A Ringing but Ineffective Defense of Globalization

Economic elites around the world are rightly alarmed by the rise of right-wing populism, many streams of which (like the Brexit movement and Donald Trump) have directly challenged previous policies of free trade and capital mobility.  Here in Australia, the One Nation party exemplifies some similar isolationist and xenophobic tendencies.

However, the main response of these elites to the challenge has been to simply double down on their standard argument that globalization as currently practiced is universally and self-evidently beneficial.  Apart from temporary "transition difficulties" (that could easily be addressed with assistance for training and relocation), everyone is a winner.  To counter the rise of populism, they urge governments to step up their efforts to "educate" concerned citizens about the virtues of free trade.  Commonwealth Treasurer Scott Morrison made a strong statement in this vein recently to a business audience in Sydney.

Unfortunately, the real world economy doesn't actually work like the theoretical models predict, and denying that anyone is permanently hurt by globalization both flies in the face of empirical evidence, and will be ineffective in countering populist arguments.  Instead, politicians should acknowledge that globalization is producing both loses and winners, and implement policies to reduce the costs and share the benefits.  Here is Director Jim Stanford's commentary on Mr. Morrison's speech, published in the Huffington Post.


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