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The Collapse of Globalism

The more extravagant promises of globalization theory have come to naught. Where do we go from here?

| Wed Nov. 9, 2005 4:00 AM EST

MJ: Isn't New Zealand another example of a country that lost religion when it came to globalization.

JRS: In the early 1980s the government of New Zealand fell into the hands of true believers, globalist believers, and they embraced the theory of inevitability perhaps more completely than anybody else. And it solved in the very short term some of their debt problems, but in the medium- and long-term it left them in real economic trouble. One of the things they did was sell of everything they could, mainly internationally, and they got a one-time import of capital, followed by a yearly drain, because they had to send all the royalties out every year. So they had youth leaving in droves, a drain of money, high unemployment and so on. And then in 1999 they made the choice to turn their backs on globalism, which didn't mean to become protectionist, but did mean to put social policy in the center, and economics at the outer rim, and to be much more balanced in their approach. And now they've got their unemployment way down; they've renationalized some things, including their airlines, they've started up a very interesting national small-loans bank, and they've got pretty good growth. Also, the government that came to power 1999 and has enacted this program has just been reelected to a third term.

MJ: Should we understand the rise to power of leftist governments in Latin America as in part a reaction against globalization?

JRS: What you’re seeing in Latin America is a new group, Brazil, Chile and Argentina, attempting to go down another road, which is international but not globalist. For example, they’re striking bargains with China where they fix the prices of commodities for a certain period of time, and actually walking away from competition. The decision by Brazil, in the area of AIDS drugs, simply to ignore the intellectual property rules was a great and very important sign that something was happening. People said "You can't do that, we'll take you to court," and then after a few years they just left them alone. And the result is that Brazil is just about the only country on the front line [of the AIDS epidemic] that's doing reasonably well.

MJ: The case of affordable drugs seems a classic instance where moral concerns should—and increasingly do—trump economic dogma.

JRS: There's no question that on this front the Western democracies are failing to act in any sort of way that respects what we say are our standards. We're in total contradiction with ourselves on drug policy because it's a matter of life and death, and we're saying, 'No it isn't; it's a matter of profits or death, and profits are more important.' So that's why people like Bhagwati say that putting the protections for intellectual property into the WTO might sign the death warrant of free trade. It can't proceed for a long period of time if it's perceived to be—and is—an immoral tool.

MJ: Margaret Thatcher famously liked to invoke TINA—“There Is No Alternative”—when challenged on her economic views. What, in your opinion, is the alternative?

JRS: People have become so used to books where authors tell them what to do; or say there's nothing to be done. What I'm doing is simply stepping back and giving people the picture—which they don't have—of the last 30 years. And it tells you something about what works and doesn't work. I'm saying that since 1995 we've been in an interregnum, a vacuum where the picture is confused, and our elites are in denial because they're inheritors of the system. They don't have the capacity to stand back and say, 'We've got some real problems here. Let's think about what we can do about them. If we got some things wrong, let's do something else.' My book contains a lot of indications of some of the things we might be doing. But mainly I'm saying, 'Look, here's the way things appear to be going. What do you think you can do about it?'

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