Making Globalization Work by Joseph E. Stiglitz Summary and Reviews
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Book Reviews of Making Globalization Work
Book Review: Very Helpful in Understanding Globalization
Summary: 5 Stars
Most discussion of globalization consists of uninformed opinion that is not worth listening to or reading. Not so with "Making Globalization Work" - the author is a Nobel prize-winner in economics and has worked at the IMF and the White House. He provides an excellent summary of the current problems with globalization, and a number of suggestions for improvement.
Stiglitz tells us that the world is in a race between economic and population growth, and so far population growth is winning - at least in absolute numbers of people, and especially when China is excluded.
The IMF is not democratic - the U.S. has effective veto. Further, it has focused on inflation, rather than wages, environment, unemployment, or poverty (recently it did make poverty reduction a priority). Advanced industrial countries (AIC) have been allowed to levy tariffs on goods produced by developing countries that were, on average, four times those on goods from other AICs. Developing countries were also forced to abandon subsidies for their nascent industries while AIC were allowed to continue their enormous agricultural subsidies. The top 1% of U.S. farms get 25% of the subsidies (averaging over $1 million/), while the bottom 80% get less than $7,000/. Thus, the program is NOT key to saving the family farm, and in fact hurts them more by increasing land prices that in turn require greater use of fertilizer and capital to utilize profitably. Further, the U.S. has used trade agreements to force patent protection for drugs (increasing AIDs deaths) and for eg. Microsoft.
Finally, Stiglitz recognizes that globalization does produce losers within the U.S., especially those with less education. He proposes more progressive taxation to support an improved safety net for those affected. However, my one criticism is that Stiglitz does not offer an estimate of what market equalizing wages would be like in the U.S. I suspect they would be so low and affect so many that it would destabilize our nation.
Free market development can be difficult - eg. firms using plastics or steel are not likely to develop without a local supplier, and those local suppliers look for assured demand before building. Further, banks are often less interested in leading to new industries than financing speculative real estate or lending to the government. Korea and Taiwan believe in the importance of free markets, but both stepped in to create world-class producers of steel (Korea) and plastics (Taiwan); meanwhile, during the early days of these industries they limited undercutting imports. Thus, "free enterprise" is not always the answer.
TIght money and budgets (the IMF prescription) were used to bring down hyperinflation in Russia after the USSR was broken up; this was accompanied by rapid privatization, resulting in a giveaway of its most valuable assets and quick capital flight (partly due to fear privatization would be reversed). Aftrica has fared poorly due to a less educated populace, less infrastructure, and less stability --> making it less attractive to investment. In addition, the Green Revolution did not take hold in Afrca as it had in Asia, and AIDs has ravaged the population. Failures of the conservative approach in Africa, Latin America, and Russia have also weakened democracy in those areas.
One of the main arguments for NAFTA was to close the income gap between Mexico and the U.S., and thereby also reduce illegal immigration. Yet, the disparity grew during the first decade by about 10%, and real growth per capita in Mexico was only 1.8% during the period. Mexican farmers now must compete with highly subsidized U.S. growers --> an increase in illegal immigration.
Exports, not the removal of trade barriers, is the driving force of growth.
GDP measures of an economy do not include sustainability - eg. resource depletion, borrowing from abroad), nor life expectancy.
China's 11th 5-year plan (3/06) shifted from exports (growing protectionism around the world) to greater domestic demand, as a means of utilizing its over 40% savings rate.
Corruption of campaign contributions by major corporations in the eg. U.S. is greater in magnitude of impact on democratic processes than the petty and pervasive small bribes paid government officials in developing countries.
Book Review: A well-informed and thought-provoking work
Summary: 5 Stars
In this book, Stiglitz gave his advices on how to make globalization work for most of the population on earth: how the world - especially the developing countries - can reap the enormous benefits of globalization while containing the equally enormous problems -- problems well documented in his previous book "Globalization and Its Discontents" - that globalization creates.
The content of the book is well organized, its opinions well informed, and its ideas thought-provoking.
This book is really written from a high moral ground - putting the interests of the world's vast poor ahead of the special interests of wealthy Western corporations. Some may feel uncomfortable of this view point, and some may even attack the book. But having met with Stiglitz in person, I have enormous respect for his integrity and his sincerity in genuinely wanting to help make globalization work to benefit most people in this world. Highly recommended!