Just to take a slightly different angle on why this column is drivel, let' us try applying the "Prisoner's Dilemma" problem from game theory to globalization.
--Two suspects are arrested by the police. The police have insufficient evidence for a conviction, and, having separated both prisoners, visit each of them to offer the same deal: if one testifies ("defects") for the prosecution against the other and the other remains silent, the betrayer goes free and the silent accomplice receives the full 10-year sentence. If both remain silent, both prisoners are sentenced to only six months in jail for a minor charge. If each betrays the other, each receives a five-year sentence. Each prisoner must make the choice of whether to betray the other or to remain silent. Each one is assured that the other would not know about the betrayal before the end of the investigation. How should the prisoners act?
http://en.wikipedia.org/wiki/Prisoner's_dilemma
What this problem illustrates is that courses of action that would be optimal if all parties are 'altruistic' --e.g. honest --are the most sub-optimal when one pary is dishonest.
This is pretty much the case with globalization in 1st world countries. The economic elite running companies has derived considerable benefit from globalization. If some reliable mechanism of sharing had been supported, it is possible that it would have benefitted the majority of citizens in these countries, and there would be widespread support gloabalization.
However, certainly in the US, there has been virtually no sharing of benefits. (median income has declined, while health care and education costs have increased rapidly).
Consequently, ordinary citizens find themselves in the position of the party in the prisoner's dilemma. Given that they believe the economic elite to be dishonest, it is not in their interest to support a course which WOULD be optimal if the benefits had been shared --e.g., the financial elite had operated on the square.
Noe Mr. Samuelson, and the elite, want to bemoan the fact that they can no longer get support for what WOULD have been the optimal course, because the population, with just cause, distrusts them.
Samuelson thinks this is tragic. I see it as a sign that the citizens' brain cells are beginning to operate again, and that they can apply elementary logical conclusions to their lives.
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Rx for Global Poverty
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Of course, qualifications abound. Some countries succeeded with high inflation rates of 15 to 30 percent. Led by Japan, Asian countries pursued export-led growth with undervalued exchange rates that favored some industries over others. Good government is relative; some fast-growing societies tolerated much corruption. Still, broad lessons are clear.
One is: Globalization works. Countries don't get rich by staying isolated. Those that embrace trade and foreign investment acquire know-how and technologies, can buy advanced products abroad, and are forced to improve their competitiveness. The transmission of new ideas and products is faster than ever. After its invention, the telegraph took 90 years to spread to four-fifths of developing countries; for the cellphone, the comparable diffusion was 16 years.
A second is: Outside benevolence can't rescue countries from poverty. There is a role for foreign aid, technical assistance and charity in relieving global poverty. But it is a small role. It can improve health, alleviate suffering from natural disasters or wars, and provide some types of skills. But it cannot single-handedly stimulate the policies and habits that foster self-sustaining growth. Japan and China (to cite easy examples) have grown rapidly not because they received foreign aid but because they pursued pro-growth policies and embraced pro-growth values.
The hard question (which the panel ducks) is why all societies haven't adopted them. One reason is politics; some regimes are more interested in preserving their power and privileges than in promoting growth. But the larger answer, I think, is culture, as Lawrence Harrison of Tufts University argues. Traditional values, social systems or religious views are often hostile to risk-taking, wealth accumulation and economic growth. In his latest book, "The Central Liberal Truth," Harrison contends that politics can alter culture, but it isn't easy.
Globalization has moral as well as economic and political dimensions. The United States and other wealthy countries are experiencing an anti-globalization backlash. Americans and others are entitled to defend themselves from economic harm, but many of the allegations against globalization are wildly exaggerated. Today, for example, the biggest drag on the U.S. economy--the housing crisis--is mainly a domestic problem. By making globalization an all-purpose scapegoat for economic complaints, many "progressives" are actually undermining the most powerful force for eradicating global poverty.
© 2008
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