Thursday, September 21, 2006

Watch Your Language

Leaving for class this morning, I heard Nobel prize winner Joseph Stiglitz on NPR discussing his book, Globalization and Its Discontents. He surprised me because he remarked that globalization could, on average, be bad. Sure, it could be bad for some people (it often is, in fact) but on the aggregate?

As it turns out, Stiglitz was treating legal globalization and real globalization as the same thing. The latter relates to the process of connecting institutions (economics, social, political, etc) across the world over. The former describes how much of that connecting people are allowed to do.

I only realized he was doing this when he explained that the free market could solve most or all of the problems "globalization" creates. For example, legal barriers embodied in "free trade" agreements allow for tariffs on certain crops, harming people in poor countries who want to export their food to the US and other protected countries. Stiglitz correctly noted that a free trade agreement could only be a few pages long; the only reason why the current ones are so massive is because they are stuffed with exceptions and little rules.

By mixing up the legal and the real definitions of globalization, I fear that people will cite this great economist as grounds for diminishing market activity, not expanding it. It reminds me of an incident when a law student claimed firms wouldn't engage in free trade because they wouldn't follow the restrictive rules of a treaty. Just because a law might say the sky is purple, does not make it so.

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