Jo Stiglitz has achieved great fame as the anti-globalization movement’s Nobel prize-winner.  Predictably, his recent film on the perils and promises of globalization is rather critical.  But it does present a relatively nuanced and interesting picture. 

Globalization has both benefits and costs.  It is like a two-edged sword.  It can be a positive force for development, if it is well managed.  Regrettably, however, in far too many cases, globalization is not well managed.

Stiglitz’s journey around the world starts in his home town of Gary, Illionois.  Once upon a time, it was a thriving industrial city.  Today, it is a wasteland – a harsh reminder that globalization may hasten the decline of industries like iron and steel, as well as accelerating the success of sunrise industries such as information technology.  Government and business should rehabilitate towns like Gary, and help them find a future by investing in education and technology.  But they don’t.  Gary has been left to rot.   

Is there any hope for a town like Gary?  Perhaps.  Mittal, the Indian steel giant, has invested in Gary, and its mayor is courting Chinese business who might establish industrial assembly operations.  An ironical twist in the globalization dynamic!

Next we travel to India, where farmers have been committing suicide because of their debt problems.  We are harshly reminded of Western hypocrisy in the globalization game.  Indian farmers are prevented from exploiting their comparative advantage in agriculture by US and European governments who subsidize their farmers.

Ecuador is our next port of call where we see the environmental and health disasters caused by Texaco’s oil extraction.  Such multinational enterprises encourage a “race-to-the-bottom” in environmental and labor standards.  Ecuador is a country that has experienced “economic growth without economic development”. 

Ecuador is also the location for a story of bio-piracy, as an American business man patents Ecuadorian modified genetic material.  Western-driven intellectual property laws are stacked in favor of Western countries.  There is little concern for traditional knowledge of developing countries.   

While we are in Latin America, the evil deeds of the IMF and World Bank come into the picture.  These bastions of global governance are more concerned with defending the interests of Western banks, than with promoting economic development.  More and stronger regional organizations, not dominated by Washington, are necessary to represent the interests of developing countries.

We then move on to Botswana, an unusual country, because it has managed rather well its large diamond revenues.  It has avoided the “natural resources curse” or the “paradox of plenty”.  But indigenous people are forcibly moved to make way for the miners, and are thereby deprived of their spiritual relationship with their ancestral lands.  It is an unfortunate reality that many natural resources are located near poor people, who usually benefit very little from their exploitation.

Our final stop on this journey around the world is China.  Stiglitz recognizes that China has suffered immense environmental damage, and that there is a yawning gap between rich and poor.  But the Chinese government is aware of this, and is tackling these problems.  Overall, China has employed its own pragmatic policies for managing globalization -- not policies imposed on it by the IMF, World Bank or Washington.  This is why it has been able to turn globalization into a positive force for development.  And its strong economic growth provides resources which enable it to deal with environmental and social problems.

Overall, Stiglitz is right.  Globalization can have disastrous effects, if it is not well managed by government.  We do need a fairer and better globalization. 

His film may be unbalanced in that he only presents one positive example, China, of globalization and development.  Many Asian countries, large and small, have benefited from globalization.

He quite rightly is very quick to identify market failures and the need for positive government intervention.  At the same time, he usually overestimates the capacity of government to address these market failures.  In reality, there are just as many examples of government failure as market failure.  And as he reiterates, even in the US the government acts more on behalf of vested interests, like banks and large corporations, than on behalf of the nation’s citizens.

Stiglitz also seems to have been seduced by the ever-charming Chinese government – as is the case of many other Western academics.  A more harsh and realistic interpretation would be that the Chinese government is also more concerned with its vested interests, namely the corrupt members of the Chinese Communist Party.  Its concerns with social justice and stability are motivated by minimizing the risks of a revolution against the Communist Party, rather than the welfare of the Chinese people. 

In conclusion, this film is most certainly worth watching.  You can rent it cheaply on the Internet.  I recently showed it to my students who found it most stimulating.  Interestingly, these young students found Stiglitz’s story excessively critical, even though it is substantially valid.

References:

Around the World with Joseph Stiglitz: perils and promises of globalization

http://www.stiglitz-thefilm.com/