PDF | On Jan 1, , Melani Cammett and others published In Defense Reviewed Work(s): In Defense of Globalization by Jagdish Bhagwati. on globalization to the United Nations, Jagdish Bhagwati is one of the In Defense of Globalization is a book of undoubted value, which steps in a scenery of. print Print; document PDF Jagdish Bhagwati provides a bracing counter- argument in In Defense of Globalization. In Defense of Globalization is especially strong in comparison to most of the recent volumes on the other side of the debate.
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In Defense of Globalization is an important contribution to an often incoherent debate. Jagdish Bhagwati never tires of proselytizing for free trade and open borders . summarized and explained so that a non-specialist can understand them. Jagdish Bhagwati, In Defense of Globalization, Oxford University Press, The first part of the review is basically a summary of the issues covered, mostly .. In a single page conclusion, in Part V, the author says: 'Reason and analysis. Notes on In Defense of Globalization by CFR Senior Fellow Jagdish N. Bhagwati. This should attract students to economics by showing how the abstract.
Until further notice In Defence of Globalisation becomes the standard general-interest reference, the intelligent layman's handbook, on global economic integration. It has two particular virtues. The first is that it is free of gimmicks in content and structure. Its other great virtue, aside from this refreshingly straightforward approach, is that it takes anti-globalist arguments seriously. Bhagwati's defense of globalization is persuasive.
The complete review 's Review:. Jagdish Bhagwati's In Defense of Globalization begins very defensively: The first chapter is titled -- almost plaintively Bhagwati defends his approach by saying that without understanding why globalization has elicited such hostile reactions and: But it's an odd approach: Unfortunately, also, his focus is on how anti-globalization manifests itself, and far less so on the arguments for such a stance.
He pretends to be open-minded, suggesting he's willing to listen to the reasoning of the anti-globalization protesters -- but we have to take his word for it: I talk with them at every opportunity; I find enthusiasm, even idealism, but never any ability to engage concretely on the issues they take a stand on.
Without any examples or sense of how these conversations go, of their supposed inability to engage concretely, Bhagwati isn't exactly convincing on this point. Surely, the anti-globalizers must be able to express some rationale even if, examined more closely, it proves entirely irrational -- but, at least initially, Bhagwati doesn't allow readers to judge for themselves.
He seems certain that he is deserving of the benefit of all doubts -- but his own approach, trivialising rather than countering the beliefs of the opposing camp, undermines his credibility. The absolute lowpoint comes early on, when he writes: It has gotten to an almost farcial level where if your girlfriend walks out on you, it must be due to globalization -- after all, she may have left for Buenos Aires. What indeed? But note the outrageous rhetorical twist here: Surely, the vast majority of anti-globalizers do not attack globalization by saying it is the cause of their break-ups, but rather have reasons that are in some way more closely related to the actual issue.
Yet Bhagwati tries to put exactly that picture -- of the whiny, self-centred, irrational moron who can't even hold onto the girl! Talk about hitting below the belt. Fortunately, that example is, indeed, the lowpoint, and Bhagwati is on much firmer and fairer footing when he considers policy implications and discusses the benefits and costs of globalization. Still, far too often, he states rather than argues or explains, offers too little supporting evidence, and does not consider counter-arguments.
Typical is a passage such as: However, I would argue that seizures of people and property are not the way to organize the protests, but that the methods of non-violent resistance advanced by Mahatma Gandhi and practiced so well by Martin Luther King Jr. While certainly a supportable position, Bhagwati offers no further explanation of why he believes this is the better way.
Yet when he states his position he doesn't say: He does not seem to have any understanding of what it means to argue a point: That the position favoured here is not entirely clear-cut should be obvious from the unfortunate fact that the two men he holds up as non-violent exemplars both got themselves killed: Bhagwati understands that globalization comes with some costs, and he strongly believes in policy solutions to make the transition to free-trade regimes less burdensome on those hit hardest by it.
He doesn't call for the immediate abolition of all trade restrictions, trying, for the most part, to keep real-world consequences in mind and not focussing entirely on airy theory which can sound sensible but, put into practise, can have devastating local effects.
Significantly, he is very much pro-free trade, but much more chary about free capital flows especially of short-term capital. Bhagwati shows a lot of interest in the role of Non-Governmental Organisations NGOs , and his repeated reminders about the differing interests, goals, and abilities of NGOs from developed countries versus those from developing nations is particularly valuable, as it introduces issues Western European and North American readers may not be familiar with.
In chapter after chapter Bhagwati discusses the main areas where globalization is sometimes thought to have negative consequences, including poverty, child labour, the environment, women's rights, the transition to democracy, culture, and wage and labour standards. The analyses do cover most of the concerns, and suggest that, overall, the benefits of globalization clearly outweigh the costs. Nevertheless, too often Bhagwati insists the problem is not globalization but the policies which are or rather: Common sense might dictate other, better policies, and popular and NGO pressure can force governments to institute necessary safeguards to prevent the effects of freeing up trade from impacting the economy and individuals too harshly; unfortunately, not all governments are as vulnerable or open to common sense or outside pressure though, as to the latter, one of the nice things about globalization is that it does make them more so -- and proper policies and safeguards are not always obvious, nor do even academics and professionals agree on them.
Soviet and Indian five-year plans used to have many supporters even among Western economists , and powerful special interests make even incredibly costly in all senses of the word subsidies in the foremost capitalist countries sacred cows that are near-impossible to get rid of. Some of the issues are very complex, the influence of globalization on the environment perhaps most of all.
Bhagwati barely hints at the fundamental problem environmentalists presumably have with free trade: Increases in economic activity the production and consumption of more goods almost inevitably have negative effects on the environment: What better place to create mayhem and get attention from the vast multitude of reporters looking for a story?
So while the old guerrillas struck where you least expected them, these new guerrillas have struck where you most expected them: The same strategic sense has been displayed in going after the cor- porations as well. Nike and Gap, two fine multinationals, now have a permanent set of critics, with newsletters and websites worldwide. With Nike and Gap having overseas operations in numerous locations, it is not possible to avoid lapses altogether from whatever is defined as good behavior: When lapses occur, these firms become obvious targets in a propaganda war that is stacked against them.
Naomi Klein, the Ca- nadian writer, admits frankly that, faced with the amorphous but over- whelming phenomenon of globalization, the only way to get at it is to latch on to something concrete and targetable. I talk with them at every opportu- nity; I find enthusiasm, even idealism, but never any ability to engage concretely on the issues they take a stand on. But then the Kleins of the anti-globalization movement are not fazed; it is all strategic, it is in a good cause.
Indeed, it is hard to understand the deep and unyielding hostility to multinational corporations, manifest on the streets and on campuses, except by analogy to earlier times.
Perhaps the classic parallel is with the stigma attached to usury in medieval times: The exaction of interest was forbidden by ecclesiastical and civil laws, its prac- tice turned into a crime.
Even as trade and globalization increased with mercantile expansion and laws began to change with occasional re- lapses , usury remained beyond the pale, contrary to conventional and persistent norms. In , however, by 6 Edward VI, cap. While the sources of anti-globalization rooted in anti-capitalism in the diverse ways set out so far are dominant in the current discourse, there are others, not quite so influential, that cannot be ignored.
In this variegated landscape, complementing those who lean on the left are forces on the right. But the Buchanans are instead knee-deep in xenophobia and crude assertions of national identity and sovereignty. These beliefs lead directly to proposals to isolate America from commerce by building tar- iff walls.
Thus in the s Buchanan called for tariffs against the Japa- nese, asking for a 10 percent tariff on every Japanese import, and has argued recently against letting Chinese imports freely into the United States. While some lib- eral environmental groups slide into anti-immigration rhetoric when they argue that immigration adds to environmental problems, the gen- eral posture of the liberal anti-globalization groups is one of benign neglect.
Surprisingly, however, there are a rare few progressive segments of the anti-globalization movement that are for free immigration. To illustrate, Sandel has objected to the use of global-efficiency- enhancing international trade in permits for carbon dioxide emissions among members of the Kyoto treaty on global warming.
With such trade, Brazil would be able to reduce its emissions but effectively sell the re- duction achieved as a tradable permit to the United States, which would then credit it as a contribution toward the fulfillment of its own target of emission reductions, thus reducing by the traded amount the emis- sion reduction it had to achieve. Sandel himself produces the example of parking spaces for handicapped people. The community would be offended if the rich could download permits to use such spaces.
But here again, the rich can always park their BMWs in these spaces and pay the fines if caught. To my knowl- edge, no one threatens that the luxury cars illegally parked in these spaces will be destroyed and the violators will be incarcerated, thus raising the effective price paid for such spaces by the rich to levels that really do amount to prohibition.
In short, while communitarian principles do intrude frequently to place limits on markets, and hence on the prin- ciple of efficiency that markets help to implement, the communitarian spirit itself is subject to limits in practice.
It is likely that the extent of communitarian limits on markets will erode with capitalism taking hold. Thus, the balance between al- truism, love, duty, and the other virtues, on one hand, and pursuit of self-interest, on the other hand, may shift away from those virtues as capitalism progresses.
For instance, love may become sex, with rever- ence and mystique yielding to gratification. And, just as you might remark that the coffee was an espresso, the reports added that the sex was oral! But the communitarians surely exaggerate the commodification that markets wreak. There is movement the other way too, and often it comes about because of the rapid pace of technical change, which has acceler- ated both the pace of economic globalization and that of globalized civil society.
The cloning debate shows how societies will seek to place limits on what will be left to markets. In the world as we know it, therefore, both communitarian and lib- eral principles coexist in varying forms. The important question is not whether we should have one or the other but whether capitalism and globalization are such an inexorable force that they propel society into a headlong rush away from traditional communitarian values and ways.
The evidence for such an alarmist conclusion is not compelling. Yet another source of anti-globalization sentiments is the resentment that comes from the rise of the United States to a military and economic hegemony so unprecedented that the French call America, with which they have a notorious love-hate relationship, a hyperpower, as if being called a superpower is no longer the highest accolade.
Since this hegemony is exercised in the global context, the resent- ment of the United States follows worldwide. The loss of the Soviet Union as a countervailing superpower is mourned, even as the collapse of the scourge of communism is celebrated.
The anti-Americanism that Ameri- can power and its exercise—no matter how benign and invited—creates is then an important source of anti-globalization sentiment. Throwing sand into the gears of globalization is seen as a way to spit on American hegemony, if not to limit the exercise of it in the political, cultural, and economic domains.
Nonetheless, those of us who favor globalization cannot re- treat from the task of meeting their concerns head-on. In the end, despite the chaotic nature of the anti-globalization movement, we can impose some commonalities and order before we offer a response. That is just what I propose now to do.
But, as became fairly clear fairly soon, there were two kinds of stake- holders: It is a sad reality that politicians such as the affable President Bill Clinton, who could feel your pain before you did, indulged the stake-wielding groups even when they broke into violence, while politicians with firmer backbones chided them instead.
By contrast, the stake-asserting NGOs—such as the Center for Sci- ence and Environment in India and the International Forum on Global- ization in the United States—prefer to be in the corridors rather than out in the streets, urging reasoned discourse as a way to advance their agendas, and using the sedate methods of glossy, researched pamphlets and policy briefs to put their oars into the policy waters.
Socially, Not Just Economically, Benign k And they plotted with the assembled conclave of the heads of leading U. The tension between the stake-wielding and stake-asserting NGOs has now become manifest: I was witness to the heads of some leading NGOs, with serious preoccupations and matching research, at the Davos meetings urging that we not mix them up with these noisy pro- testers either. If the stake-wielding proponents of hard-core anti-globalization attitudes were all we had to contend with, our prospects would be pretty dim.
We would be talking to them across a chasm that they would not cross. If they extend their hand across the divide, it is not to shake your hand but to wrestle brutally with it. Fortunately, however, they are no longer the most compelling players on the stage. The center of gravity among the anti-globalization movements has actually been shifting toward the stake-asserting groups, which are im- passioned but have a definable set of concerns that can be met by en- gagement and dialogue.
These are the vast numbers of fairly serious civil society organizations that have emerged worldwide. As explored and explained in Chapter 4, some powerful ones have turned away from the traditional preoccupations with advancing domestic social agendas, such as the elimination of dowry payments and implementation of land re- forms to assist the landless, to an external preoccupation with the effects of economic globalization.
So as we sit down with these groups, alongside or across from them at the table, we must ask: I would argue that it is the broadly social effects of economic globalization that they are concerned with. These dramatic concerns have dominated the globalization debate so much that people commonly assume that economic globalization harms, not advances, social agendas—that glo- balization needs a human face.
Indeed, we now confront the ready assumption that is endemic by now even in some international institutions that if capitalism has pros- pered and economic globalization has increased while some social ill has worsened, then the first two phenomena must have caused the third! The chief task before those who consider globalization favorably, then, is to confront the fears that while globalization may be economi- cally benign in the sense of increasing the pie , it is socially malign.
It is perhaps interesting to recall that admittedly different social effects were not entirely ignored by the earliest economist proponents of trade in nineteenth-century England.
They argued, however, that these effects beyond the economic realm were benign, not malign. Just one quote from John Stuart Mill should illustrate: It is hardly possible to overrate the value, in the present low state of human improvement, of plac- ing human beings in contact with persons dissimilar to themselves, and with modes of thought and action unlike those with which they are familiar. Com- merce is now, what war once was, the principal source of this contact.
There is no nation which does not need to borrow from others, not merely particular arts or practices, but essential points of character in which its own type is inferior. And at first blush, which is what many are happy to settle for, their fears do appear often to be plausible.
But the key task before us today is to consider whether, on closer analytical and empirical examination, these fears turn out to be well founded. We must also ask where the balance of arguments seems to lie. This is precisely the analysis that I undertake in Part II. If I conclude, as I do after the close examination in Part II, that eco- nomic globalization is on balance socially benign, then the proponents of the view that globalization needs a human face are raising a false alarm.
This is not an idle conclusion. It has important implications for appro- priate governance to oversee and manage the phenomenon. But instead, as I hope to convince the readers of this book, if you believe that global- ization has a human face, you will think of a very different set of policies and institutions to accompany it.
Among them, you will want to think of policies to enhance, supplement, complement, and accentuate its good outcomes. To illustrate: But if you conclude that globalization reduces child labor, you will want to know what added policies will reduce it yet more. Given that Part II concludes that globalization has a human face, Chapter 3 sketches how the question of appropriate governance must be addressed in that event.
Chapter 15 specifically and Part IV generally do this in depth. W hat, then, are the principal dimensions of an approach to making the beneficial globalization process work even bet- ter? I will sketch here the three principal prescriptions that need to be kept in view: They leave room for downsides, and we must have institutional mechanisms to cope with such adverse outcomes if and when they ma- terialize. Also, we will want to go faster in achieving social agendas than glo- balization permits and facilitates.
The question then is: Occasionally globalization will do harm that requires attention. We must create institutions and policies that either reduce the probability of such downsides or can be triggered so as to cope with them, preferably doing both. Let me illustrate. Consider the recent concerns raised by some NGOs about the rap- idly proliferating shrimp farms along the coasts of India, Vietnam, Thai- land, and many other countries, including some in Latin America.
I first. On examina- tion, however, it was clear that this was precisely the sort of occasional downside of globalization of trade and direct investment that needed to be addressed.
What was the problem? Coastal shrimp farming was damaging the surrounding mangroves because of discharge of chemicals and backup of uneaten feed, disrupt- ing the livelihood of fishermen and others subsisting traditionally in the surrounding areas.
Recall that with greater openness in trade there often comes a sense of economic insecurity from the fear that more openness will create greater volatility of prices and hence of jobs. Even though the objective evidence for this fear is not compelling—recent empirical analyses suggest that labor turnover has not particularly increased in the United States and United Kingdom despite ongoing globalization—the fear is palpable and prompts anti- globalization sentiments.
I and several others have therefore long sug- gested that such assistance be provided as the economy is opened up to greater trade. Then again, the pace at which globalization advances social agendas need not be accepted as satisfactory. Today, if a developing country regis- ters growth below 6 percent annually, it is regarded as a failure. Why not the same with the speed at which we achieve social agendas?
So we need to consider the ways in which we can reinforce the benign social effects of globalization. Thus, child labor is known to decline as economic growth occurs. But what can we do to accelerate its removal? This is where the question of appropriate choice of policy instruments, and international agencies to oversee them, becomes pertinent. The latter group would rather see non-sanctions-based ap- proaches and the location of the issue at the ILO instead.
My own sympathies lie with the latter position, for reasons that are explained in Chapters 10 and Again, the question of appropriate management of globalization requires attention to the speed at which globalization must be pursued.
The dif- ficulties that Russia got into under shock therapy, which was a program of very rapid stabilization and reform measures, are a reminder that the best speed is not necessarily the fastest speed. Or take the prescription to dismantle tariffs. Maximal speed would mean that they are eliminated forthwith. But this may mean that the government falls and the tariffs are reimposed; gradual reduction over a few years would then have been preferable.
To use an analogy, if you kick a door open, it may rebound and close instead, whereas gentle pressure on it would ensure that it remains open. A dramatic example of mismanagement of globalization, which is the focus of Chapter 13, is the imprudent and hasty freeing of capital flows that surely helped to precipitate the Asian financial and economic crisis starting in Again, if one thinks of immigration, discussed in Chapter 14, it is clear that a rapid and substantial influx of immigrants can precipitate a reaction that may make it extremely difficult to keep the door open.
There is clearly prudence in proceeding with caution, even if one considers, as I do, that international migration is an eco- nomically and socially benign form of globalization. And so, in these different ways, globalization must be managed so that its fundamentally benign effects are ensured and reinforced. With- out this wise management, it is imperiled.
I shall also argue that this management will be better and more effective if the governments, inter- national institutions, corporations, and intellectuals who celebrate and reinforce globalization joined hands with the non-governmental orga- nizations that generally discount and oppose it, creating what UN Sec- retary General Kofi Annan calls a partnership, achieving what I call a shared success.
So before I get on with my principal themes of globaliza- tion with a human face and how to make it work better, I turn now to a close look at these NGOs. What are they? Why have their numbers increased to a level that none had anticipated a quarter century ago? How may their energies and passions be harnessed to produce a yet bet- ter globalization? Writing in , Salamon estimated the NGOs at levels as high as , in the United Kingdom alone and roughly 20, in the poor countries.
Besides, the numbers were growing rapidly: As it happens, this growth has been sustained and perhaps has even accelerated. In fact, the definition of NGOs is both nebulous and shifting.
They are commonly defined as any non-profit organization that is indepen- dent from the government. Should we refuse to admit a lone activist as an NGO? To refuse to do so would militate against the poor countries where organi- zation and finance are in short supply and many NGOs are shoestring operations.
Given the high visibility of the anti-globalization NGOs today, it is easy to forget that these NGOs represent only a small fraction of the groups that have emerged worldwide. Indeed, the NGOs range over is- sues and objectives as diverse as outlawing bigamy, changing inherit- ance laws to enable women to inherit, or eliminating female circumcision as a barbaric relic of the past.
Only a few are focused narrowly on the global economy and global issues. Few but growing in public presence are the poor-country NGOs, the most prominent of which are the Third World Network, whose articulate head is the Malay- sian intellectual Martin Khor; the Consumer Unity and Trust Society, the leading NGO in India on trade and globalization issues, run by Pradeep Mehta;3 and the Center for Science and Technology, in New Delhi, which focuses on environmental issues and has achieved legend- ary status for the insights and programs that it has put on the world environmental agenda from a poor-country Southern perspective.
This rise of non-profit groups of varying sizes, ranging from low-key, empty-till mom-and-pop outfits to media-savvy, cash-plush, lawyer- infested razzle-dazzle juggernauts, for all kinds of public-interest causes reflects an accentuation of the altruistic activism directed at charitable and social reform causes that is hardly new in many societies.
The million NGOs in India as of a few years ago are the inheritors of activism that included individuals and groups that sought reforms in archaic religious traditions. Notable among those who devoted themselves to social progress were the members of the Servants of India Society, founded almost a century ago in Having returned from exceptional academic success at En- glish universities such as Oxford and Cambridge, they accepted educa- tional positions at a pittance over a lifetime to further the cause of higher education.
A great controversy erupted over the plans to dam the Narmada River in Gujarat and two other states , a project that involved the construction of thirty major dams and three thousand smaller ones. Many activists objected to the dam project and to the dam- age it would inflict on the communities living on the lands to be sub- merged. Although it was not correct for the activists to argue that resettlement was being ignored, the agitation served to focus extra at- tention on this important aspect of the construction of these dams.
In October the supreme court of India, after six years of agitation and delays, declared itself satisfied with the final resettlement plans and gave the green light to the dam project. But this still does not answer the question of why NGOs seek- ing public good should be springing up in the first place.
I recall sitting down to lunch in the early s with the planner Pitambar Pant on the lawn of his home, in the mild sun of the vanishing Indian winter in the month of January, when the flowering shrubs that are the pride of the bureaucratic bungalows are pregnant with signs of new life.
This was symptomatic of the growing numbers of women going for higher education. Pant and I wondered where they would all go.
We thought they would be doctors, bureaucrats, politi- cians, lawyers, scientists, and much else. But we did not think that, ani- mated by altruism while also informed and equipped to pursue it by their education, they would become both leaders and followers in the immense tide of NGOs now seeking to change Indian society in pro- gressive directions.
So we find that the mantle of social activism in India, long worn mostly by men, has now fallen on the shoulders mostly of women. The ecofeminist Vandana Shiva is the most prominent in the Western media, but she is just one of a multitude. Indeed, doing good has become so much the thing to do in India that where the parents of a young man once might have bid for a bride by offering riches or a green card for immigration into the United States through marriage, the joke today on the Indian subcontinent is that they must offer the bride her own NGO!
Interact here with the environmental, human rights, and other NGOs, as I often do, and mostly you run into dedicated and impassioned women. Their writings reflected recognition of the impossibility of forming a meaningful democratic opposition within the Communist Party. New strategies were necessary. The dissident intellectuals opted for parallel politics at the level of individual morality and action, outside the frame- work of corrupted politics.
In societies under the post-totalitarian [i.
People have no opportunity to express themselves politically in public, let alone to organize politically. The gap that results is filled by ideological ritual. Yet even in such societies, individuals and groups of people exist who do not abandon politics as a vocation and who, in one way or another, strive to think independently, to express themselves and in some cases even to or- ganize politically, because that is a part of their attempt to live within the truth.
The fact that these people exist and work is itself immensely important and worthwhile. Even in the worst of times, they maintain the continuity of political thought. But it ran into an obvious problem once communism had collapsed. As the new regimes began to struggle with democratic governance, the politics of values was no longer effective.
It was replaced by politics defined by democratic processes such as elections and parliaments. In turn, politics was now dominated by ideas and interests that dictated the realities of choices on issues such as the policies and institutions to be devised to guide economic transition. These were precisely the areas where the anti-politics of the inherited civil society dissidents was at a loss.
This indeed turned out to be the case. Citizens must shoulder their share of responsibility for social development. There are various minor- ity needs that a representative democracy cannot, in its present form, safeguard.
Civil society encourages ordinary people to participate in govern- ment, thereby strengthening relations between citizens and their state. Thus Salamon has written: As of , several thousand founda- tions were registered with governmental authorities in Poland. In Hungary, 6, foundations and 11, associations had been registered by mid This explosion can be documented also for Russia, Bulgaria, and other former socialist countries.
He arranged for the heads of these institutions to meet with prominent NGOs such as Jubilee even as his riot police clashed with the demonstrators on the streets. In both cases, the fact that communication today via e-mail and the Internet makes organization and coordinated civil action so much easier than when Mahatma Gandhi, for instance, organized the civil disobedi- ence movement in India in the s and s surely has played its part.
In the case of the NGO movement, where organization has flourished, this free-rider problem is transcended by the glue that the values orientation provides, by the sense of solidarity and commitment that follows from the shared presumption that the strength of numbers and activism alone can guarantee success in their cause.
Thus while dif- fused consumers may succumb to the free-rider problem, and seem tra- ditionally to have done so where their own economic welfare is involved, this does not happen when citizens are motivated by focused altruism instead.
I have only sketched what seem to be the principal reasons why NGOs have become immensely important today. Their views that economic globalization constitutes a threat to our social well-being need therefore to be examined with care, as I will do in Part II, starting with the next chapter. But, since they represent a phenomenon that is as demanding of our attention today as the continuing economic globalization, and since their objectives will be shown in this book to be advanced rather than diminished, as they fear by such globalization, it should be pos- sible to join hands to advance the same objectives more deeply through the design of appropriate governance, which I will turn to in Part IV.
But, in joining hands, I must caution that the functioning of the NGOs has raised certain questions that need to be addressed. Just as we insist on transparency and regulation for other agents and actors in society, it is important to see that these demands cannot be evaded by NGOs, especially if we are to work with them in the public domain.
The tendency on the part of some of them to turn their halos into shields is unwise and unacceptable. The NGOs that claim the moral high ground because they profess a moral commitment need not be taken at their word. Pecksniff in Martin Chuzzlewit. Comfortable in his professed empathy for humanity, and even christen- ing his daughters Mercy and Charity, Pecksniff turns out to be a scoun- drel in truth.
Auden alerts us to the need for critical scrutiny in a gentler tone: Base words are uttered only by the base And can for such at once be understood, But noble platitudes: Many independent observers, including those who are NGO-friendly, have therefore argued that the transparency many of the NGOs ask from others needs to be extended to them as well.
She responded with arcane legalisms such as the right to make anonymous donations, none of them insurmountable in my view if Public Citizen wished to put principles such as transparency before the pursuit of profits. I use the word deliberately, as profits are not all that different from contributions insofar as they both imply the acquisi- tion of cold cash.
If transparency is not routinely practiced by NGOs, it would be noth- ing short of a miracle if NGOs did not produce their own counterparts of the occasional corruptions of some multinationals such as Enron. Lest anyone thinks that NGOs are exempt from the laws of human na- ture, recall the lapses by one of the most venerated non-profit organiza- tions, the Vatican—consider its historical record on anti-Semitism or its collaborations, first with the conquistadors in South America and next with the oppressive dictatorial regimes that afflicted the region until very recently—and by charities such as the United Way whose CEO turned out to be not quite a moral example to the rest of us and the American Red Cross whose practice of secretly reassigning funds gathered in a disaster to its general war chest, practicing a deceptiveness that amounts to fraud, came to light after the outpouring of charitable contributions following September Nor are the NGOs and their rank and file beyond practicing the occasional lie, much like the corporations, politicians, and bureaucrats they excoriate.
These are only among the most disturbing of such activities, all presumably in the name of a good cause. Another recent example is even more striking because it was per- haps based not on outright fraud but rather on the desire to inflate num- bers to motivate remedial action. Many accounts in British and American news media last year spoke breathlessly of 15, child slaves.
The number first appeared in Malian newspapers, citing the Unicef of- fice in Mali. The Unicef office in Ivory Coast, which had, concluded that it was impossible to determine the number. This month, the results of the first extensive survey of child labor in cocoa plantations in Ivory Coast and three other African nations were re- leased by the International Institute of Tropical Agriculture, a nonprofit, multinational organization that works in Africa.
The survey. As for child workers [most of them ages fifteen to seventeen] unrelated to the plantation owners. Ninety percent of the children, the study says, knew the intermediary or broker who hired them for the plantation work. But even in the United States—my own background is a farm- ing background—we grew up helping on the farm.
Everyone was surprised when all the wild figures—15, trafficked children—were being thrown around. It is also necessary to recognize that NGOs, no matter what universalism they profess, are grounded in national political and cultural contexts.
This constrains their universalism when it comes to choice of causes and campaigns. Let me take just two examples. It is hard to believe that the U. Then again, when the WTO found, correctly again as it happens, against the United States for providing subsidies to exporters operating through offshore subsidiaries, the U. Or did the deafening and nationalistic protests of the U. The problem of the cultural context is acute also for another reason.
Globalization involves issues of the balance of power, and hence also of democratic governance, between groups and between nations. The NGOs-multinationals divide is therefore crisscrossed by a within-NGOs divide that reflects a poor-rich country divide.
These large American anti-capitalist movements have effectively taken over the mili- tant scene in this country. The poor-country NGOs, with their shoestring budgets, feel overwhelmed by the hugely more prosper- ous NGOs of the rich countries.
I visited the leaders of nearly all the labor unions in India. When I was attending a conference at the U. Chamber of Commerce building, I was told that it was near the Hay-Adams. The salience of this rich-poor divide is evident also when the poor countries object to what seem like obviously good proposals, such as the acceptance of amicus curiae briefs which in the United States can be filed by qualified organizations and individuals who are not direct par- ties to a case.
Such briefs by NGOs are seen by the poor countries as giving the rich countries two oars to put in the disputed waters. When these NGOs back U. We cannot ignore, without sowing seeds of discord, the rela- tive size and resources of NGOs in rich and poor countries, and the inference of the bias it builds into defining the globalization agendas and priorities in favor of rich-country definitions of public interest.
Recognizing a problem often prompts its resolution. NGOs are in- creasingly aware of these shortcomings, and signs of change are already visible. Their role as partners in creating and sustaining appropriate governance is therefore a task that can be pursued with confidence. I n Act III, Scene 4 of King Lear, the proud old king, transported pro- foundly by the tragedy that relentlessly unfolds and engulfs him, kneels to pray as a storm rages around him, to regret his neglect of the wretched of the earth: Take physic, pomp; Expose thyself to feel what wretches feel, That thou mayst shake the superflux to them, And show the heavens more just.
Of course, the acute sensitivity to poverty and the moral commit- ment to reduce it are nothing new. It would be strange indeed if the many enlightened leaders and intellectuals of these nations had not al- ready resolved to wage a war on poverty half a century ago. That, in fact, was the very focus of the leaders in the many independence movements that resulted in extensive decolonization at the end of the Second World War. Writing some decades earlier, even the conservative Winston Churchill, who had observed acutely a shift in public opinion in the decade of the s, had remarked: The great victories had been won.
All sorts of lumbering tyrannies had been toppled over. Authority was everywhere broken. Slaves were free. Conscience was free. Trade was free. But hunger and squalor were also free and the people demanded something more than liberty.
Indeed, few in the twentieth century have not had poverty on their minds and a passion to remove it in their hearts. So, the compelling question is altogether different as we consider the issue of poverty as the new century, and even the new millennium, be- gins: And that returns us to the central question: As it happens, the proponents of globalization have it right.
Two types of supporting argumentation can be produced: Real Story of Globalization, has written from his firsthand experiences in Asia and described with telling stories and portraits from the ground how poverty has been licked by globalization. Let me cite one example that stayed with me long after I had read the book: The combined chicken farm and gambling den is right next door to a Lucent factory that manufactures microelectronics components—the factory floor of the broadband revolu- tion and the knowledge economy.
The work is done in large square buildings that look like giant sugar cubes. At the entrance stands a shrine honoring Brahma with yellow gar- lands and small wooden elephants. Inside are thousands of Thai laborers. Then they got motor- bikes. On my way back into town I amble through the industrial estate in search of a ride.
A shift is ending. Thousands of women for it is mostly women who work in the foreign-owned electronics factories pour through the factory gates. I pass restaurants, drugstores, supermarkets, jewelers, tai- lors, film shops, vendors of automatic washing machines.
The scientific analysis of the effect of trade on poverty is even more compelling. It has centered on a two-step argument: These propositions have been supported by many economists and policy makers of very different persuasions over the years. We calculated that a really progressive standard of living would necessitate the increase of wealth by or per cent. That was however too big a jump for us, and we aimed at a or per cent increase within ten years. It fell to me to work on this problem since I had just returned from Oxford and was the economist assigned to assist the proponents in the Indian Planning Commission of this plan to raise the minimum incomes of the poor.
I assembled the income distribution data that were available at the time; their quality was pretty awful because of inadequate statisti- cal expertise in most countries, nor were they standardized for interna- tional comparability.
But a quick scan seemed to suggest that there was no magic bullet: So the pri- mary inference I made was that if there was no way to significantly affect the share of the pie going to the bottom 30 percent, the most important thing was to grow the pie.
In short, my advice—what I might call with some immodesty the Bhagwati hypothesis and prescription—was that growth had to be the principal but, as I argue below, not the only strat- egy for raising the incomes, and hence consumption and living stan- dards, of the poor. In this view, growth was not a passive, trickle-down strategy for help- ing the poor. It was an active, pull-up strategy instead. It required a gov- ernment that would energetically take steps to accelerate growth, through a variety of policies, including building infrastructure such as roads and ports and attracting foreign funds.
By supplementing meager domestic savings, the foreign funds would increase capital formation and hence jobs. Those of us who were present at the creation therefore dismiss as nothing but ignorance and self-serving nonsense the popular and popu- list propositions that, first, growth was regarded as an end in itself and poverty removal was forgotten until a new, socially conscious genera- tion of economists who worried about poverty arrived on the scene, and second, that the strategy of growth in order to reduce poverty was a laissez-faire, hands-off, passive strategy.
We were also aware that growth had to be differentiated. Some types of growth would help the poor more than others. In India, the em- phasis on autarky and on capital-intensive projects reduced both growth rates and increase in the demand for labor, so the impact on poverty was minimal. Then again, growth can paradoxically immiserize a country and hence its poor as well unless corrective policies are undertaken simul- taneously.
Consider Bangla- desh, which exports a lot of jute. Growth in the shape of more jute production, resulting in greater exports, would depress the international price of jute.
Suppose then that one hundred additional bales of jute have been produced. Immiseration is the result. This paradox earned me a lot of attention, partly because econo- mists love paradoxes; whoever got attention for saying the obvious?
This was either because of economic reasons such as market saturation or because of protec- tionism that would choke off markets as soon as more exports material- ized.
A suitable policy can always nip the immiserizing growth paradox in the bud, ensuring that growth does amount to an increase in the size of the pie. Think of the green revolution, the evocative phrase used to describe the arrival and use of new and vastly more productive vari- eties of wheat and rice that had been invented with support from the Ford and Rockefeller Foundations and for which Dr.
Norman Borlaug got the Nobel prize for peace in So there you have the divide that attends every transition to a major new technology: But then imagine what happens when some innovate and increase their produc- tion so that the price falls, while others have not innovated and their stagnant output now is sold at a lower price.
Those who lag behind do not merely fall behind; they fall by the wayside, struck by a blow not of their making. Thus many feared that the green revolution would usher in the red revolution! But this did not come to pass. For one thing, policies were devised to ensure that immiseration of the laggards generally did not occur. Agricultural prices did not fall be- cause of increasing demand, which resulted from investments that added new jobs and incomes. The government in India also actively used price support schemes, providing a floor to possible declines in prices.
And as for the different fear that landless labor would be replaced by the higher yields, the reality turned out to be far more agreeable. The joint use of new seeds and irrigation led to multiple cropping; this resulted in an increased demand for labor on farms, prompting improvement in wages. Yet another possible source of immiseration with new seeds is the emer- gence of new pests and diseases that can be destructive of yields and of farming more generally.
In the Indian case again, the government was careful to establish a substantial scientific support system that contained these dangerous possibilities.
So appropriate policies will always enable us to profit from growth and to moderate, even prevent, unpleasant outcomes for the poor. While some governments have not been careful as discussed in Chapter 16 on coping with the potential downsides of globalization , other governments have not been blind to these problems.
Other interesting issues, how- ever, must be addressed. First, recall that different types of growth e. Such a de- velopment strategy undermined the cause of the poor by reducing growth and by delinking it from increased demand for the low-grade labor that constitutes the bulk of the poor. Second, what can we do to improve the access of the poor to ex- panding opportunities in a growing economy? It is not always true that growth will pull up the poor into gainful employment.
Even though growth opens the doors, the traction in the legs of the poor may not be enough to carry them through these doors.
For example, tribal areas in India where poverty is acute may not be connected sufficiently to the mainstream economy where growth occurs. And we know from inner- city problems in the United States that the supply response of its youth to jobs downtown may be minimal unless we also address structural problems such as the allure of drugs, transportation bottlenecks, and the lack of role models in broken and single-parent families struggling against terrible odds.
I should add that those who grow up in the inner city also need to acquire the carriage and demeanor that are critical for service sector jobs downtown—though you need them less in the kitchen, where you flip hamburgers, than in the front, where you face the cus- tomers. But if you know the history of developmental economics, then you also know that the earliest development-policy makers tried hard to improve the access of the poor to growing incomes by making it easier for them to borrow to invest.
This was done in India by forcing banks to open branches in rural areas and by asking them to lower collateral re- quirements. The problem with this policy was that it often resulted in bad debts. A breakthrough, however, came with the invention of micro- credit programs, which go down to the very poor. The problem, de Soto says, is that these assets do not enjoy property rights and the associated rule of law that protects and enforces those rights.
This prevents the poor from being able to collateralize these assets in order to borrow and invest. De Soto has made this case beautifully and convincingly, citing the nineteenth-century American experience. There is no doubt that his prescription must be tried. As I remarked earlier, the anti-market protesters do not adequately appreci- ate that, as has been documented by numerous development economists who have studied both the working of controls and the rise of corrup- tion in developing countries, far too many bureaucrats impose senseless restrictions just to collect bribes or to exercise power.
I can do no better if I am to persuade skeptics than to tell here the bon mot that Sir Arthur Lewis, the Nobel laureate in development economics from St. Lucia which has the distinction of having produced two Nobel lau- reates, the other being the poet Walcott shared with me. When he met Thomas Balogh, a radical economic ad- viser to British prime minister Harold Wilson, he told him: Without a voice, it is highly un- likely that they will get appropriate and effective legislation. NGOs provide yet another support mechanism for the poor; and the Indian supreme court took great strides in the s and s by giving legal standing to social action groups as the Indian NGOs are called to bring action before the courts on behalf of the poor.
But it will often amount to a hill of beans unless a growing economy gives women the economic independence to walk out and even to sue at the risk of being discarded.
A battered wife who cannot find a new job is less likely to take advantage of legislation that says a husband cannot beat his wife. An impoverished parent is unlikely, no matter what the legislation says, to send a child to school if the prospect of finding a job is dismal because of a stagnant economy.
In short, empowerment, as it is called today—a fancy word for what we development economists have long understood and written about—proceeds from both political democracy and economic prosperity, and it is a powerful tool for aiding the poor. Finally, we need to go beyond just having incomes of the poor grow. Growing incomes would do little good if frittered away, for instance.
So, drawing on a lecture I gave on poverty and public policy, let me say that we have a final set of problems that need to be addressed once in- come has been provided: First, as sociologists of poverty have long known, the poor may spend their incomes on frills rather than on food. As the Japanese proverb goes, to each according to his taste; some prefer nettles. In fact, there is now considerable econometric evidence. Should we actively intervene so that the poor are seduced into better fulfillment of what we regard as their basic needs?
I do [think so]. In fact, I see great virtue in quasi-paternalistic moves to induce, by supply and taste- shifting policy measures, more nutrient food intake, greater use of clean wa- ter, among other things, by the poor. In thus compromising the principle of unimpeded and uninfluenced choice, for the poor and not for the others, evidently I adopt the moral-philosophical position that I do not care if the rich are malnourished from feeding on too many cakes but do if the poor are malnourished from downloading too little bread, when their incomes can download them both proper nourishment if only they were to choose to do so.
Of course, the question then also arises as to the distribution of the con- sumption, even when adequate and desirable, within the household. This is, of course, an active issue today, with the rise of feminism. But then, was our earlier optimism about the benign relationship be- tween trade and growth also justified despite the fact that one could readily imagine circumstances where, instead of helping growth, trade could harm or even bypass growth?
Indeed, economists can, and do, readily build formal models to derive these unpleasant possibilities. And empirical evidence supports the optimism. First, consider the late nineteenth century. Historians of this period have often thought that protection, not free trade, was associated with high growth.
Equally important, he shows that the rapidly growing coun- tries, Canada and Argentina, had high tariffs but that these tariffs were for revenue and had few protective side effects.
The two countries were in fact splendid examples of outward-oriented countries that built pros- perity on their pro-trade orientation. Second, we can also turn to analyses that take into account com- plexities that the many-country regressions necessarily ignore.
These typically involve deeper examination of specific episodes that speak to the issue at hand or consist of sophisticated country studies in depth.
Two examples of such analyses, both supportive of the merits of freer trade, can be found in the empirical literature. Just because specific tariffs led an industry to grow, we cannot conclude that the strategy con- tributed to economic prosperity and hence growth. At the same time, the modern evidence against an inward-looking or import substitution trade strategy is really quite overwhelming. In the s and s, several full-length studies of the trade and indus- trialization strategies of over a dozen major developing countries, in- cluding India, Ghana, Egypt, South Korea, the Philippines, Chile, Brazil, and Mexico, were undertaken at the Organization for Economic Coop- eration and Development OECD and the National Bureau of Economic Research, the leading research institution in the United States.
Thus, for instance, in examining whether the trade lib- eralization in India worked, T. Srinivasan and I wrote a whole chap- ter assessing whether, after making allowance for a severe drought that blighted exports, the liberalization could be considered to have been beneficial compared to a decision to avoid it.
The result was to over- turn decisively the prevailing wisdom in favor of autarkic policies. The layman finds it hard to appreciate this because, as the Nobel laureate Paul Samuelson has remarked, perhaps the most counterintuitive but true proposition in economics has to be that one can specialize and do better.
This is particularly the case for small countries. They decided in the s therefore to have an East African Common Market so that they could specialize among themselves and each could pro- duce at lower cost for the larger combined market.
Restric- tion of trade often is the chief cause of domestic monopolies. Freer trade produces enhanced competition and gains therefrom. In- dia provides an amusing illustration. Inflation-prone economies with fixed exchange rate regimes, where countries only reluctantly adjust their exchange rates in response to inflation, would soon find that their currency had become overvalued.
This overvaluation would make exporting less profitable and import- ing more rewarding, thus undermining the outward-oriented trade strategy. Hence countries committed to export-promoting trade strategy had to have macroeconomic stability, and they therefore earned the economic advantages that follow from good management of the economy. They are wrong. Aside from the fact that we did think of this almost a quarter of a century ago, it is wrong to suggest that macroeconomic stability—for example, an economy not plagued by high inflation—will necessarily lead to an export-promoting trade strategy.
India and the Soviet-bloc countries enjoyed splen- did macroeconomic stability, to the point where a wit observed that Karl Marx and Milton Friedman were strange bedfellows. But the economies were autarkic in trade: It would also be less productive.