Making globalization work, some practical ideas

Let’s face it; the current state of globalization doesn’t live up to its promise. While in theory more international trade would mean more wealth to more people, in practice it only benefits a few countries, en within these countries a handful of companies and persons.

The supposed ‘trickle down’ effect (where the wealth of the riches automatically cascade downwards to the poor) is not occurring, and countries that have focused on their ‘competitive advantage’, as economic doctrine pushes them to do, at the end have found themselves dependent on the goodwill of more powerful (and often more protective) counterparts.

Is globalization therefore evil? Not so, according to Nobel prize winner Joseph Stiglitz, is has only not been applied adequately.In his ‘Making Globalization Work’, Stiglitz provides a thorough account on where the mechanisms of the current globalization fail, and –more importantly- provides some concrete ideas on how these mechanisms could be changed to work for the greater good. Some examples:

 Making trade fair

Trade obviously is at the heart of globalization, and pumping this heart are the agreements and rules made between countries in the ‘World Trade Organization (WTO)’. These rules, however, are largely influenced by the bigger countries to protect their core interests. Trade has never been free, nor fair, argues Stiglitz. From the European cows who are subsidized at twice the level of human subsistence (1$ a day, according to UN definition), to the US using creative definitions of ‘dumping’ in order to levy taxes on some critical goods  (critical in the sense that they have a large industry producing these same goods), Stiglitz goes at length about the unbalanced way international trade is being organized today.

The system is particularly unfair to smaller countries, who’s political and economical weight are mostly insufficient to defend their interest, or even to defend themselves when their interests are threatened. One of the ideas Stiglitz proposes, is to enable these smaller countries to sell these litigations to more powerful countries. If the US harms the fair trade interests of, say, Burkina Fasso, this country could sell this litigation to Europe who would go to trial and get the compensations if the trial is won. Sounds like a plan ;-) But it is emblematic for the refreshing, ‘out of the box’ ideas that Stiglitz proposes throughout the book.

Patents and people

The subject of patents, and how they are often used to create monopolies or trade advantages, is a relatively harsh one. The best example of how unfair this procedure has become, is given by the so-called ‘bio piracy’. Large corporation have attempted (and succeeded) to get patents on cures with natural substances that have been used by local populations for ages. This lead to the absurd situation where local villagers in a remote country theoretically had to pay right to foreign companies in order to keep on producing medicines in the same way they have done for centuries. ‘They could’ve patented these medicines themselves’, argues the pharmaceutical and the cosmetic industry…

Taking this as example, Stiglitz defends the protection of ‘traditional knowledge’ on which nobody could be granted any patent. Makes sense.

The burden of debt

Another hot issue –especially today when many Western countries have to cope with debt problems- is the debt of countries. According to Stiglitz, for developing countries this debt was often pushed for by the International Monetary Fund (IMF), even if they were not per se necessary. The IMF had its own interest in pushing –or forcing- countries to adopt a neoliberal route (formalized by the Washington Consensus). How these dogma’s have often put countries in even more trouble, instead of helping them, is strikingly explained by Naomie Klein in her “The Shock Doctrine: The Rise of Disaster Capitalism”.

One specific problem pointed out by Stiglitz, and one that I didn’t realize so far, is what to do with ‘odious debts’, like debts incurred by dictators to buy weapons in order to repress internal opposition. When the dictator ultimately comes to fall, should the population of a country still be accountable for these debts? The answer of Stiglitz sounds reasonable to me: NO! Country debt is as much the responsibility of the lender as of the loaner. If a Western bank want to lend money to a dictator, for whatever purpose, it should be made aware that the debt will not be paid back in the event the dictator would fall. Obviously this is not an easy rule to work with (what exactly is a ‘dictator’? This notion would/should be based on consensus, in the UN for instance, where dictators also have a seat…). Nevertheless, the concept is crucial since it will make Western loaners think twice about who they lend to.

In short, this is an essential book for everyone interested in world affairs, both for the way it points to critical failures of the current system in a crystal-clear way, as well as  for the multiple practical and realistic ideas it proposes to resolve the pain-points and build a fair(er) globalized world.

Click here to buy on Amazon.com:

Check out my previous book reviews:

• "2030 -Technologies that will change the world" Van Santen, Khoe, Vermeer
• "What Technology wants" David Kelly
• "Crowdsourcing" Jeff Howe
• "The next big thing" William Higham
• "Future Files" Richard Watson
• "Future savvy" Adam Gordon
• "Futurewise" Patrick Dixon
• "Ecological intelligence" Daniel Goleman