Overview of Stiglitz (chs. 1-2)

Mano a Mano

Overview of Stiglitz (chs. 1-2) • Promise of globalization (“prosperity for all”) has failed • Unbalanced outcomes within and between nations (“rich countries and poor people”) • Globalization has unified people against globalization – “They’ve got a point!” • Stiglitz will tell us how to make globalization work

Specific Indictments • Rules of conduct unfair and favor developed countries (DC) • Material values over “social” values • Eroded less developed countries (LDC) sovereignty and undermined democracy • Some winners, many losers • “Anglo-American economic model” forced on LDC

Making Globalization Work • Poverty reduction with more gradualism • More aid and debt relief, fewer conditions • New trading rules since trade and growth has not worked • More capital market controls (“hot money”) • More environmental protection • Address failed global governance

Nation States and Globalization • Isolation to autarky not unfettered capitalism – large role of government • Autarky to globalization undermines role of government and ability to create institutions in LDC • Need global agreements/governance to solve problems created by globalization • Current institutions are failing because…

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Obsession with free markets and total GDP Smaller government Privatization Free international trade Free international capital markets Deregulation ASSUMES: perfect information, perfect competition, perfect risk markets

• “Comprehensive approach” • Proactive, highly interventionist government for development • More equity and protection for the poor • Emphasis on education • Emphasis on community • Assumes failure of Washington Consensus assumptions

The Evidence • • • • •

East Asia – Stiglitz grade: A+ Latin America – C Africa -- D Sub-Saharan Africa -- F Russia & “transition economies“ – F-