On Sunday, the New York Times finally got around to reviewing a book that I've been talking about here since January, Joseph Stiglitz and Andrew Charlton's "Fair Trade for All." Maybe the reviewer, Robert Reich, the former Clinton administration labor secretary, had issues with his deadline. But better late than never -- the review is excellent and it nails a point that has come up with increasing frequency in the ongoing conversation at How the World Works about globalization.
Specifically, Stiglitz and Charlton's vision for fair trade is one in which rich nations are obligated to open their markets to poorer nations, but poorer nations enjoy the privilege of protecting their markets against the rich. This is because rich nations can adapt much more effectively to the competition unleashed by free trade.
"Surprisingly, though Stiglitz has spent some years in Washington, he doesn't answer the obvious next question: How can this commendable agenda be sold to richer nations?" writes Reich. "Their political leaders are in a bind since so many of their own citizens are also losing jobs and experiencing declining incomes and, rightly or wrongly, blaming globalization for their plight. This is one of the major reasons the antiglobalization movement is as strong in the developed world as in the developing.
"While Stiglitz and Charlton nobly assert that trade agreements should be viewed as presumptively unfair if they bestow disproportionate benefits on richer nations, they fail to acknowledge that within richer nations free trade is already disproportionately benefiting the best educated and best connected. The wealthy are growing much wealthier while the middle class is being squeezed. In fact, the adjustment mechanisms the authors find lacking in most developing economies -- good public schools, modern infrastructure and adequate social safety nets -- are coming to be less and less available even in America. Free trade surely generates the gains Ricardo claimed for it. But until those gains are more widely shared -- within richer countries as well as between richer and poorer -- we can kiss any further round of trade liberalization goodbye."
I think it's unfair to assert that Stiglitz and Charlton fail to acknowledge the inequality of the distribution of benefits from free trade in the developed world. My own guess is that this is so mind-bendingly obvious to them that they don't feel the need to belabor it.
But Reich's review does set the table for a challenging question. Liberal economists like Stiglitz and Jeffrey Sachs have focused their energies on trying to make globalization work for the world's poorest regions. In doing so, they run the risk, like Stiglitz here, of demonstrating a lack of concern for the poor and less well-off in their own, highly developed nations. But finding a solution that responds to globalization's pressures, as Stiglitz suggested in the Nation last week, without "trying to enhance the well-being of our citizens at the expense of those abroad who are even poorer" is a desperately hard nut to crack.
In How the World Work's darker moments, we recall an epiphany experienced by Frank Holliwell, the protagonist in Robert Stone's great novel about the U.S. and Central America, "A Flag for Sunrise." Contemplating the mess made by the U.S. in Latin America, he fears that the affluence of the rich countries of the North requires the poverty of the poor nations of the South. In Holliwell's nightmare, globalization is a zero-sum game: Luxury in New York mandates starvation in Zambia.
There's got to be a better way.
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