Project Syndicate: The Globalization Backlash Paradox

Some forms of globalization tend to be appreciated more than others, and economist Arvind Subramanian delves into why cross-border financial exchanges are more widely accepted than trade or migration despite having “regularly wreaked havoc on rich and poor economies alike over the last 40 years.” He concludes: “When it comes to real global integration, it is easy to identify perpetrators and victims; with financial integration, it is not.” Politicians find it easier to identify and target those suffering from trade or migration, especially if geographically concentrated, he suggests. Assigning blame during a financial crisis is less easy, and political leaders resist the integration in governance and rules-making that could prevent bad behavior. He urges controls of financial integration. “To support real integration, policymakers must create ambitious – even radically so – social safety nets that protect the inevitable losers, while highlighting the overall benefits that such integration affords…. policymakers will need to do a better job of managing financial integration – a task that may be all the more challenging, because no political constituency is really demanding it.” – YaleGlobal