Making globalization work

Kai Ryssdal Sep 20, 2006

KAI RYSSDAL: It’s somehow been happening without much notice here in the U.S. this week. The World Bank and International Monetary Fund have been meeting in Singapore. Granted, part of that’s because Singapore’s not all that welcoming to protesters and activists. And part of it’s because Americans don’t pay much attention to what the World Bank says. Poorer countries do, though. Because they have to. Or they risk losing millions of dollars in loans and grants. That disparity between rich and poor and how they’re treated is one of the things opponents of globalization point to. As long as there’s that gap, they say, globalization can’t ever work. Economist Joseph Stiglitz has a new book out talking how to fix that. Joseph Stiglitz good to have you with us.

JOSEPH STIGLITZ: Nice to be here.

RYSSDAL: So, I’m holding a copy of the book in my hands. It’s called “Making Globalization Work,” and conveniently, right about the title, is the title of your last book, which is called “Globalization and Its Discontents.” Have you changed your mind now — that it’s sort of inevitable, this globalization thing?

STIGLITZ: Well, I never thought it was inevitable. If globalization does make a lot of people, most people, worse off, there will be resistance and there can be a reversal.

RYSSDAL: What are the first couple of things the global community ought to be thinking about?

STIGLITZ: Well, the one that has gotten, obviously, a lot of attention is trade. The way the trade regime has worked has not been fair to the developing countries. In the last round, the intellectual property provisions of the last trade agreement . . . the effect of this was to make access to lifesaving medicines unaffordable to hundreds of thousands of people in Africa. In effect, they were signing the death warrants on thousands of people in the poorest countries of the world.

RYSSDAL: Is, do you think, globalization . . . is one definition, perhaps, the whole world having the same economic system? Is that what we’re shooting for here?

STIGLITZ: No, in fact, that’s one of the complaints — that the way globalization has been managed in the past has tried to impose a single-size-fits-all, a single recipe. For instance, last year we had a debate about privatization of Social Security and a large number, perhaps a majority of Americans, said it wasn’t right for America. And yet, the IMF and the World Bank have pushed many countries to privatize their social security and the result has been disastrous.

RYSSDAL: You make the point that one of the things that globalization has done in its current form is lead to a whole lot of rich countries with a whole lot of poor people in them.

STIGLITZ: That’s right. And some people have said, “Well, you have to accept this. This is the way of globalization.” And they scratch their heads and they say, “Well, you told us that globalization was going to make us better off. But now you tell us the globalization means that we have to have lower wages, less job protections, less benefits. How is that going to make us better off?” Some people have said, “Well, in the long run . . . ” There’s a famous quip by the great economist John Maynard Keynes that said, “Yes, but in the long run we’re all dead.”

RYSSDAL: But how do you get the big multinational companies, who will always say that their obligation is to their shareholders, to pay attention to the losers from globalization.

STIGLITZ: Partly it’s a self-interest. In many parts of the world mining companies have not paid adequate attention to the well-being of the workers, to the environment. And the result is enormous instability. So, they’re beginning to realize that having good regulations, to make sure that the benefits are shared widely, is in their own interest.

RYSSDAL: Do you think globalization gone bad could convince some countries who are not seeing benefits of globalization to turn against a capitalist economic system.

STIGLITZ: Well, we already see some of the aspects of this in a number of Latin American countries. Where there has been growth, the benefits have gone almost entirely to the people at the top. And the good news is that democracy has taken hold in so many of these countries. But with democracy, citizens are going to say, “We want to see the benefit.”

RYSSDAL: There are those who will say — and many of these people are in Washington, D.C., as it happens — globalization is an unvarnished good.

STIGLITZ: I don’t think anybody seriously believes that today. The best that one can say is that when globalization is managed well, the winners can win enough that they could compensate the losers. It doesn’t make any sense to say GDP’s gone up if 60 percent of the people say that their income is lower today than it was five years ago.

RYSSDAL: Joseph Stiglitz was chairman of the Council of Economic Advisers for President Clinton. He’s currently a professor of finance and economics at Columbia University. his latest book is “Making Globalization Work.”

Joe Stiglitz, thanks alot for your time.

STIGLITZ: Nice to be here.

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