Saturday , July 22 2017
Home / Dani Rodrik
Dani Rodrik

Dani Rodrik

I am an economist, and a professor at the Harvard Kennedy School. My most recent book is Economics Rules: The Rights and Wrongs of the Dismal Science (Norton, 2015). I was born and grew up in Istanbul, Turkey. I still follow Turkish politics very closely, as you will find out if you spend any time with this blog.

Articles by Dani Rodrik

The G20’s Misguided Globalism

16 days ago

HAMBURG – This year’s G20 summit in Hamburg promises to be among the more interesting in recent years. For one thing, US President Donald Trump, who treats multilateralism and international cooperation with cherished disdain, will be attending for the first time.

Trump comes to Hamburg having already walked out of one of the key commitments from last year’s summit – to join the Paris climate agreement “as soon as possible.” And he will not have much enthusiasm for these meetings’ habitual exhortation to foreswear protectionism or provide greater assistance to refugees.

Moreover, the Hamburg summit follows two G20 annual meetings in authoritarian countries – Turkey in 2015 and China in 2016 – where protests could be stifled. This year’s summit promises to be an occasion

Read More »

Can Macron Pull it Off?

May 9, 2017

CAMBRIDGE – Emmanuel Macron’s victory over Marine Le Pen was much-needed good news for anyone who favors open, liberal democratic societies over their nativist, xenophobic counterparts. But the battle against right-wing populism is far from won.

Le Pen received more than a third of the second-round vote, even though only one party other than her own National Front – Nicolas Dupont-Aignan’s small Debout la France – gave her any backing. And turnout was apparently sharply down from previous presidential elections, indicating a large number of disaffected voters. If Macron fails during the next five years, Le Pen will be back with a vengeance, and nativist populists will gain strength in Europe and elsewhere.

As a candidate, Macron was helped in this age of

Read More »

Why Did So Many Cheer Turkey’s Democracy While It Was Dying?

April 25, 2017

Claire Berlinski’s excellent account of the Western (and domestic) observers who cheered on as Turkey was sliding into authoritarianism reminds me of a point I long wanted to make.
There was in Erdogan’s early years some reason to be confused as to what was going on. Was he a Muslim democrat who was essentially the Turkish equivalent of a European Christian Democrat? Or was he an authoritarian at heart who would resort to repression as soon as he had sufficient control?
We know the answer now. But at the time there was perhaps what an economist would call an “observational equivalence” between the two scenarios.
In his early years, Erdogan was not sufficiently secure in power. Remember that as late as 2008, his party barely escaped closure thanks to a very narrow constitutional court decision. The first five years or so of his coming to power were years of transition, from the secular elites to the AKP-Gulenist alliance. During the transition, Erdogan naturally sought allies among the liberals and the West. But beyond that, the transition opened up space for political discussion and debate in ways that had long escaped the country. The old guard’s power was weakening while Erdogan had not yet consolidated his power. The former could not put the lid on the new developments, while the latter was not strong enough (yet) to crush all potential opposition.

Read More »

Prudential regulation, capital controls, and second-best

April 20, 2017

A usual argument against the use of capital controls as a prudential measure is that it is always better to tackle problems at their source rather than trying to deal with symptoms.  This is called the principle of economic targeting in Economics, one of the discipline’s most powerful teachings. The problem with indirect remedies is that they create problems themselves, “by-product distortions” in Econ-speak. With capital controls, those would be corruption and the discouragement of trade and other flows that are not necessarily a problem.
Hyun Song Shin essentially relies on this principle when he argues against capital controls (in a speech yesterday in Washington, DC):

The lesson is to distinguish underlying causes from outward symptoms. Yes, the 2008 financial crisis was in large part a cross-border phenomenon, but focusing on capital flows confuses the symptoms (capital flows) from the underlying causes (excess leverage and funding risk). If the problem is excessive bank leverage and funding risk, then address these risks directly with traditional microprudential, or regulatory tools.

This argument always reminds me of opponents’ argument about why gun controls are not needed: “it’s not guns that kill people; it’s people.” The implication is that we should target the criminals and not the guns.

Read More »

Trade, redistribution, and social dumping

April 18, 2017

I just saw this response from Joel Trachtman to my column "Too Late To Compensate Free Trade’s Losers." Trachtman argues that "the fundamental problem of winners and losers will not be solved by these changes."
I do not disagree. But the fundamental political problem with trade is not there are winners and losers — the domestic market generates much greater job churn and dislocation than trade does. It is that it generates unfair redistribution, or at least redistribution that can be legitimately perceived as unfair, when goods cross jurisdictional boundaries.
As I explain here:

It’s important to distinguish between two versions of an argument as to why trade may be problematic from a social or political perspective.

Some suggest trade is problematic because it redistributes income. The basis for that claim is true, but trivial. Pretty much everything else that happens in a market economy somehow redistributes income. Technology and market competition are the sources of endless churns in an economy. Moreover, plenty of other things, including skill-biased innovation and minimum-wage laws, have vastly greater effects on income distribution than trade.

Read More »

Dismal thoughts about the Turkish referendum

April 17, 2017

I don’t write a lot on Turkey these days. (My latest piece was published last September. It was on Erdogan’s missed opportunities to enter history books as a truly great leader, rather than the corrupt tyrant he seems destined for.) It’s partly because the subject is too depressing: try hard as I might, I really cannot find a good scenario developing over the years ahead.
It’s also because conventional wisdom has so thoroughly converged on what I have been saying since I first began to write on Turkey’s politics in 2010. For a few years, I was a relatively lonely voice in a Western media landscape full of cheerleading for Erdogan and his then-allies, the Gulenists.  (Sorry pundits, I wrote my “Turkey’s Democracy is Dead” piece seven years ago, back in June 2010!) I don’t see much to be gained today by repeating what everyone else is saying about the abysmal state of Turkey’s democracy and rule of law.
I do think a lot about Turkey, mostly about whether there was another path.

Read More »

Too Late to Compensate Free Trade’s Losers

April 11, 2017

CAMBRIDGE – It appears that a new consensus has taken hold these days among the world’s business and policy elites about how to address the anti-globalization backlash that populists such as Donald Trump have so ably exploited. Gone are the confident assertions that globalization benefits everyone: we must, the elites now concede, accept that globalization produces both winners and losers. But the correct response is not to halt or reverse globalization; it is to ensure that the losers are compensated.

The new consensus is stated succinctly by Nouriel Roubini: the backlash against globalization “can be contained and managed through policies that compensate workers for its collateral damage and costs,” he argues. “Only by enacting such policies will globalization’s losers begin to think that they may eventually join the ranks of its winners.”

This argument seems to make eminent sense, both economically and politically. Economists have long known that trade liberalization causes income redistribution and absolute losses for some groups, even as it enlarges a country’s overall economic pie. Therefore, trade deals unambiguously enhance national wellbeing only to the extent that winners compensate losers. Compensation also ensures support for trade openness from broader constituencies and should be good politics.

Read More »

How Much Europe Can Europe Tolerate?

March 14, 2017

CAMBRIDGE – This month the European Union will celebrate the 60th anniversary of its founding treaty, the Treaty of Rome, which established the European Economic Community. There certainly is much to celebrate. After centuries of war, upheaval, and mass killings, Europe is peaceful and democratic. The EU has brought 11 former Soviet-bloc countries into its fold, successfully guiding their post-communist transitions. And, in an age of inequality, EU member countries exhibit the lowest income gaps anywhere in the world.

But these are past achievements. Today, the Union is mired in a deep existential crisis, and its future is very much in doubt. The symptoms are everywhere: Brexit, crushing levels of youth unemployment in Greece and Spain, debt and stagnation in Italy, the rise of populist movements, and a backlash against immigrants and the euro. They all point to the need for a major overhaul of Europe’s institutions.

So a new white paper on the future of Europe by European Commission President Jean-Claude Juncker comes none too soon. Juncker sets out five possible paths: carrying on with the current agenda, focusing just on the single market, allowing some countries to move faster than others toward integration, narrowing down the agenda, and pushing ambitiously for uniform and more complete integration.

Read More »

Ariel Rubinstein on Economics Rules

March 13, 2017

The great Ariel Rubinstein has a review of my book Economics Rules in the latest issue of the Journal of Economic Literature. It is a fun review – gratifying for me because Ariel agrees with many of my arguments – and it has a deeply personal, even emotional, feel to it. Ariel feels strongly about the turn the profession has taken, and agree or not, the essay makes for a very interesting read.
The review took me back to my graduate-student days at Princeton. The place had a very strong crop of theorists among the graduate students, and I used to hang out with them a lot. I am not sure quite why, since what I did was very different from what they did. But they were the most fun bunch in Princeton at the time. I have fun memories of many a drunken night at the Annex – the student bar long since gone.
I remember distinctly our contrasting attitudes to Economics. The theorists had it all together; they knew what they were doing and had few questions about methods or approach. By contrast, I was full of doubt and uncertainty: What was I doing in Economics? Did Economics really help answer any of the big questions? How would we know?
At one of our gatherings, I tried to voice some concerns about economic methodology. One of the theorists impatiently brushed me off. “Why do you bother with methodology,” he asked. “It’s a waste of time. Do your work.

Read More »

A Foreword to Kari Polanyi Levitt

March 8, 2017

I was recently asked to write a foreword to the Mexican edition of Kari Polanyi Levitt’s From the Great Transformation to the Great Financialization. Kari is Karl Polanyi’s daughter, and the essays in her book — part memoir, part intellectual history, part analysis of the global economy — provide a wonderful Polanyi-esque perspective on our day. I happily accepted, and my Foreword is below.
****
I first encountered Karl Polanyi as an undergraduate, in a course on comparative politics. “The Great Transformation” was on the course syllabus, sitting somewhat awkwardly amidst more standard political science fare. The assigned reading, on the Speenhamland system and the reform of the Poor Laws in Britain made little impression on me at first. But over the years, I found myself coming back to the central arguments of the book: the embeddedness of a market economy in a broader set of social arrangements, the rejection of an autonomous economic sphere, the folly of treating markets as self-stabilizing.
I am lucky that I had been exposed to Polanyi before I became a full-fledged economist. Looking at standard neoclassical fare from the perspective of the Great Transformation kept me alert to the hidden assumptions of economic theory.

Read More »

Global Citizens, National Shirkers

February 10, 2017

CAMBRIDGE – Last October, British Prime Minister Theresa May shocked many when she disparaged the idea of global citizenship. “If you believe you’re a citizen of the world,” she said, “you’re a citizen of nowhere.” Her statement was met with derision and alarm in the financial media and among liberal commentators. “The most useful form of citizenship these days,” one analyst lectured her, “is one dedicated not only to the wellbeing of a Berkshire parish, say, but to the planet.” The Economist called it an “illiberal” turn. A scholar accused her of repudiating Enlightenment values and warned of “echoes of 1933” in her speech.

I know what a “global citizen” looks like: I see a perfect specimen every time I pass a mirror. I grew up in one country, live in another, and carry the passports of both. I write on global economics, and my work takes me to far-flung places. I spend more time traveling in other countries than I do within either country that claims me as a citizen. Most of my close colleagues at work are similarly foreign-born. I devour international news, while my local paper remains unopened most weeks. In sports, I have no clue how my home teams are doing, but I am a devoted fan of a football team on the other side of the Atlantic. And yet May’s statement strikes a chord.

Read More »

Thinking straight about fair trade

January 27, 2017

In the previous entry, I discussed the real-world distributional effects of trade agreements, in the specific case of NAFTA. Why should we care about such redistribution and how should we deal with it?
It is useful to distinguish between two different versions of an argument as to why trade may be problematic from a social or political perspective.
Trade is problematic because it redistributes income.
Trade is problematic because it violates norms and understandings embodied in our institutional arrangements – it undercuts domestic social bargains.
The first case is no different than a million other things in a market economy that can have distributional implications. It does not in general require that we target trade specifically.
But the second case is different, and may require trade remedies. I associate the valid core of fair-trade or social-dumping concerns with this particular possibility.
I elaborate on this argument here. Here is a teaser:

Economists like to claim that the purpose of free trade is to eliminate barriers that impair the efficient global allocation of resources, while helping some of the world’s poorest people. It’s an argument undermined by a simple thought experiment.

Read More »

What did NAFTA really do?

January 26, 2017

Brad De Long has written a lengthy essay that defends NAFTA (and other trade deals) from the charge that they are responsible for the loss of manufacturing jobs in the U.S. I agree with much that he says – in particular with the points that the decline in manufacturing employment has been a long-term process that predates NAFTA and the China shock and that it is driven mainly by the secular trend of labor-saving technological progress. There is no way you can hold NAFTA responsible for employment de-industrialization in the U.S. or expect that a “better” deal with Mexico will bring those jobs back.
At the same time, the essay leaves me frustrated and uneasy. It seems to gloss over the distributional pain of NAFTA and overstate the overall gains.  
So what does the evidence say on these issues? We have now some good academic papers that address both overall gains and distributional impacts.
Let’s start with the big picture. Remember first that many advocates of NAFTA made at the outset some wildly optimistic claims about what NAFTA was going to achieve. The most extravagant of the studies, and the one that probably was the most widely circulated, was one produced at the Peterson Institute for International Economics (then just the Institute for International Economics). This study argued that NAFTA would be a net job creator for the U.S.

Read More »

New results on structural change during the recent growth boom in developing countries

January 23, 2017

The last two decades have been a rare period of rapid convergence for the world’s developing economies. Everyone is familiar with China and India’s experience, but growth went beyond these two large economies. Many countries in Sub-Saharan Africa and Latin America had their best performance in decades, if not ever.
In a new paper, my co-authors Xinshen Diao (IFPRI) and Margaret McMillan (Tufts and IFPRI) and I examine this experience. We ask what drove this growth and how sustainable is it. Looking at recent growth through the lens of structural change proves particularly insightful.
Here is our decomposition of recent growth accelerations into the within-sector and between-sector terms. The latter term captures the growth contribution of structural change — the reallocation of labor across sectors with different labor productivities.

What stands out in the analysis is that recent growth accelerations were based on either rapid within-sector labor productivity growth (Latin America) or growth-increasing structural change (Africa), but rarely both at the same time. In Latin America, within-sector labor productivity growth has been impressive, but growth-promoting structural change has been very weak.

Read More »

Is Global Equality the Enemy of National Equality?

January 22, 2017

The question in the title is perhaps the most important question we confront, and will continue to confront in the years ahead. I discuss my take in this paper.
Many economists tend to be global-egalitarians and believe borders have little significance in evaluations of justice and equity. From this perspective, policies must focus on enhancing income opportunities for the global poor. Political systems, however, are organized around nation states, and create a bias towards domestic-egalitarianism. 
How significant is the tension between these two perspectives? Consider the China "trade shock." Expanding trade with China has aggravated inequality in the United States, while ameliorating global inequality. This is the consequence of the fact that the bulk of global inequality is accounted for by income differences across countries rather than within countries. 
But the China shock is receding and other low-income countries are unlikely to replicate China’s export-oriented industrialization experience. So perhaps the tension is going away?
Not so fast. The tension is even greater somewhere else: Relaxing restrictions on cross-border labor mobility would have an even stronger positive effect on global inequality, at the cost of adverse effects at the lower end of labor markets in rich economies.

Read More »

Trump’s Defective Industrial Policy

January 10, 2017

CAMBRIDGE – US President-elect Donald Trump has yet to take office, but his brand of flawed industrial policy has been on full display since his surprise win in November.

Within weeks of the election, Trump had already claimed a victory. Through a mix of inducements and intimidation, he prevailed on the heating and cooling firm Carrier to keep some of its operations in Indiana, “saving” around 1,000 American jobs. Touring the Carrier plant subsequently, he warned other US firms that he would impose stiff tariffs on them if they moved plants overseas and shipped products back home.

His Twitter account has produced a stream of commentary in the same vein. He has taken credit for Ford’s decision keep a Lincoln plant in Kentucky, rather than move it to Mexico. He has threatened General Motors with import tariffs if it continues to import Chevrolet Cruzes from Mexico instead of making them in the United States.

Trump has also hounded defense contractors for cost overruns, berating the aerospace giants Boeing and Lockheed Martin on separate occasions for producing planes that are too expensive.

Trump’s policy style represents a sharp break from that of his predecessors. It is highly personalized and temperamental. It relies on threats and bullying. It is prone to boasting, exaggeration, and lies about actual successes.

Read More »

Don’t Cry Over Dead Trade Agreements

December 8, 2016

CAMBRIDGE – The seven decades since the end of World War II were an era of trade agreements. The world’s major economies were in a perpetual state of trade negotiations, concluding two major global multilateral deals: the General Agreement on Tariffs and Trade (GATT) and the treaty establishing the World Trade Organization. In addition, more than 500 bilateral and regional trade agreements were signed – the vast majority of them since the WTO replaced the GATT in 1995.

The populist revolts of 2016 will almost certainly put an end to this hectic deal-making. While developing countries may pursue smaller trade agreements, the two major deals on the table, the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP), are as good as dead after the election of Donald Trump as US president.
We should not mourn their passing.

What purpose do trade agreements really serve? The answer would seem obvious: countries negotiate trade agreements to achieve freer trade. But the reality is considerably more complex. It’s not just that today’s trade agreements extend to many other policy areas, such as health and safety regulations, patents and copyrights, capital-account regulations, and investor rights. It’s also unclear whether they really have much to do with free trade.

The standard economic case for trade is a domestic one.

Read More »

Straight Talk on Trade

November 15, 2016

CAMBRIDGE – Are economists partly responsible for Donald Trump’s shocking victory in the US presidential election? Even if they may not have stopped Trump, economists would have had a greater impact on the public debate had they stuck closer to their discipline’s teaching, instead of siding with globalization’s cheerleaders.

As my book Has Globalization Gone Too Far? went to press nearly two decades ago, I approached a well-known economist to ask him if he would provide an endorsement for the back cover. I claimed in the book that, in the absence of a more concerted government response, too much globalization would deepen societal cleavages, exacerbate distributional problems, and undermine domestic social bargains – arguments that have become conventional wisdom since.
The economist demurred. He said he didn’t really disagree with any of the analysis, but worried that my book would provide “ammunition for the barbarians.” Protectionists would latch on to the book’s arguments about the downsides of globalization to provide cover for their narrow, selfish agenda.

It’s a reaction I still get from my fellow economists.

Read More »

Scholars’ letter of support for Ricardo Hausmann

November 7, 2016

Here is a letter that I have prepared and signed with some colleagues in response to Venezuelan president Nicolás Maduro’s ugly attacks on Ricardo Hausmann.

“We the undersigned write to express our dismay at Venezuelan president Nicolás Maduro’s repeated targeting of our colleague Ricardo Hausmann and to express our support for Professor Hausmann.
Two years ago, President Maduro ordered Venezuela’s Attorney General to proceed against Professor Hausmann following an article in which Hausmann argued that the government consider defaulting on its external debt to spare the Venezuelan people further economic hardship. Last year, he aired the tape of a private conversation between Professor Hausmann and a Venezuelan businessman and ordered that Hausmann be prosecuted. And most recently, on November 3rd, he called Professor Hausmann a “traitor” in a televised address and accused him of conspiring with ratings agencies and the International Monetary Fund in order to deny Venezuela access to capital markets.
Professor Hausmann is a distinguished scholar and practitioner who has worked with governments around the world. He is a leading voice on economic policy and a frequent contributor to the world’s financial media. In his writings and policy advocacy on Venezuela, Professor Hausmann has exercised his right of free speech, essential to any open society.

Read More »

The Walloon mouse

October 22, 2016

It appears Belgium’s Wallonia has put a nail on the coffin of the EU-Canada trade agreement (CETA) by vetoing it. The reasons, The Economist puts it, "are hard to understand." 
Well, yes and no. Canada is one of the most progressive trade partners you could hope to have, and it is hard to believe that Walloon incomes or values are really being threatened. But clearly something larger than the specifics of this agreement is at stake here.
Instead of decrying people’s stupidity and ignorance in rejecting trade deals, we should try to understand why such deals lost legitimacy in the first place. I’d put a large part of the blame on mainstream elites and trade technocrats who pooh-poohed ordinary people’s concerns with earlier trade agreements. 
The elites minimized distributional concerns, though they turned out to be significant for the most directly affected communities. They oversold aggregate gains from trade deals, though they have been smallish since at least NAFTA. They said sovereignty would not be diminished though it clearly was in some instances. They claimed democratic principles would not be undermined, though they are in places. They said there’d be no social dumping though there clearly is at times.

Read More »

How to tell apart trade agreements that undermine democratic principles from those that don’t

October 22, 2016

I discussed in an earlier post on Brexit how to think about international agreements and the constraints on state action they entail in terms of democratic legitimacy. Since that discussion has relevance beyond Brexit, I’ve pasted the relevant part here below. The basic point is this: the fact that an international rule is negotiated and accepted by a democratically elected government does not inherently make that rule democratically legitimate.

The optimistic argument has been best formulated by the political scientists Bob Keohane, Steve Macedo and Andy Moravcsik. They point there are various ways in which global rules can enhance democracy — a process that they call “democracy enhancing multilateralism.” Democracies have various mechanisms for restricting the autonomy or the policy space of decision makers. For example, democratically elected parliaments often delegate power to independent or quasi-independent autonomous bodies. Central banks are often independent and there are various other kinds of checks and balances in constitutional democracies. Similarly, global rules can make it easier for national democracies to attain the goals that they pursue even if they entail some restrictions in terms of autonomy. Keohane at al.

Read More »

It’s a war of ideas, not of interests

October 19, 2016

Mike Konczal has an interesting piece on how the progressives are unlikely to win over Trump’s base of white, male, working class voters – even if they take their concerns to heart and propose policies that will help them.  He thinks progressives lack specificity and clarity on the “specific approaches and programs [that] would convince Trump’s voters to join liberals.” More fatally, he believes the progressive agenda, if successfully implemented, would actually fail to bring these voters along.
Here is the gist of the argument:

“Yet any sufficiently important left project going forward is going to involve at least four things: a more redistributive state, a more aggressive state intervention in the economy, a weakening of the centrality of waged labor, and a broadening, service-based form of worker activism. These four points, essential as they are, will likely further drive Trump’s white working-class supporters away from the left, rather than unite them.”   

Konczal might well be right, but I want to entertain the possibility that he is wrong.
The progressives’ preference for specific policies is rooted in the view that voters’ “interests” – as they derive from their occupation, income, race, or gender – are fairly fixed. So policies are winners as long as they appeal to those “interests.

Read More »

No Time for Trade Fundamentalism

October 14, 2016

CAMBRIDGE – “One of the crucial challenges” of our era “is to maintain an open and expanding international trade system.” Unfortunately, “the liberal principles” of the world trade system “are under increasing attack.” “Protectionism has become increasingly prevalent.” “There is great danger that the system will break down … or that it will collapse in a grim replay of the 1930s.”

You would be excused for thinking that these lines are culled from one of the recent outpourings of concern in the business and financial media about the current backlash against globalization. In fact, they were written 35 years ago, in 1981.
The problem then was stagflation in the advanced countries. And it was Japan, rather than China, that was the trade bogeyman, stalking – and taking over – global markets. The United States and Europe had responded by erecting trade barriers and imposing “voluntary export restrictions” (VERs) on Japanese cars and steel. Talk about the creeping “new protectionism” was rife.

What took place subsequently would belie such pessimism about the trade regime. Instead of heading south, global trade exploded in the 1990s and 2000s, driven by the creation of the World Trade Organization, the proliferation of bilateral and regional trade and investment agreements, and the rise of China.

Read More »

How Shimon Peres brought inflation down in 1985

September 28, 2016

I saw Shimon Peres, who passed away yesterday, only once and it was at a conference on inflation stabilization in Jerusalem in 1990. He had led the national unity government during 1984-86 which had successfully brought down the country’s triple-digit inflation. The conference organizer, the great Michael Bruno, had asked him to give an after-dinner speech.
When Peres took office, the budget deficit stood at more than 15% of GDP. Everyone at the conference wanted to know how he had managed to bring it down so quickly.
Peres said it was actually quite easy. He called a cabinet meeting — Labour and Likud had an equal number of cabinet seats — and announced that the meeting would not end until the requisite expenditure cuts had been agreed upon.
The meeting went on and on, with each minister zealously guarding his turf. But as Peres explained, eventually people got tired. Some ministers began to nod off. That was Peres’ chance. "The minister of education seems to have fallen asleep. Off with his budget. Look, the minister of tourism has also nodded off — off with his budget too…"
The story probably underestimates Peres’ abilities as a negotiator, and the effort he had to spend to get his cabinet to agree to the cuts. But it is a funny one.

Read More »

From hyper-globalization back to sensible globalization

September 19, 2016

I had a piece in the New York Times over the weekend that tries to steer our globalization discussion in what I think is a more sensible direction. A brief excerpt:

We need to rescue globalization not just from populists, but also from its cheerleaders. Globalization evangelists have done great damage to their cause not just by underplaying the real fears and concerns on which the Trumps of this world thrive, but by overlooking the benefits of a more moderate form of globalization.
We must reassess the balance between national autonomy and economic globalization. Simply put, we have pushed economic globalization too far — toward an impractical version that we might call “hyperglobalization.”

The principles I discuss are taken largely from my book, The Globalization Paradox —  so if you’ve read that book, you will not see much that is new. But the intervening developments have made these ideas even more relevant now, I think.

Read More »

Erdoğan’s Tragic Choice

September 12, 2016

CAMBRIDGE – Ever since Turkish President Recep Tayyip Erdoğan won his first general election in late 2002, he has been obsessed with the idea that power would be wrested from him through a coup. He had good reason to worry even then. Turkey’s ultra-secularist establishment, ensconced in the upper echelons of the judiciary and the military at the time, made no secret of its antipathy toward Erdoğan and his political allies.

Erdoğan himself had been jailed for reciting religion-laced poetry, which prevented him from taking office immediately when his Justice and Development Party (AKP) assumed office in November 2002. In 2007, the military issued a statement opposing the AKP’s candidate for president – then largely a figurehead. And in 2008, the party narrowly escaped being shut down by the country’s top court for “anti-secular activities.”
The old guard’s efforts largely backfired and served only to augment Erdoğan’s popularity. His strengthening grip on power might have mollified him and led to a less confrontational political style. Instead, in the ensuing years, his then-allies the Gülenists – followers of the cleric-in-exile Fethullah Gülen – managed to whip Erdoğan’s obsession into paranoia.

Read More »

The False Economic Promise of Global Governance

August 11, 2016

CAMBRIDGE – Global governance is the mantra of our era’s elite. The surge in cross-border flows of goods, services, capital, and information produced by technological innovation and market liberalization has made the world’s countries too interconnec…

Read More »

Turkey’s Baffling Coup

July 17, 2016

GRANADA – Military coups – successful or otherwise – follow a predictable pattern in Turkey. Political groups – typically Islamists – deemed by soldiers to be antagonistic to Kemal Atatürk’s vision of a secular Turkey gain increasing power. Tensions rise, often accompanied by violence on the streets. Then the military steps in, exercising what the soldiers claim is their constitutional power to restore order and secular principles.

This time, it was very different. Thanks to a series of sham trials targeting secularist officers, President Recep Tayyip Erdoğan had managed to reconfigure the military hierarchy and place his own people at the top. While the country has been rocked by a series of terrorist attacks and faces a souring economy, there was no inkling of unrest in the military or opposition to Erdoğan. On the contrary, Erdoğan’s recent reconciliation with Russia and Israel, together with his apparent desire to pull back from an active role in the Syrian civil war, must have been a relief to Turkey’s top brass.
No less baffling was the almost amateurish behavior of the putschists, who managed to capture the chief of the general staff but apparently made no meaningful attempt to detain Erdoğan or any senior politicians.

Read More »

The Abdication of the Left

July 11, 2016

RONDA, SPAIN – As the world reels from the Brexit shock, it is dawning on economists and policymakers that they severely underestimated the political fragility of the current form of globalization. The popular revolt that appears to be underway is taking diverse, overlapping forms: reassertion of local and national identities, demand for greater democratic control and accountability, rejection of centrist political parties, and distrust of elites and experts.

This backlash was predictable. Some economists, including me, did warn about the consequences of pushing economic globalization beyond the boundaries of institutions that regulate, stabilize, and legitimize markets. Hyper-globalization in trade and finance, intended to create seamlessly integrated world markets, tore domestic societies apart.
The bigger surprise is the decidedly right-wing tilt the political reaction has taken. In Europe, it is predominantly nationalists and nativist populists that have risen to prominence, with the left advancing only in a few places such as Greece and Spain. In the United States, the right-wing demagogue Donald Trump has managed to displace the Republican establishment, while the leftist Bernie Sanders was unable to overtake the centrist Hillary Clinton.

Read More »