Trump said he doesn't see a recession after the bond market spooked investors and the Dow suffered its worst day of the year last week.Marketsread more
The U.K. prime minister prepares to meet his German and French counterparts this week.Europe Politicsread more
Amazon is raising seller fees for thousands of small and medium-sized businesses in France because of a new digital tax passed by the French government.Technologyread more
U.S. stock index futures point to a higher open on Monday morning as the White House sought to calm investors over growing concerns about the U.S. economy.US Marketsread more
Ahead of the deadline, U.S. President Donald Trump told reporters that Huawei was a national security threat.Technologyread more
Bianco Research's James Bianco suggests Wall Street is desperately looking for a signal that a 50 basis point cut is coming next month.Trading Nationread more
Baidu is gearing up to release its second-quarter earnings on Monday with the market expecting a sharp decline in profit.Technologyread more
Americans now say they approve of free trade by 64%-27%, a margin of better than two to one. That's up from 57%-37% early in Trump's presidency, and 51%-41% near the end of...Politicsread more
Stocks in Asia rose on Monday as U.S. Treasury yields bounced higher after plunging last week.Asia Marketsread more
The problem with tanking equities lies elsewhere, writes Michael Ivanovitch, because traders see no end to America's unfolding trade disputes with Europe and China.World Economyread more
Beijing wants to use reforms to support a slowing economy.China Marketsread more
Globalization sits at the center of America's economic crisis. On one side, critics of globalization blame it for the plight of America's suffering middle class. According to President Trump, our trade negotiators got snookered by those smart negotiators from other countries. We signed bad trade deals that led to the loss of American industrial jobs. This criticism of globalization has found enormous resonance, especially in the parts of the country that experienced deindustrialization.
By contrast, globalization's advocates claim that all of this is sheer nonsense. America has benefited from globalization. Protectionist policies put at risk all that has been gained through trade. In the end, they say, protectionism will not help even those who've lost their jobs due to globalization or seen their wages collapse. They, the U.S., and the entire world will be worse off. Globalization's advocates shift the blame for deindustrialization and the American malaise elsewhere: the real source of job loss and low wages for unskilled workers has been improved technology, and globalization is getting a bum rap.
For more than twenty years, I've been criticizing the way that globalization has been managed — but from a completely different angle. From my perch as chief economist at the World Bank, it was obvious that the global rules of the game were tilted — not against, but in favor of the United States and other advanced countries at the expense of developing countries. The trade agreements were unfair — to the benefit of the U.S. and Europe and to the detriment of developing countries.
The idea that our trade negotiators got snookered is laughable: we got almost everything we wanted in late-twentieth-century trade negotiations. Over the opposition of those from developing countries, we secured strong intellectual property protections — which protected the intellectual property of the advanced countries, but not that of developing countries. We've succeeded in forcing countries to open up their markets to our financial firms — and even to accept those highly risky derivatives and other financial products that played a central role in our own financial collapse.
It's true that American workers have been disadvantaged — low-skilled workers in particular have seen their wages reduced, in part because of globalization. But that is partly because American negotiators got what they asked for: the problem was with how we managed globalization and with what we wanted — trade agreements simply advanced corporate interests at the expense of workers in both developed and developing countries. We as a country didn't do what we should have to help workers whom globalization was hurting. We could have ensured that globalization benefited all, but corporate greed was just too great. The winners didn't want to share their gains with the losers. Indeed, they liked it that wages were pressured down as American workers had to compete with workers from developing countries. It increased corporate profits all the more.
It might seem that President Trump and I are on the same side of this battle against globalization, but that is wrong. Fundamentally, I believe in the importance of the rule of law — of a rules-based system for governing international trade. Just as we need a rule of law within our economy — without that, no society can function — so too, we need a rules- based international system. Trump, by contrast, wants to return to the rule of the jungle: when there is a trade dispute between two countries, they "duke it out," and the stronger country wins. His misguided view is that since we are stronger than any single country we would win all of these battles, and we could then create an international trade regime that is a maidservant to U.S. interests. He misses two critical points: why would anyone else join such a system, to be taken advantage of, rather than focus on trading and other economic relations with partners that behave and treat others decently? And other countries can, and would, get together, and while we're not much different in economic size than China and Europe (though within a short while China is slated to be more than 30 percent larger than the US), if the other two got together against us — or any of the other two are joined by large numbers in the "third world" — our seeming power advantage would quickly disappear.
Trump is wrong to blame globalization, whether unfair trade rules or unwanted immigrants, for the country's woes, but globalization's advocates are also wrong in arguing that globalization has played no role in the plight of the large parts of the population that have seen their incomes stagnate or decline, and that it's just technological progress that's to blame. The real onus of blame, though, should be on ourselves: we mismanaged the consequences both of globalization and of technological progress. If we had managed these well, both could have generated the blessing that their advocates claimed.
We need better, fairer international rules. But what America needs most is better management of the changes being brought about both by globalization and technology.
Excerpted from People, Power, and Profits: Progressive Capitalism for an Age of Discontent by Joseph E. Stiglitz. Copyright © 2019 by Joseph E. Stiglitz. Used with permission of the publisher, W.W. Norton & Company, Inc. All rights reserved.
Joseph Stiglitz is a professor of economics at Columbia University and chief economist at the Roosevelt Institute. He served as chief economist at the World Bank and was chairman of the Council of Economic Advisers under President Bill Clinton. He won the Nobel Prize in Economics in 2001.