January 19, 2004
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Globalization did not cause global poverty, but it did make us more aware of it. And by creating a single global market, it raised the question of how that market benefits the world’s poorest nations.
DANIEL YERGIN: We are seeing around the world a movement towards greater reliance on markets, greater confidence in markets. But for that confidence to last it has to be seen that these markets are fair, that they are delivering the benefits widely, that people are benefiting from them. And if they don’t have that kind of legitimacy, then the confidence is not going to remain, and the markets will be vulnerable to disruption and be replaced by other kinds of controls. So every day the market has to earn and prove its legitimacy, and that’s a big test, particularly in the developing world, where the number-one issue, the central preoccupational concern, is the issue of poverty, and delivering the goods means lifting people out of poverty. And that more than anything else is what these markets would be judged by.
JAIRAM RAMESH, Senior Economic Advisor to India’s Congress Party, 1991-1998: The fact is the rules of the game are tilted in favor of the economically powerful. I understand, I respect that, and until India is economically powerful we are not going to be able to influence the rules of the game. Let’s take the textile trade. Now all textile imports into America, for example, are governed by quotas. Every country is allocated a certain quota. It’s not free trade. It’s managed trade. America is free to sell textiles to us, but we are not free to sell textiles to America.
BENJAMIN MKAPA, President of Tanzania: You see, we talk about a level playing field, but in fact it is very much tilted in their favor. We would earn so much more than we are possibly getting by bilateral aid if those markets were just open to us, literally by billions.
NEMAT SHAFIK: I think we’re in a very funny period, because with the collapse of the Soviet Union and the Cold War system, the world is struggling to define a global governance structure. We have a world economy, we don’t have a world government, and we probably won’t have a world government. Instead what we have is a kind of hodgepodge of international institutions like the World Bank, and also the World Trade Organization, all focused on different parts of the world economy. But we also have very powerful civil society– organizations which are operating at the global scale, be it Greenpeace or the international labor unions who are also operating and shaping the rules of the international game. I guess I would tell a student to be prepared for a messy world. There won’t be simple systems wherein, like the UN, you have one country, one vote; nation states are represented; and that’s the system which runs the world. It’s going to be a world where there will be nation states who are players, international organizations that are players, civil society groups and NGOs and also business associations and voluntary associations of networks that will play a critical role in shaping the future of the world.
VICENTE FOX: Mexico has been one of the losers of the 20th century. We tried many different alternatives to development, and unfortunately we have 40 percent of the population poor; we have a per capita income that is extremely low. It is the same per capita income we had 25 years ago, so we must change things.
JEFFREY SACHS: The world is more unequal than at any time in world history. There’s a basic reason for that, which is that 200 years ago everybody was poor. A relatively small part of the world achieved what the economists call a modern economic growth. Those countries represent only about one-sixth of humanity, and five-sixths of humanity is what we call the developing world. It’s the vast majority of the world. The gap can be 100-1, maybe a gap of $30,000 per person and $300 per person. And that’s absolutely astounding to be on the same planet and to have that extreme variation in material well being.
It is an incredible moral problem how to live together with this vast gap in wealth. It’s also an incredible intellectual problem. It’s what development economists such as myself spend all our time thinking about. Why is the gap so large? What can be done to help the poorer countries narrow the gap? It’s a very tough question.
JORGE CASTANEDA: The left’s main issue since the middle of the 19th century has been inequality that accompanies capitalism. There is probably more inequality pressing against society today than before within rich countries, within poor countries, and between rich countries and poor countries. So on this score, for example, the left has more of a cause, more of a raison d’etre, than perhaps in any time recently.
HERNANDO DE SOTO: The problem that’s happened over these last years is that somehow or other people who are capitalists in countries like the United States considered the real interlocutors are rich people from developing countries, so they’ve been touching the wrong constituency. The constituency of capitalism has always been poor people that are outside the system. Capitalism is essentially a tool for poor people to prosper.
So the important thing about a capitalist system is that it’s a system of representations. Therefore it’s a little bit like when I go to the United States. People ask me for my identity, and I say: “My identity is me. I mean, look at my face. I am Hernando de Soto.” But the man at the U.S. immigrations just says, “Look, give me your passport.”
The reason that things travel so well in the market economy of the United States, and values travel from one place to another, is because they all have passports. And the real value is like my identity. It’s not in me; it’s in my passport. Real value to pay the hotel room is not in me; it’s in the credit card. And so what happens is that this system by representation, it requires of course that all the representations — the credit cards, the passports, the IDs, the property titles, and the shares — be organized by a system of law that allows people to be able to trust what they’re dealing with.
NARAYANA MURTHY, Founder and CEO of Infosys Technology: We were all children of a different generation. We were all mesmerized by the charisma of Nehru. Nehru believed in central planning; Nehru believed in socialism. But then I realized that if you want to eradicate poverty, you don’t do it by redistribution of existing wealth; you have to create more wealth. And that’s when I got somewhat disillusioned by the socialism as is practiced in India . . . You know, I define globalization as producing where it is most cost-effective, selling where it is most profitable, sourcing capital from where it is without worrying about national boundaries.
JORGE CASTANEDA: The issue that’s been coming up constantly in the speeches is that the small countries, the poorer sectors of each society need a special deal; that they cannot just be left out, because if they are, they’ll never be brought in. There is, I would say, a growing consensus on that, but there isn’t necessarily a consensus on what to do.
NEMAT SHAFIK: Well, the protest movement is multifaceted, and the anger is multifaceted, but there clearly is a sense of losing control and a sense of alienation. The old structures and the old institutions and the old lines aren’t working anymore, and I think we’re at a stage where is this extraordinary chaos in international organizations, in international rules of the game, that we’re trying to define, and we’re not there yet. And I think, like in any chaotic situation when you’re in the middle of it, you don’t see the way out, but I think what we’re observing — the series of protests, the series of engagements — is part of the process of coming towards some new structure for managing a global economy.
JAGGI SINGH, Activist, Canada: We’re trying to move from the politics of protest to the politics of liberation. It’s not simply trying to create a kinder, gentler capitalism. It’s not simply trying to negotiate the terms of our misery, to make our misery less miserable. It’s about changing the world; it’s about creating institutions, structures, and frameworks, communities and neighborhoods that are based on our values, which are values of social justice, of mutual aid, of solidarity, of direct democracy. And we’re a long way from where we want to go, but we have to start now.
LAWRENCE SUMMERS: It’s always difficult to sell open markets. There’s a basic cost of open markets. Whether it’s somebody losing a job particularly or very obvious, the benefits are much less clear. Who said on Christmas day, “Gosh, thanks — without open markets I would have been only able to buy half as many toys for my kid”? Or whoever says, “You know, I’m not that great a worker, but they really had no choice to promote me given the surge and export demand”? On the other hand, every job loss that can be remotely connected to international trade, people do. So this problem of invisible beneficiaries and visible losers is one that bedevils the political economy of trade.
HERNANDO DE SOTO: Oliver Twist has come to town, and he’s poor, and he’s got a TV set, and he’s able to see how you live as compared to how he lives, and he’s going to get very angry. So either you show him a capitalist route to do it and integrate him, or he’s going to find another ideology. And the fact that today there is no more Kremlin that is organizing a revolt doesn’t mean that they’re not going to find another capital, because when these things happen, when people are unhappy and rebel against a system, they’ll find another locus of power very, very quickly.
BILL CLINTON: I’m not one of these people that believes that economics solves all problems, but if people know they’re taking care of their children, and if they have a personal interest in maintaining the peace, it’s just easier for them to manage life’s difficulties. You know, it’s no accident that the Nazi Party arose in Germany. Everybody who was alive at the time remembers people in the Weimar Republic, after the harsh peace of Versailles after World War I, carrying wheelbarrows full of worthless Marks to the bakery to buy a loaf of bread. So I don’t want to oversell this: but the [free flow of international trade] is not sufficient to build a peaceful, free world, but it is absolutely necessary.
NEMAT SHAFIK: In the early days, when the first protests started, I remember feeling very frustrated, because their rhetoric was so abstract. It was, you know, it was about economic justice; they had no alternative program. And the more I thought about it, the more I realized that if one looks historically, the role of protest movement isn’t to provide solutions; it’s their job to be critical, and then it’s the job of the insiders, the people in the system, in their response to those protests to come up with new solutions. And I think that’s where we’re at now. And so I do think it’s healthy that we have them banging at the gates.
JORGE CASTANEDA: The protestors, by staking out an extremist position, make a more regulatory position more centrist, and that’s fine. Perhaps that’s not what they want, but that’s too bad. You don’t always get what you want, and you don’t always know who you’re working for. But I do think that the protestors are natural allies of people who believe that there are things that should be done to manage world trade a certain way.
BILL CLINTON: They care about legitimate problems, but they have the wrong diagnosis. Their diagnosis is that the global economy has produced all the misery that they’re protesting against. On the other hand, you cannot have a global economy without a global social response, without a global environmental response, without a global security response. It’s just… it’s unrealistic to think you can. And that’s basically the next big challenge, is making this interdependent world of ours, on balance, far more positive than negative. And the extent to which we succeed in doing that will determine whether the 21st century is either marred in its first 50 years by terrorism of all kinds across national borders, and more racial and religious and ethnic strife, and tribal strife in Africa, or whether it becomes the most peaceful and prosperous and interesting time the world’s ever known.
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In the first decade of the 20th century, the global economy was in many ways as integrated as ours today. That era of globalization ended in Sarajevo in 1914, when a bullet fired by a terrorist triggered the first world war. In the aftermath of September 11, it seemed possible that history could repeat itself.
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DANIEL YERGIN: Up until September 11, there was a sense that with the crisis and the risks, that nevertheless this movement towards globalization really was irreversible. And since then there’s a recognition of that you can’t turn back the clock; we’re not going to abolish e-mail, or computers aren’t going to get slower, but things can go in another direction. Markets do best and work best and deliver what they can do during times of peace. And if you’re not in a time of peace, but you’re in some other kind of time, then things won’t work as well, and priorities will be elsewhere as well.
ROBERT RUBIN: I think that the new technologies, that the breaking down of trade and capital market barriers, the spread of market-based economics, that all of this has contributed greatly to global economic well-being, and it will contribute enormously for a long, long time to come. I think the potential is tremendous. But the people in those countries who feel that they are left out and the system isn’t working for them have merit on their side of the case. And I think it’s not only an issue of being helpful to them; I think it’s enormously in our interest that they become part of the system.
DICK CHENEY: I don’t think there is any one overnight solution. I don’t know anyone who’s smart enough to sit down and write a brand-new set of rules that we should all then adhere to. I think it is a process for negotiation among solvent and independent nations, and that’s probably as it should be. And it will evolve over time. And I do think we learn from our mistakes. But I the idea that there’s some sort of basic right way to do it out there, and there’s one individual or group that have got all the answers, I’d be deeply suspicious of that notion . . . At this stage I don’t find in my travels around the country or even around the world that there is widespread opposition to the basic fundamental trends that have been there for the last 40 or 50 years. Millions of people a day are better off than they would have been without those trends and development, without globalization, without the developments of the increased international commerce, and that’s all of the good. And very few people have been harmed by it.
MAHATHIR BIN MOHAMAD: Presently we see a well-planned effort to undermine the economies of all the Asian countries by destabilizing their currencies.
In the old days you needed to conquer a country with military force, and then you could control that country. Today it is not necessary at all. You can destabilize a country, make it poor, and then make a request for help, and for the help that is given, you gain control over the policies of the country, and when you gain control over the policies of a country, effectively you have colonized that country.
HERNANDO DE SOTO: So this is a time of crisis for the cause of capitalism worldwide, because for the moment it has only meant giving the elite of developing countries additional opportunities, and not being able to get down deep, deep into where the real majority interests of people in any developing country are, which is among the poor.
DANIEL YERGIN: The belief that trade increases the odds for peace and also leads to higher standards of living is something that has been part of the American political tradition. And looking back on the Depression, looking back on the first or second world war, it became very deep seated, and it’s not just a question of specific trade agreements, but it’s really a broad consensus about the importance of trade to the American economy, to what it does for economic development around the world, and also as one of the foundations for a more peaceful world.
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