Safety Net Needed

Globalization and its New Discontents

NEW YORK, UNITED STATES - JULY 19: A homeless man with his dog stands on a pavement in New York, United States, on July 19, 2015. The national poverty rate rose to include 13.2% of the population. One out of 50 children or 1.5 million children in America will be homeless each year. In addition, 3.5 million people were forced to sleep in parks, under bridges, in shelter or cars. Many non-profit organizations are in operation to serve their need but most lack the funding necessary to create enough housing. Cem Ozdel / Anadolu Agency [ Rechtehinweis: picture alliance/AA ]
A homeless man in New York.
  • Why it matters

    Why it matters

    Advanced countries are facing rising populism because of the failure to introduce policies to ensure that the gains of globalization are widely shared.

  • Facts

    Facts

    • Fifteen years ago, Mr. Stiglitz wrote a book on growing opposition in the developing world to globalization.
    • Now there is also growing opposition in advanced economies, giving rise to populist movements.
    • If globalization is to benefit most members of society, strong social-protection measures must be in place.
  • Audio

    Audio

  • Pdf

 

Fifteen years ago, I wrote a little book, entitled “Globalization and its Discontents,” describing growing opposition in the developing world to globalizing reforms. It seemed a mystery: people in developing countries had been told that globalization would increase overall well-being. So why had so many people become so hostile to it?

Now, globalization’s opponents in the emerging markets and developing countries have been joined by tens of millions in the advanced countries. Opinion polls, including a careful study by Stanley Greenberg and his associates for the Roosevelt Institute, show that trade is among the major sources of discontent for a large share of Americans. Similar views are apparent in Europe.

How can something that our political leaders – and many an economist – said would make everyone better off be so reviled?

One answer occasionally heard from the neoliberal economists who advocated for these policies is that people are better off. They just don’t know it. Their discontent is a matter for psychiatrists, not economists.

But income data suggest that it is the neoliberals who may benefit from therapy. Large segments of the population in advanced countries have not been doing well: in the U.S., the bottom 90 percent has endured income stagnation for a third of a century. Median income for full-time male workers is actually lower in real (inflation-adjusted) terms than it was 42 years ago. At the bottom, real wages are comparable to their level 60 years ago.

The effects of the economic pain and dislocation that many Americans are experiencing are even showing up in health statistics. For example, the economists Anne Case and Angus Deaton, this year’s Nobel laureate, have shown that life expectancy among segments of white Americans is declining.

 

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