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The overselling of globalization

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Abstract

Globalization was oversold. Politicians and some economists wrongly argued for trade agreements on the basis of job creation. The gains to GDP or growth were overestimated, and the costs, including adverse distributional effects, were underestimated. There have been important political consequences of this overselling, including the undermining of confidence in the elites that advocated globalization. The failures of globalization and the misguided backlash against it contain many lessons: about the importance of science and learning in society, the importance of the shared acceptance of facts, the dangerous consequences of deliberately misinforming the public, and the folly of ignoring the distributional consequences of economic forces just because they may lead to growth. The new protectionism advocated by the administration of Donald Trump will only worsen the plight of those already hurt by globalization. What is needed is a comprehensive system of social protection. After cataloguing the failures of globalization and explaining how they led to our current political mire, this paper outlines a set of policies that could put the economy and our politics back on a better path.

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Notes

  1. This is a result I showed with Professor David Newbery of Cambridge University more than a third of a century ago (Newbery and Stiglitz 1984; Keynes 1942). Professor Partha Dasgupta (also of Cambridge University) and I were able to show that quotas—restrictions on the absolute amount that could be imported—might be better than tariffs, upending a key pillar of trade policy of the last half century, which has been to convert quotas into tariffs. See Dasgupta and Stiglitz (1977).

  2. See Stiglitz (2015).

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Authors and Affiliations

  1. Columbia University, 3022 Broadway, 212 Uris Hall, New York, NY, 10027, USA

    Joseph E. Stiglitz

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  1. Joseph E. Stiglitz
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Correspondence to Joseph E. Stiglitz.

Additional information

Paul A. Volcker Prize Lecture, delivered at the meetings of the National Association of Business Economists, Washington D.C., March 6, 2017. A more extensive analysis of the issues addressed here is provided in Globalization and its Discontents Revisited, New York: W. W. Norton, 2017. I wish to acknowledge the assistance of Andrew Kosensko, Debarati Ghosh, and Eamon Kircher-Allen.

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Stiglitz, J.E. The overselling of globalization. Bus Econ 52, 129–137 (2017). https://doi.org/10.1057/s11369-017-0047-z

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