Making Globalization Work:Making Globalization Work:PrefacePreface

Julie A. PucciniJulie A. Puccini

Joseph E. StiglitzJoseph E. Stiglitz

Born 2/9/1943 in Gary, INBorn 2/9/1943 in Gary, IN EducationEducation

Spent 40+ years studying Spent 40+ years studying strengths & weaknesses strengths & weaknesses of market economyof market economy

B.A. from Amherst B.A. from Amherst College in 1964College in 1964

Ph.D. in Economics from Ph.D. in Economics from M.I.T. in 1967M.I.T. in 1967

Nobel Prize in 2001Nobel Prize in 2001

Work HistoryWork History White HouseWhite House

From 1993 to 1997 under President William Jefferson ClintonFrom 1993 to 1997 under President William Jefferson Clinton Member then Chairman of the Council of Economic AdvisorsMember then Chairman of the Council of Economic Advisors Declined President’s request to stay on board and join Declined President’s request to stay on board and join

cabinetcabinet

World BankWorld Bank From 1997 to 2000From 1997 to 2000 Senior Vice President and Chief EconomistSenior Vice President and Chief Economist

Current Professor at Columbia University in NYCurrent Professor at Columbia University in NY Previously taught at Princeton, Oxford, Stanford, M.I.T.Previously taught at Princeton, Oxford, Stanford, M.I.T.

Globalization and Its DiscontentsGlobalization and Its Discontents

Written just after leaving World BankWritten just after leaving World Bank About the failure of international About the failure of international

financial system to make globalization financial system to make globalization workwork

Chronicled period of chaotic and difficult Chronicled period of chaotic and difficult yearsyears East Asian financial CrisisEast Asian financial Crisis Former Soviet Union’s transition from Former Soviet Union’s transition from

communismcommunism World’s economy – competition, World’s economy – competition,

uncertainty, instability, laziness and uncertainty, instability, laziness and greedgreed

Making Globalization WorkMaking Globalization Work

““Development [is] possible, [but] not inevitable”Development [is] possible, [but] not inevitable” China’s domination of manufacturing in global sceneChina’s domination of manufacturing in global scene India’s success in outsourcingIndia’s success in outsourcing

Need to change policies and thinkingNeed to change policies and thinking Successful developing countries share some common Successful developing countries share some common

policiespolicies

Making Globalization WorkMaking Globalization Work

Change is inevitable… the question is Change is inevitable… the question is when…when…

Global financial crisis of 1997-1998Global financial crisis of 1997-1998Latin American crises of the early 2000sLatin American crises of the early 2000sFalling dollar beginning in 2003Falling dollar beginning in 2003

……before it’s too before it’s too late?late?

Current Globalization ProblemsCurrent Globalization Problems

Underlying flaws in market Underlying flaws in market fundamentalism (the belief that markets, fundamentalism (the belief that markets, by themselves, lead to economic by themselves, lead to economic efficiency)efficiency)

Need right balance between private and Need right balance between private and public sectorspublic sectors

Advance policies promoting equality and Advance policies promoting equality and full employmentfull employment

Connections Between Economic & Connections Between Economic & Cultural ValuesCultural Values

““Globalization is the field on which some of Globalization is the field on which some of our major societal conflicts – including our major societal conflicts – including those over basic values – play out.”those over basic values – play out.”

- Joseph E. - Joseph E. StiglitzStiglitz

Connections Between Economic & Connections Between Economic & Cultural ValuesCultural Values

CONSERVATIVES/ “FREE MARKET” ECONOMISTSCONSERVATIVES/ “FREE MARKET” ECONOMISTS

1.1. Actions towards equality are costly and Actions towards equality are costly and counterproductivecounterproductive

2.2. Markets, without government intervention, are efficientMarkets, without government intervention, are efficient3.3. Let economy grow and somehow benefits will trickle Let economy grow and somehow benefits will trickle

down to the poordown to the poor4.4. Inequality due to efforts; wealth is reward for hard workInequality due to efforts; wealth is reward for hard work5.5. Tend to be less concerned about noneconomic issues:Tend to be less concerned about noneconomic issues:

social justicesocial justice universal access to health careuniversal access to health careenvironmentenvironment consumer protectionconsumer protectioncultural diversitycultural diversity

Connections Between Economic & Connections Between Economic & Cultural ValuesCultural Values

AUTHOR & OTHER ECONOMIC LIBERALSAUTHOR & OTHER ECONOMIC LIBERALS

1.1. Free markets produce inefficiencies like too much Free markets produce inefficiencies like too much pollution or too little basic researchpollution or too little basic research

2.2. Disturbed by inequality and poverty; understand the Disturbed by inequality and poverty; understand the costs of ignoring the problemcosts of ignoring the problem

*Attribute inequality to luck – “sperm lottery” and real estate *Attribute inequality to luck – “sperm lottery” and real estate bubblesbubbles

3.3. Believe government interventions can workBelieve government interventions can work4.4. Globalization does not have to damage the Globalization does not have to damage the

environment, increase inequality, weaken cultural environment, increase inequality, weaken cultural diversity, and advance corporate interests at the diversity, and advance corporate interests at the expense of ordinary citizens’ well-beingexpense of ordinary citizens’ well-being

Making Globalization WorkMaking Globalization Work

““An informed citizenry is more likely to An informed citizenry is more likely to provide some checks against the abuse of provide some checks against the abuse of

the special corporate and financial the special corporate and financial interests that have so dominated the interests that have so dominated the

globalization process”globalization process”

- Joseph E. Stiglitz- Joseph E. Stiglitz

Questions?Questions?

DiscussionDiscussion

What is the “right” balance between private and public sectors?

What regulations, if any, should it adopt to protect workers, consumers, and the environment?

OSHA fines, Environmental Protection Agency regulations

What services should the government provide?

welfare, universal healthcare, education

Should there be public pension programs?

social security vs. 401k and the privatization of social security

Should government encourage particular sectors with incentives?

farm subsidies, tariffs imposed to protect steel industry

DiscussionDiscussionConservative vs. liberal economists – which Conservative vs. liberal economists – which

are you?are you?

CONSERVATIVECONSERVATIVE

1.1. Actions towards equality are Actions towards equality are costly & counterproductivecostly & counterproductive

2.2. Markets alone are efficientMarkets alone are efficient3.3. Let economy grow and Let economy grow and

benefits will trickle down benefits will trickle down 4.4. Inequality due to efforts; Inequality due to efforts;

wealth is reward for hard wealth is reward for hard workwork

5.5. Less concerned about: Less concerned about: social justice, universal social justice, universal access to health care, access to health care, environment, consumer environment, consumer protection, cultural diversityprotection, cultural diversity

LIBERALLIBERAL

1.1. Free markets produce Free markets produce inefficienciesinefficiencies

2.2. Disturbed by inequality and Disturbed by inequality and poverty & understand the poverty & understand the costs of ignoring the problemcosts of ignoring the problem

3.3. Believe government Believe government interventions can workinterventions can work

4.4. Globalization does not have Globalization does not have to damage the environment, to damage the environment, increase inequality, weaken increase inequality, weaken cultural diversity, and cultural diversity, and advance corporate interests advance corporate interests at the expense of ordinary at the expense of ordinary citizens’ well-beingcitizens’ well-being