Jonathan Biddle's Reviews > The Globalization Paradox: Democracy and the Future of the World Economy

The Globalization Paradox by Dani Rodrik
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's review
Jul 08, 2012

really liked it
bookshelves: kindle, 2012

Rodrick's trilemma states that we cannot simultaneously pursue democracy, national determination, and economic globalization. We can hold a maximum of two factors at the same time. Holding onto democracy and economic globalization and elimination the nation state is the ideal solution. In this scenario, everything from labor to goods to capital flows would be released to move freely without barriers. A world economy functioning as the United States would be much more efficient at distributing labor and shocks. At this point, nevertheless, in our history, this solution seems to be no more than a pipe dream. Most people are not ready to give up their national identity for an international order. The differences in values, culture, and geography are so great across the world that uniting everyone under and international organization is impossible.

The second choice, national det. and econ. globalization, are what the world seems to be presently pursuing. The goal is to gain the benefits from absolute and comparative advantage while still retaining control over local policies. This option looks good on paper and is ideal from the political perspective, but it does not seem to be possible in the real world. When globalization extends to the global financial sector, the reduction of barriers actually increases instability. For globalization to continue to succeed, international controls on capital would be required, thus requiring nations to give up more of their rights. The swift flow of capital in and out of countries. However, because of the great disparities across the globe, international rules could not be agreed upon nor enforced without peoples giving up their freedoms. Even today's attempts are excruciatingly slow. In short, these two are not compatible because the rules of economic globalization pander to the rich countries who made them and can hurt poorer, developing countries.

Retaining democracy and national determination at the expense of full globalization is Rodrick's choice. This option preserves what most people who are having this conversation hold dear: personal freedom and national loyalty. Rodrick explains that the benefits we would gain from even more globalization are small in comparison to the freedoms that we would lose. His key point is that having a thin layer of international rules while holding democracy and national determination is actually a better globalization. This suggestion runs the risk of being derailed on what rules should be in that "thin" layer. For this suggestion to work, rich countries will have to give up a lot more of their pet policies than they have been willing to in the past and allow flexibility. The perennial question of who makes these rules will be difficult to answer.

I appreciate that fact that Rodrick's approach takes the world as it is, not how one wishes it was. The benefit is that his suggestions are workable in today's environment, not some future utopia. The present world is divided by language, different values, and geography, and supporting democracy and national determination at the expense of globalization makes sense. The downside, however, is that concessions we make today could enshrine backward ways of looking at the world into tradition that is hard to escape. Although I support Rodrick's policy suggestions, I think we still need to be constantly pushing forward toward a globalized ideal. Financial controls may be the last thing to go, if ever, but in our efforts to be realistic we should not lose sight of the goal. The policies we make today should have clauses in them that make it understood that the goal is eventually discard them in favor of global governance. These thin layers of international rules should encourage regional trade unions that head the same direction the EU is (supposedly) heading. Maybe those regional unions could one day unite to form a better world.
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Reading Progress

July 8, 2012 – Started Reading
July 8, 2012 – Shelved
July 8, 2012 – Shelved as: kindle
July 8, 2012 – Shelved as: 2012
July 15, 2012 –
page 120
July 23, 2012 –
page 184
August 1, 2012 – Finished Reading

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