Globalization is widely perceived to be at a crossroad. Its long-acknowledged benefits to economic growth, poverty reduction, and consumers’ access to varied goods at lower prices, have given way to growing public skepticism out of concerns with job losses, de-industrialization, and inequality. Such skepticism has been aggravated by a string of international financial crises that have heightened unemployment and public debt in many countries in recent years, as well as by concerns about loss of national sovereignty and homeland security, all of which help fuel anti-foreigner sentiments. This panel brings together some of the main contemporary thinkers on the topic, who will speculate on how the interplay of pro- and anti-globalization forces are likely to evolve in coming years and how policymakers can influence that outcome for the benefit of societal welfare at large.
Globalization is at a crossroads. In an engaging dialogue, panelists discussed the benefits and harms brought by globalization and implications for policy makers.
Key Points:
· Double‑edged sword. Pros and cons of globalization were revisited. Deaton noted that the global movement of goods and ideas has brought numerous benefits and led to wonderful achievements over the past four decades, citing the extraordinary reduction of global poverty, increase in lifespans, and lower infant mortality rates. In a video clip addressing the audience, Summers argued that globalization has united countries and created efficiency benefits, but that it has also contributed to rising inequality. Summers noted that while George Eastman’s pioneering invention and the establishment of Eastman Kodak Company has turned Rochester, New York, into a prosperous middle class U.S. city, its global impact is not comparable to Apple, which has spread production globally and lifted salaries of workers in other countries. Tyson noted that technology has redefined jobs in terms of its content and pay and led to an erosion of middle‑class income opportunities.
· Tectonic changes. Panelists pointed to dramatic changes driven by technology advances and global integration. Summers observed two fundamental changes over the past four decades: firstly, the increased integration between advanced economies (AEs) and emerging market economies (EMs) has led to a relative drop in the wages of less‑skilled workers in AEs; secondly, dramatic technological changes have made production happen at distance, resulting in the dislocation of the success of elites and regular workers. In a similar vein, Tyson cited one IMF study showing that about half of the decline of national income paid to workers in AEs since the 1980s can be traced to the impact of rapid progress in technology. Global integration, as captured by trends in final goods trade, participation in global value chains, and foreign direct investment, also played a role, with its contribution being estimated at about half that of technology.
· Misperceptions. Panelists stressed that misinterpretation can lead to wrong policy action. Summers noted that the primary reason behind trade deficits of some AEs is not free trade agreements, but is mainly due to the success of EMs. In this context, he was gravely concerned about U.S. nationalist postures. Deaton echoed this concern. He argued that globalization is a good thing, but costs like job losses in AEs are not inevitable consequences, but mainly a result of wrong policies. For instance, the working‑class life is getting worse in the U.S. because policy makers have mismanaged the benefits of globalization. Globalization is not a zero‑sum game between AEs and EMs. Wolf contended that viewing globalization only from the perspective of trade is too narrow‑minded, as globalization is also about capital flows, FDI, and migration.
Quotes:
“The increase of mergers, consolidation and profit margins have made a few people very rich, and raised prices for everybody else.” Angus Deaton
“Focusing on globalization and trade has caused economic and political problems that developed countries particularly face. We have overestimated the role of trade, but underestimated the effect of technology change.” Laura Tyson
“The dominant issue in Europe is not trade at all, but the movement of people.” Martin Wolf
“International cooperation will not continue and will not be vigorously supported, if it is seen primarily as an agenda on behalf of the elites.” Lawrence Summers
Ernesto Zedillo
Frederic Iseman '74 Director
Yale Center for the Study of Globalization
Yale University
Ernesto Zedillo is the Director of the Yale Center for the Study of Globalization; Professor in the Field of International Economics and Politics; Professor of International and Area Studies; and Professor Adjunct of Forestry and Environmental Studies at Yale University. He currently teaches two undergraduate seminars at Yale on “Debating Globalization” and “The Economic Evolution and Challenges of the Latin American and Caribbean Countries” and formerly taught “Trade Theory and Policy,” an Economics Department lecture course. He earned his Bachelor’s degree from the School of Economics of the Natìonal Polytechnic Institute in Mexico and his M.A. and Ph.D. at Yale University. After almost a decade with the Central Bank of Mexico he served as Undersecretary of the Budget, Secretary of Economic Programming and the Budget, and Secretary of Education before serving as President of Mexico from 1994-2000. He is the Chairman of the Board of the Natural Resource Governance Institute and Co-Chair of the Inter-American Dialogue. He serves on the Global Commission on Drug Policy; the High-Level Board of Experts on the Future of Global Trade Governance; and is a member of The Elders, an independent group of global leaders using their collective experience and influence for peace, justice and human rights worldwide. From 2010 to 2012 he served as Vice Chair of the Global Commission on Elections, Democracy and Security, chaired by Kofi Annan; from 2005 to 2011, as Chair of the Global Development Network; and from 2008 to 2010 as Chair of the High Level Commission on Modernization of World Bank Group Governance. He is a Member of the Group of 30, a consultative group on international economic and monetary affairs. In 2011 he was elected an international member of the American Philosophical Society.
Angus Deaton
Dwight D. Eisenhower Professor of Economics and International Affairs Emeritus
Princeton University
Angus Deaton is Senior Scholar and the Dwight D. Eisenhower Professor of Economics and International Affairs Emeritus at Princeton University’s Woodrow Wilson School, where he taught for thirty years. He is also Presidential Professor of Economics at the University of Southern California. He is the author of five books including, most recently, The Great Escape: health, wealth, and the origins of inequality. His interests include health, development, poverty, inequality, and wellbeing. He has written extensively on happiness, foreign aid, and how we should collect evidence for good policy. He is a member of the National Academy of Sciences and of the American Philosophical Society, and an Honorary Fellow of the Royal Society of Edinburgh. He was President of the American Economic Association in 2009, and in 2015 he received the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel “for his analysis of consumption, poverty, and welfare.” He was born in Edinburgh, Scotland and is a British and an American citizen; his BA, MA, and PhD are from Cambridge University. In 2016, he was made a Knight Bachelor for his services to economics and international affairs.
Larry Summers
Charles W. Eliot University Professor and President Emeritus
Harvard University
Lawrence H. Summers is the Charles W. Eliot University Professor and President Emeritus of Harvard University. During the past two decades, he has served in a series of senior policy positions in Washington, D.C., including the 71st Secretary of the Treasury for President Clinton, Director of the National Economic Council for President Obama, and Vice President of Development Economics and Chief Economist of the World Bank. He received a bachelor of science degree from the Massachusetts Institute of Technology in 1975 and was awarded a Ph.D. from Harvard in 1982. In 1983, he became one of the youngest individuals in recent history to be named as a tenured member of the Harvard University faculty. In 1987, Mr. Summers became the first social scientist ever to receive the annual Alan T. Waterman Award of the National Science Foundation (NSF), and in 1993 he was awarded the John Bates Clark Medal, given every two years to the outstanding American economist under the age of 40. He is currently the Charles W. Eliot University Professor at Harvard University and the Weil Director of the Mossavar-Rahmani Center for Business & Government at Harvard’s Kennedy School. He and his wife Elisa New, a professor of English at Harvard, reside in Brookline with their six children.
Laura Tyson
Professor
Business Administration and Economics
Haas School of Business University of California
Berkeley
Laura D. Tyson is a Distinguished Professor of the Graduate School and Director of the Institute for Business & Social Impact at the Berkeley Haas School of Business. She chairs the Blum Center for Developing Economies Board of Trustees. From 2002-2006, she served as Dean of London Business School and from 1998-2001 she served as Dean of the Berkeley-Haas. Tyson was a member of the US Department of State Foreign Affairs Policy Board and a member of President Obama’s Council on Jobs and Competitiveness and the President’s Economic Recovery Advisory Board. She served in the Clinton Administration as the Chair of the Council of Economic Advisers (1993-1995) and as Director of the National Economic Council (1995 – 1996). She is a member of the Board of Directors of AT&T, CBRE Group Inc. and Silver Spring Networks. She is the co-author of Leave No One Behind, a report for the United Nation’s High-Level Panel on Women’s Economic Empowerment.
Martin Wolf
Chief Economics Commentator
Financial Times
Martin Wolf is Chief Economics Commentator at the Financial Times, London. He was awarded the CBE (Commander of the British Empire) in 2000 for services to financial journalism. He was a member of the UK government's Independent Commission on Banking between June 2010 and September 2011. He is an honorary fellow of Nuffield College, Oxford and of King's College, London. He has honorary doctorates from five universities, including the London School of Economics. He is a University Global Fellow of Columbia University, New York, and a Senior Fellow in Global Economic Policy at its School of International Public Affairs. Mr. Wolf won the Ludwig Erhard Prize for economic commentary for 2009, the 33rd Ischia International Journalism Prize in 2012, and the Overseas Press Club of America's prize for "best commentary on international news in any medium" for 2013. His most recent books are Why Globalization Works (Yale University Press, 2004), Fixing Global Finance (Johns Hopkins University Press and Yale University Press, 2008 and 2010), and The Shifts and The Shocks: What we've learned - and have still to learn - from the financial crisis (Allen Lane, 2014).