GS101 Chapter Notes -Anti-Globalization Movement, George W. Bush

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17 Oct 2012

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This article was written 2 weeks after 9/11 had occurred. 9/11 was a mass public execution, a criminal act of callous disregard for human life. Four civilian aircraft hijacked and turned into fiery bombs, aimed at the citadels of us financial and military power. The world trade centre, and pentagon a symbol of american military might were in ruins. The world trade centre (wtc) was a symbol of global economy. George w bush revved up the propaganda machine by describing the incident as an all-out assault on the american way of life". The goal of religious extremists like bin laden is clean. His aim is to provoke the americans into an all- out conflict with the islamic world. There is no military solution to this problem. You can bomb afghanistan all you want, but this will do nothing to wipe out terrorism. For the us to strike back is to give the terrorists what they want.

Related Questions

After reading the February 19th, 2009 Economist article, "Turning their backs on the world," do you believe it is wise for world governments to shy away from globalization during a period of economic crisis?

Globalisation

Turning their backs on the world

Feb 19th 2009 From The Economist print edition

The integration of the world economy is in retreat on almost every front

Illustration by Claudio Munoz

THE economic meltdown has popularised a new term: deglobalisation. Some critics of capitalism seem happy about itâlike Walden Bello, a Philippine economist, who can perhaps claim to have coined the word with his book, "Deglobalisation, Ideas for a New World Economy". Britainâs prime minister, Gordon Brown, is among those who fear the results will be bad.

But is globalisation really ending? The worldâs economies are certainly slowing fast. And the speed and scale of this recession are raising doubts about the assumptions that had underpinned the drive to integrate world markets. At the end of 2008 the IMF said the world economy would grow 2.2% in 2009, less than half the rate in 2007. Now it thinks growth will be just 0.5% this year, the lowest for 60 years. Even that may be optimistic; in the last quarter of 2008, some economies shrank at annualised rates of over 10%.

Nobody ever said globalisation had ended economic ups and downs, but this feels different: prima facie evidence of big problems at least, and possibly of the failure of globalisation to deliver many of its advertised benefits, especially to the poor. True, economic slowdown is not the same as deglobalisation. And the slowdown has yet to affect one thing. For years, poor countries have been growing faster than rich ones; so far, they still are. The gap between real GDP growth in emerging markets and in rich countries widened from nothing in 1991 to about five points in 2007â

and, says the IMF, it will stay at 5.3 points in 2008 and 2009. Helping poorer countries catch up has long been among the benefits touted for globalisation.

And yet the process is going into reverse. Globalisation means the global integration of the movement of goods, capital and jobs. Each of these processes is now in trouble. World trade has plunged. As recently as the first half of 2008, boosted by rising commodity prices and a falling dollar, trade was growing at an annualised 20% in dollar terms. In the second half of 2008, as commodities sagged and the dollar rose, growth slowed fast; by September, says the IMF, it was in reverse. In December, says the International Air Transport Association, air-cargo traffic (responsible for over a third of the value of the worldâs traded goods) was down 23% on December 2007âalmost double the fall in the year up to the end of September 2001, a result affected by the 9/11 terror attacks.

The downturn has been sharpest in countries that opened up most to world trade, especially East Asiaâs tigers. Singaporeâs exports are 186% of GDP; its economy shrank at an annualised rate of 17% in the last three months of 2008. Taiwanâs exports are over 60% of GDP; and its economy may fall as much as 11% this year. The downturn has also hurt rich countries that specialise in staid old-fashioned manufacturingâsupposedly a safer activity than the reckless delusions of finance. On average, says the IMF, rich countries will contract 2% this year. But Germany and Japan, big exporters of capital goods, cars and electronics, will do worse, their economies shrinking by 2.5% and 2.6% respectively. In the last quarter their economies contracted alarmingly, falling at an annualised rate of 8% in Germany and by 13%âthe worst since 1974âin Japan.

Small countries which went into businesses that grew in globalisationâs wake, like tourism, are also suffering. The World Tourism Organisation says international tourist arrivals fell 1% in the second half of 2008, which may not sound bad, but compares with growth of more than 5% a year for the previous four years. In the Caribbean, visitors may fall by a third this season; in some islands hotels are half empty, flights are being cancelled and national budgets, reliant on tourism, are strained.

In contrast, the biggest emerging markets are doing less badly so far. In India, where exports are around 15% of GDP, the government recently said growth in the year to April 2009 would be 7.1%; most forecasters put growth for the 2009 calendar year lower, but still about 5%. In Brazil the economy has been harder hit by falling commodity prices and declining exports. Most economists still think output grew a bit in the year to the fourth quarter, and put growth for 2009 at 1.5% to 2%. China was still growing by 6.8% in the year to the fourth quarter, though like Brazil it is probably stagnating. Chinese exports fell 18% and imports 43% in the year to January. All three countries have large domestic markets and relatively stable banking systems, which have not been liberalised.

The gap between toothless tigers and friskier BICs (ie, BRICs minus Russia, a special case because of oil) raises questions not so much about globalisation as a wholeâafter all, Brazil, India and China have been beneficiariesâas about particular aspects. Can one be too dependent on trade? How far should one liberalise banking? Is there a trade-off between taking advantage of good times and providing shock absorbers for bad ones?

Emerging marketsâ trade problems have been worsened by shifts in capital flows, globalisationâs second big plank. According to the World Bank, net private debt and equity flows to developing countries will fall from $1 trillion in 2007 to $530 billion in 2009, or from 7.7% to 3% of those countriesâ GDPs. The Institute for International Finance sees an even steeper fall; it says that this year banks will extract more from emerging markets in debt repayments than they inject in new loans. Bond markets in those countries collapsed in the last quarter of 2008, doing less than $5 billion of business; in the second quarter, they had issued about $50 billion of bonds.

As with trade, financial deglobalisation is hitting countries in a variety of ways. In this case, East Asia has been less affected because most countries there are net creditors. But eastern Europe and Russia have been hammered because local banks went on a foreign-borrowing binge, foreign banks piled into their markets (and piled out again) and because some countries lacked insurance policies against tough times. Although many big emerging markets have built up foreign-exchange reserves and cut their external debts, in eastern Europe reserves have been flat, external debts have risen and current- account deficits have grown considerably in the past decade. In these countries, the reversal of globalisation has exacerbated problems that were building up anyway.

People in emerging markets have mixed feelings about financial liberalisation and may not regret its reversal. But foreign direct investment (FDI) is different. Most people welcome new factories and new jobs. FDI is also one of the commonest routes by which skills and technology are transferred from rich to poor countries.

This, too, is falling. The United Nations Conference on Trade and Development (UNCTAD) says worldwide FDI inflows shrank 21% in 2008 to $1.4 trillion. The World Association of Investment Promotion Agencies says FDI will contract by a further 12-15% this year.

In contrast to trade, the investment impact of the global downturn has so far been hardest on the countries where the woes began: rich ones. They have seen FDI falls of one-third on average and by half or more in Britain, Italy and Germany. Finland and Ireland have seen net outflows. FDI flows to developing countries were still growing in 2008, albeit by only 4%, after a rise of 21% in 2007. Flows to big South American countries were up by about a fifth; those to India more than doubled, though they may ebb as GDP falters.

The third of the three main aspects of globalisationâjobsâis following the other two, with a lag. The International Labour Organisation forecasts that unemployment worldwide will rise by around 30m above 2007âs level in 2009. Most of that rise will be the result of recession, not deglobalisation, but some will be attributable to the fall in trade (exporting companies will lay off workers) and some to declining investment (if expansion plans are cut, new jobs will not be created).

Deglobalisation will have a dire impact on migrants. In the past decade, more people have been moving voluntarily than ever before; now, some are going home. Those who provided labour for the housing boom in America (notably Latinos), Ireland (Poles) and China (rural Chinese going to cities on the eastern seaboard) have been among the first to be laid off. In Spain newly jobless builders are competing with migrants there for jobs picking fruit.

This will surely have an effect on the flow of remittances from rich countries to poor ones, although it has so far (see article) been quite resilient. In any case, economies that absorbed large numbers of foreign workers may take fewer. Some of the millions of South Asians who work in the Gulf, or the young Africans who flock to South Africa, or the Central Asians who work in Russia, may have to stay at home.

Yet for all the economic pain, the social and political fallout from deglobalisation has not yet been severe. Protests may still come. Or maybe national governments are absorbing most of the ire. In December, Greece saw riots after a police bullet killed a teenager. In France, unions brought over 1m people onto the streets for a one-day strike, and a riot in Latvia over economic policy ended in more than 100 arrests. But only in Britain, where workers have picketed refineries and power stations over the hiring of foreigners, has protest had a very anti-global tone.

This lag may be explained by residual support for globalisation, especially in emerging markets. A poll in 2007 by the Pew Global Attitudes Project found that majorities in 47 countries saw international trade as good for them; majorities in 41 out of 46 welcomed multinational firms; in 39 out of 47, most felt better off with a free market. In more than half the countries where changes could be tracked, support for free markets was rising.

When consensus wobbles

But is that still true? Last summer, on the eve of the meltdown, European Union pollsters reported that two-thirds of EU citizens saw globalisation as profitable only for large firms, not citizens. In 2002, according to the Pew poll, 78% of Americans thought foreign trade helped the country; by 2007 it was only 59%. A CNN poll in July 2008 showed that, for the first time, a small majority of Americans saw trade as a threat, not an opportunity.

Of the few worldwide polls to have been completed since then, one by Edelman for the World Economic Forum found that 62% of respondents in 20 countries said they trusted companies less or a lot less now. Manifestly, popular opinion backs more state regulation.

So far, this has mostly taken the form of pouring public money into banks and selected industries, notably cars. Last week Barack Obama set out plans for another vast bank rescue, and the French government promised â¬6 billion ($7.8 billion) in preferential loans to Renault and Peugeot-CitroÃ«n in return for pledges that no car factories would be closed in France.

There has been somewhat less evidence of trade protectionism. India has raised some steel tariffs. The EU has reintroduced export subsidies for some dairy products. Russia has raised import duties on vehicles. But there has also been movement the other way. The American Senate softened the "Buy America" provisions of the stimulus bill. Mexico said that by 2012 it would cut tariffs on thousands of kinds of manufacture. And some countries have sought a safe harbour, rather than embracing pure nationalism. East Europeans are even keener on the shelter of the euro; Iceland has applied to the EU; the Irish are more likely than they were to vote for the EUâs Lisbon treaty.

Despite the downturn, the nations of the world have not shunned globalisation. It has been protected by the belief of firms in the efficiency of global supply chains. But like any chain, these are only as strong as their weakest link. A danger point will come if firms decide that this way of organising production has had its day.

Read The Economist's articles, "The return of economic nationalism," "The battle of Smoot-Hawley," and Business Week's article, "Jobs and Protectionism in the Stimulus Package."

Do you believe the provision of "Buy America" placed in the $787 billion stimulus package by Congress was necessary during the recession to ensure American jobs and strengthen the American Economy?

Or was this Congressional provision a form of protectionism similar to the Smoot-Hawley bill passed in 1930?

The world economy

The return of economic nationalism

Feb 5th 2009

From

The Economist

print edition

A spectre is rising. To bury it again, Barack Obama needs

to take the lead

Illustration by Jon Berkeley

MANAGING a crisis as complex as this one has so far called for nuance and pragmatism

rather than stridency and principle. Should governments prop up credit markets

by offering

guarantees or creating bad banks? Probably both. What package of fiscal stimulus would be

most effective? It varies from one country to the next. Should banks be nationalised? Yes,

in some circumstances. Only the foolish and the partisan have r

ejected (or embraced) any

solutions categorically.

But the re

emergence of a spectre from the darkest period of modern history argues for a

different, indeed strident, response. Economic nationalism

the urge to keep jobs and

capital at home

is both turnin

g the economic crisis into a political one and threatening the

world with depression. If it is not buried again forthwith, the consequences will be dire.

Devil take the hindmost

Trade encourages specialisation, which brings prosperity; global capital marke

ts, for all their

problems, allocate money more efficiently than local ones; economic co

operation

encourages confidence and enhances security. Yet despite its obvious benefits, the

globalised economy is under threat.

Congress is arguing about a clause in the $800 billion

plus stimulus package that in its most

extreme form would press for the use of American materials in public works. Earlier, Tim

Geith

ner, the new treasury secretary, accused China of âmanipulatingâ its currency,

prompting snarls from Beijing. Around the world, carmakers have lobbied for support (see

article

), and some have got it. A host of industries, in countries from India to Ecuador, want

help from their governments.

The grip of nationalism is tightest in banking (see

article

). In France and Britain, politicians

pouring taxpayersâ money into ailing banks are demanding that the cash be lent at home.

Since banks are reducing overall lending, that means repatriating cash. Regulators are

thinking nationally too. Switzer

land now favours domestic loans by ignoring them in one

measure of the capital its banks need to hold; foreign loans count in full.

Governments protect goods and capital largely in order to protect jobs. Around the world,

workers are demanding help from t

he state with increasing panic. British strikers, quoting

Gordon Brownâs ill

chosen words back at him, are demanding that he provide âBritish jobs

for British workersâ (see

article

). In France more than 1m people stayed away from work on

January 29th, marching for jobs and wages. In Greece police used tear gas to control

farmers calling for even more subsidies.

Three arguments are raised in defence of economic nationalism: t

hat it is justified

commercially; that it is justified politically; and that it wonât get very far. On the first point,

some damaged banks may feel safer retreating to their home markets, where they

understand the risks and benefit from scale; but that is

a trend which governments should

seek to counteract, not to encourage. On the second point, it is reasonable for politicians to

want to spend taxpayersâ money at home

so long as the costs of doing so are not

unacceptably high.

In this case, however, the c

osts could be enormous. For the third argument

that

protectionism will not get very far

is dangerously complacent. True, everybody sensible

scoffs at Reed Smoot and Willis Hawley, the lawmakers who in 1930 exacerbated the

Depression by raising American tar

iffs. But reasonable people opposed them at the time,

and failed to stop them: 1,028 economists petitioned against their bill. Certainly, global

supply

chains are more complex and harder to pick apart than in those days. But when

nationalism is on the marc

h, even commercial logic gets trampled underfoot.

The links that bind countriesâ economies together are under strain. World trade may well

shrink this year for the first time since 1982. Net private

sector capital flows to the

emerging markets are likely t

o fall to $165 billion, from a peak of $929 billion in 2007. Even

if there were no policies to undermine it, globalisation is suffering its biggest reversal in the

modern era.

Politicians know that, with support for open markets low and falling, they must

be seen to

do something; and policies designed to put something right at home can inadvertently eat

away at the global system. An attempt to prop up Irelandâs banks last year sucked deposits

out of Britainâs. American plans to monitor domestic bank lending

month by month will

encourage lending at home rather than abroad. As countries try to save themselves they

endanger each other.

The big question is what America will do. At some moments in this crisis it has shown the

way

by agreeing to supply dollars to

countries that needed them, and by guaranteeing the

contracts of European banks when it rescued a big insurer. But the âBuy Americanâ

provisions in the stimulus bill are alarmingly nationalistic. They would not even boost

American employment in the short r

un, because

just as with Smoot

Hawley

the inevitable

retaliation would destroy more jobs at exporting firms. And the political consequences would

Protectionism

The battle of Smoot

Hawley

Dec 18th 2008

From

The Economist

print edition

A cautionary tale about how a protectionist

measure opposed by all right

thinking people

was passed

Library of Congress

Hawley and Smoot, the bogeymen of trade

EVEN when desperate, Wall Street bankers are not given to grovelling. But in June

1930 Thomas Lamont, a partner at J.P. Morga

n, came close. âI almost went down

on my knees to beg Herbert Hoover to veto the asinine Hawley

Smoot Tariff,â he

recalled. âThat Act intensified nationalism all over the world.â

According to David Kennedy, an historian, Lamont was âusually an influential

economic adviserâ to the American president. Not this time. Hoover signed the bill

on June 17th: âthe tragic

comic finaleâ, said that weekâs

Economist

, âto one of the

most amazing chapters in world tariff history...one that Protectionist enthusiasts the

worl

d over would do well to study.â

The Tariff Act of 1930, which increased nearly 900 American import duties, was

debated, passed and signed as the world was tumbling into the Depression. Its

sponsors

Willis Hawley, a congressman from Oregon, and Reed Smo

ot, a senator

from Utah

have come to personify the economic isolationism of the era. Sixty

three years later, in a television debate on the North American Free

Trade

Agreement, Al Gore, then vice

president, even presented his unamused anti

NAFTA

opponent,

Ross Perot, with a framed photograph of the pair. Now, with the world

economy in perhaps its worst pickle since the Depression, the names of Hawley and

Smoot are cropping up again.

In fact, few economists think the Smoot

Hawley tariff (as it is most often

known)

was one of the principal causes of the Depression. Worse mistakes were made,

largely out of a misplaced faith in the gold standard and balanced budgets.

Americaâs tariffs were already high, and some other countries were already

increasing their own.

Nevertheless, the act added poison to the emptying well of global trade (see chart).

The worldwide protection of the 1930s took decades to dismantle. And bad

monetary and fiscal policies were at least based on the economic orthodoxy of the

day: economists

would tear each other apart over the heresies of John Maynard

Keynes. On protection, there was no such division. More than a thousand

economists petitioned Hoover not to sign the Smoot

Hawley bill. Bankers like

Lamont sided with them; so did editorialists

by the score.

The âasinineâ bill began as a much smaller beast: the plan was to help American

agriculture, which had slumped in the early 1920s. Congress passed sev

eral bills to

support prices and subsidise exports, but all were vetoed by Calvin Coolidge,

Hooverâs predecessor. With no obvious logic

most American farmers faced little

competition from imports

attention shifted to securing for agriculture the same

sort

of protection as for manufacturing, where tariffs were on average twice as

high. To many of its supporters, âtariff equalityâ meant reducing industrial duties as

well as raising those on farm goods. âBut so soon as ever the tariff schedules were

Jobs and Protectionism in the Stimulus

Package

President Obama's spending bill promotes the use of

American goods and labor. Despite foreign and domestic

protests, the language is mainly rhetorical

Members of the Senate and the House hash out differences between the two versions of the

economic stimulus legislation at the U.S. Capitol on Feb. 1

Chip Somodevilla/Getty Images

Moira Herbst

The $787 billion spending legislation being signed on Feb. 17 by President Barack Obama is

designed to jolt some life into a moribund economy. Already, though, provisions to use the

ney to "buy American"

whether that means American iron, steel, or labor

is sparking a

debate about whether such rules in a global economy amount to protectionism.

Organized labor and small U.S. manufacturers won an amendment to the stimulus bill to ensure

that more materials used on construction and infrastructure are made in the U.S. Critics of the H

1B visa program won tougher rules governing when banks that are bailed out by the Troubled

Assets Relief Program (TARP) can fill jobs with skilled immigrants

The final language drew criticism from abroad, where editorials and government officials

warned it could run afoul of trade agreements. But both provisions are less stringent than earlier

versions had been, and neither is likely to have a radical effect

on how stimulus spending takes

shape.

Opposition from Exporters

The clearest attempt to wall off foreign companies from U.S. spending came in a "Buy

American" provision. That rule requires that only U.S. iron, steel, and other manufactured goods

be used

for public buildings and public works funded under the bill. However, it comes with

several key caveats.

For one, the language states that the Buy American po

licy must not violate

U.S. obligations under existing international trade agreements. Nor does the rule apply if

American goods aren't available in sufficient quantities or if they'll increase the cost of the

overall project by more than 25%. Federal highw

ay, transit, and airport projects are already

covered by similar Buy American requirements.

The battle over the provision had been contentious. On Feb. 3, 100 business groups and

companies

including the U.S. Chamber of Commerce, General Electric (

), Caterpillar

(

CAT

), and other major construction, defense, and

high

tech companies

wrote a letter to Senate

leaders warning that a far

reaching Buy American rule "will harm American workers and

companies across the entire U.S. economy, undermine U.S. global engagement, and result in

mirror

image trade restrictions abr

oad that would put at risk huge amounts of American exports."

But advocates of the provision

including the Alliance for American Manufacturing, a

partnership of manufacturing companies and the United Steelworkers union

said

such rules are

needed

to stem the tide of layoffs in the U.S. construction and manufacturing sectors.

Coalition Claims 'Major Victory'

In negotiations, the Obama Administration sought to r

econcile the opposing sides. White House

spokesman Robert Gibbs told reporters on Feb. 12 that the final bill achieves this. "I think where

we ended up with the Buy America provision is the right compromise that respects the Buy

America laws that we've had

on our books for many, many years while also ensuring that the

language doesn't create unnecessary trade disagreements in a time of economic crisis," Gibbs

said.

Scott Paul, executive director of AAM, said in a prepared statement that the resulting langu

age

was "a major victory for American manufacturers and workers." He said: "Buy America is good

news for laid

off workers in construction and manufacturing, and good news for the global

economy by helping to spur U.S. growth."

That's not how it was receive

d overseas, however. Robert Zoellick, president of the World Bank,

told

The New York Times

that

it was crucial to avoid the protectionist policies of the 1930s. "The

Buy Ame

rican provision is very dangerous," he said. At the Group of Seven meeting of world

financial leaders in Rome last week, U.S. Treasury Secretary Timothy Geithner was pressed to

assure other countries that the Obama Administration would remain committed to

free trade.

Too Late to Compensate Free Tradeâs Losers

CAMBRIDGE â It appears that a new consensus has taken hold these days among the worldâs business and policy elites about how to address the antiÂglobalization backlash that populists such as Donald Trump have so ably exploited. Gone are the confident assertions that globalization benefits everyone: we must, the elites now concede, accept that globalization produces both winners and losers. But the correct response is not to halt or reverse globalization; it is to ensure that the losers are compensated.

The new consensus is stated succinctly by Nouriel Roubini: the backlash against globalization âcan be contained and managed through policies that compensate workers for its collateral damage and costs,â he argues. âOnly by enacting such policies will globalizationâs losers begin to think that they may eventually join the ranks of its winners.â

This argument seems to make eminent sense, both economically and politically. Economists have long known that trade liberalization causes income redistribution

and absolute losses for some groups, even as it enlarges a countryâs overall economic pie. Therefore, trade deals unambiguously enhance national wellbeing only to the extent that winners compensate losers. Compensation also ensures support for trade openness from broader constituencies and should be good politics.

Prior to the welfare state, the tension between openness and redistribution was resolved either by largeÂscale emigration of workers or by reÂimposing trade protection, especially in agriculture. With the rise of the welfare state, the constraint became less binding, allowing for more trade liberalization. Today the advanced countries that are the most exposed to the international economy are also those where safety nets and social insurance programs â welfare states â are the most extensive. Research in Europe has shown that losers from globalization within countries tend to favor more active social programs and laborÂmarket interventions.

If opposition to trade has not become politically salient in Europe today, it is partly because such social protections remain strong there, despite having weakened in recent years. It is not an exaggeration to say that the welfare state and the open economy have been flip sides of the same coin during much of the twentieth century.

Compared to most European countries, the United States was a latecomer to globalization. Until recently, its large domestic market and relative geographical insulation provided considerable protection from imports, especially from lowÂwage countries. It also traditionally had a weak welfare state.

When the US began opening itself up to imports from Mexico, China, and other developing countries in the 1980s, one might have expected it to go the European route. Instead, under the sway of Reaganite and marketÂfundamentalist ideas, the US went in an opposite direction. As Larry Mishel, president of the Economic Policy Institute, puts it, âignoring the losers was deliberate.â In 1981, the âtrade adjustment assistance (TAA) program was one of the first things Reagan attacked, cutting its weekly compensation payments.â

The damage continued under subsequent, Democratic administrations. In Mishelâs words, âif freeÂtraders had actually cared about the working class, they could have supported a full range of policies to support robust wage growth: full employment,

collective bargaining, high labor standards, a robust minimum wage, and so on.â And all of this could have been done âbefore administering âshocksâ by expanding trade with lowÂwage countries.â

Could the US now reverse course, and follow the newly emergent conventional wisdom? Back in 2007, political scientist Ken Scheve and economist Matt Slaughter called for âa New Deal for globalizationâ in the US, one that would link âengagement with the world economy to a substantial redistribution of income.â In the US, they argued, this would mean adopting a much more progressive federal tax system.

Slaughter had served in a Republican administration, under President George W. Bush. It is an indication of how polarized the US political climate has become that it is impossible to imagine similar proposals coming out of Republican circles these days. The effort by Trump and his Congressional allies to emasculate former President Barack Obamaâs signature healthÂinsurance program reflected Republicansâ commitment to scaling back, not expanding, social protections.

Todayâs consensus concerning the need to compensate globalizationâs losers presumes that the winners are motivated by enlightened selfÂinterest â that they believe buyÂin from the losers is essential to maintain economic openness. Trumpâs presidency has revealed an alternative perspective: globalization, at least as currently construed, tilts the balance of political power toward those with the skills and assets to benefit from openness, undermining whatever organized influence the losers might have had in the first place. Inchoate discontent about globalization, Trump has shown, can easily be channeled to serve an altogether different agenda, more in line with elitesâ interests.

The politics of compensation is always subject to a problem that economists call âtime inconsistency.â Before a new policy â say, a trade agreement â is adopted, beneficiaries have an incentive to promise compensation. Once the policy is in place, they have little interest in following through, either because reversal is costly all around or because the underlying balance of power shifts toward them.

The time for compensation has come and gone. Even if compensation was a viable approach two decades ago, it no longer serves as a practical response to

globalizationâs adverse effects. To bring the losers along, we will need to consider changing the rules of globalization itself.

QUESTIONS:

a. According to Rodrik, why is it that "trade deals unambiguously enhance national wellbeing only to the extend that winners compensate losers?" Explain completely.

b. Rodrik draws a historical link between globalization and the "welfare state." Explain this link.

c. Rodrik mentions a previous proposal by Scheve and Slaughter called "A New Deal for Globalization." What was the essence of this proposal? What has become of it?

d. What is the "time inconsistency" problem and why is it relevant for Rodrik's argument?

e. In your opinion, what is one weakness in Rodrik's argument? Explain.

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GS101 Chapter Notes -Anti-Globalization Movement, George W. Bush

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