheated on the very rules they had committed to and even used those rules as a weapon against their Western rivals through malign practices such as the theft of intellectual property.    

In today's world it is increasingly clear that unchecked globalization has gravely harmed the middle class, particularly the less-educated lower middle class in most Western nations—and this in turn has spawned a series of political revolts such as the one in France so brilliantly documented by Guilluy's seminal work.           

Thus at present globalization allows the educated and politically savvy upper classes to create and largely keep great wealth by moving goods and money across international borders little constrained by the taxes and regulations of sovereign governments, while at the other end of the spectrum the lower classes despite being in the majority are increasingly consigned to economic insecurity, job losses, and cultural alienation.

In his most recent writings Rodrik has insisted that this ominous social polarization can only be remedied by finding common ground through restoration of a balanced relationship between multi-lateral economic globalization and independent and sovereign nation states.  Failure to do so is a clear recipe for continued economic dislocation and political upheaval. 

Editor: Notice that one man’s name never appears in Bill Moloney’s discussion above, yet that man will continue dominating the struggle between sovereignty and globalism at least though 2020 and possibly through 2024: President Donald Trump.

Moloney covers national and international politics for the America blog. His columns have appeared in the Wall Street Journal, USA Today, Washington Post, Washington Times, Philadelphia Inquirer, Baltimore Sun, Denver Post and Human Events.

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