A False Alarm: Overcoming Globalization's Discontents

Globalization is a buzzword that has no precise definition. It takes on many meanings, drawing both fervent support and fervent opposition. Indeed, the term is so imprecise that it is possible to be simultaneously for and against globalization.

"In Defense of Globalization" focuses on its economic dimension, defined by Bhagwati as "diverse forms of international integration such as foreign trade, multinational direct foreign investment, movements of 'short-term' portfolio funds, technological diffusion, and cross-border migration." His main thesis is that economic globalization is an unambiguously good thing, with a few downsides that thought and effort can mitigate. His secondary thesis is that globalization does not need to be given a "human face"; it already has one. A thoughtful and objective evaluation, Bhagwati believes, will make this clear, and that is what he sets out to do.

The book addresses a slate of charges against globalization: that it increases poverty, encourages child labor, harms women, threatens democracy, imperils culture, lowers wages, erodes labor standards, worsens the environment, and gives full reign to predatory corporations. Bhagwati also discusses capital market liberalization and international migration, before turning to fixes for globalization's downsides: improving governance, accelerating social agendas, and managing the speed of transitions. He concedes a few points to globalization's critics but, wielding logic and fact, demolishes most of the allegations made against it. His conclusion: that the world, particularly its poorest regions, needs more globalization, not less.

FOOLS AND KNAVES

Bhagwati was born in India and has settled in the United States. He was educated in those two countries and at Oxford and is now professor of economics at Columbia University. He maintains strong and active ties with his country of origin (where his brother was chief justice of the High Court) and with his adopted country (where his daughter is in the Marine Corps). In truth, he is a world citizen casting a critical eye, tongue, and pen on bad policies and bad arguments wherever he finds them -- a vocation that keeps him fully occupied.

Bhagwati began his career as a theorist and made seminal contributions to the study of international trade and migration. Over time, his attention shifted to the realm of policy. He was long a senior adviser to the director-general of the General Agreement on Tariffs and Trade (GATT, now subsumed into the World Trade Organization, or WTO). His compulsion to address shoddy arguments has resulted in prodigious production: in the past 15 years, he has authored or edited at least 23 books and many scholarly papers (many of which he distills for a general readership in this book).

Bhagwati divides critics of globalization into two basic categories. The first is made up of incorrigible enemies of market capitalism, constitutionally anti-establishment and not open to serious argument. The second consists of well-meaning but ill-informed critics. Bhagwati addresses his book to the latter group -- and takes their charges seriously.

To this end, he offers a thoughtful analysis of the role of nongovernmental organizations (NGOS) in international decision-making. He chides American and European NGOS on two points: their lack of transparency (of their funders and choice of issues) and their tendency to speak on behalf of the world's poor without consulting them. Western NGOS and developing-world NGOS often hold diametrically opposed views on issues such as the extension of WTO authority to global labor and environmental standards. Yet, thanks to better funding and media savvy, wealthy NGOS based in Europe or the United States get most of the attention and often make their cases directly to intergovernmental organizations, bypassing national constitutional processes set up to facilitate compromise among diverse interests in pluralistic societies. Granted, different considerations apply when governments are not democratic, but Western NGOS that purport to speak on the behalf of poor people should receive special scrutiny.

CAPITAL FIGHTS

To the claim that globalization increases poverty, Bhagwati's response is, rubbish. As a young economist at the Indian Planning Commission 40 years ago, he observed that redistributing wealth is not an effective way to reduce poverty; far more effective is to create more wealth. And engagement with the rest of the world facilitates growth. During the three decades that Bhagwati's India was a relatively closed economy, for example, the economy grew at 4 percent a year, and the poverty rate hovered around 55 percent. But in the two decades since it opened its economy to foreign trade and investment, economic growth averaged five percent; by 2000, the poverty rate had fallen to 26 percent. China's experience was similar: with liberalization came spectacular growth, and poverty declined from 28 to 9 percent between 1978 and 1998. Although India and China provide the most dramatic examples, the rule applies more broadly: openness brings growth, which reduces poverty.