London Panel Considers Globalization and Its Future

The fallout from Brexit and the persistent fragility of the international financial system have led to increased concerns about the effects of globalization. At a September 28 event for alumni and friends in London, SIPA brought together three experts for a timely panel discussion on the state of globalization and its future.

Taking part in the panel discussion—one of many signature events this year to mark SIPA’s 70th anniversary—were economist Jan Svejnar, director of the Center on Global Economic Governance; Martin Wolf of the Financial Times; and Tina Fordham MIA ’99, managing director and chief global political analyst at Citi. Dean Merit E. Janow moderated.

“The world system is more wobbly than it used to be,” Svejnar suggested.

The cause of this instability? Bad leadership and growing mistrust in governments, said Wolf.

“We have done a miserable job [with globalization]. Inequality is on the rise and large portions of populations in the developing world have stagnant incomes,” he said. “The immense financial crisis has led people to believe that those running the financial system are corrupt and incompetent.”

Fordham disagreed with the implication that growing inequality has contributed to negative attitudes about globalization.

“When you look at data, some of the most unequal societies have the most positive attitudes toward globalization,” she said. “Studies have shown that someone in China, with a much lower income per capita than someone in the U.S. or the U.K., have more positive feelings toward globalization.”

What decides feelings towards globalization, Fordham argued, is whether people have bought in to the idea that it will lead to a better life.

“People like to feel like things are improving for them and their children. It is the prospect of a better life that seems to drive attitudes toward globalization,” she added.

Stagnant economies and decreased economic opportunities have effectively dashed this hope in western countries, which in Wolf’s eyes has contributed to a populist view of government.

Fordham offered a warning that public mistrust in appointed officials can have devastating consequences.

“Historically, low-trust societies produce conspiracy theories and have revolutions. We are not experiencing the lowest levels of trust in the U.S. and Western Europe,” she said.

Wolf said that states have not only lost the trust of their people, they have also lost legitimacy.

“If states are not seen as legitimate, then the global order with flounder,” he said. “We have failed to manage it because we have failed to convince the population that the way we are running the system is good.”

Wolf nevertheless suggested a simple way that state leaders can restore public faith in their legitimacy:

“We can fix it by enforcing rules. A global system needs rules enforced by states,” he said.

In response to a question about policy recommendations that address this weakness in the system, Svejnar claimed that inclusive policies, which bring people who feel marginalized by globalization into the system, is key. He also called for small levels of well-regulated migration because “mass migration in the short run is not feasible.”

In a similar vein, Martin Wolf described mass migration as a “gone cause” and emphasized that corporations such as Apple cannot be allowed to continue to avoid paying taxes because it was “corrosive.”

Conversely, Fordham implied that the system might be able to correct itself given time.

“What if what we are experiencing is equivalent to a political, social, and economic market correction?,” she asked. “This could be an adjustment. Things are cyclical, conflict and ideology is cyclical. We are not going to see revolutions in advanced economies; we are going to see orderly adjustments. Change is inevitable.”

Is the response to globalization, then, a simple market correction? What will the world look like at the end of it? Wolf cited a lesson from an early economics class to suggest that if things continue as they have been, the result will not be favorable.

“When we were talking about free trade, the lesson we learned is that everything is okay if the losers are compensated,” he said. Right now, “not only are losers not being compensated they are being reduced to states of deep insecurity.”

All told, 130 guests attended the panel discussion and subsequent reception at the Royal Automobile Club. Alumni Affairs Director Susan Storms and Student Affairs Dean Cory Way joined the panelists in greeting alumni, friends, and prospective students.

— Serina Bellamy MIA ’17

Pictured (from left): Jan Svejnar, Tina Fordham, Martin Wolf, and Merit E. Janow