Globalization and its discontents

The author had worked in the World Bank and “saw firsthand the devastating effect that globalization can have on developing countries and especially the poor within those countries (p.ix).” He hopes that, as an economist, he might do something to improve the lives of the people who live in extreme poverty.

Under the competitive model, prices, private property, profits and competition are the four essential ingredients provide incentives and coordinate economic activities. By assumption, markets never fail. And most policy makers view government interventions as the root of all evil and show no concern about the poor. Worse still, it is not just a matter of views of markets and government but a matter of values.

Unfortunately, what we observe in the developing countries is another picture. The consequences of deregulation, liberalization and privatization are prolonged economic recession and the collapse of the banking sector. How should we reconcile what we learn in theory with what we observe in the developing countries?

If good economic policies are the solutions to poverty, what do we learn from these developing countries? Should we make policies because of the ideology and politics that fit only the interests of the people in power? Or should we accept the need and right of the developing countries and allow them to make their own choices that reflect their political judgments?

Stiglitz, Joseph (2002), Globalization and its discontents, NY: Penguin Books