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Plato’s Beard » East vs West - whereof one cannot speak, thereof one must make random noises

Plato’s Beard » East vs West - whereof one cannot speak, thereof one must make random noises

Plato’s Beard » East vs West - whereof one cannot speak, thereof one must make random noises

I sometimes think Economics has more interesting questions than Physics, but less interesting answers than the latter. Perhaps that is so because an ideological position seems almost a pre-requisite before any work in the field is started. Below are a set of links on the issue of globalisation and its effects. Broadly speaking, its somewhat of the same old debate abou free market vs protectionism, but the agents are reversed, and it seems, so are some of the ideologues.

The old story was that, despite its intuitive appeal (and caution gained from the experiences of colonialism), protectionism was bad for developing nations and adopting a free market system was a quicker (and perhaps only) way to achieve economic progress. The Asian Tigers were a clear demonstration of this, it was argued. Closed and protected economies like India, which languished for decades, blossomed into dynamic capitalist success stories within years of “liberalising” their economies. China was a bit of an outlier, but could be explained away.

Then we hear from Ha-Joon Chang about the development history of today’s “first world” nations and the credibility of the critique of protectionism:

Shortly after came the stories of the workings of the IMF and WB capped by a series of criticisms of erstwhile enthusiast Joseph Stiglitz.

Fast forward to today and we come to the role reversal, where countries like India and China are growing at near 10% rates while the US (and other parts of the West) is bogged down — of particular interest: jobs and outsourcing. And the result has been a strange morphing of positions among the intellectuals, theorists and assorted heavy-weights:

Needless to say, this has not gone down well with Bhagwati (whom I like to think of as the intellectual version of Thomas Friedman ;-)). Not just a liberal like Samuelson, but also conservatives like Paul Craig Roberts have switched to a protectionist (of sorts) position, and Bhagwati takes on Roberts in the WSJ:

I think Bhagwati is right[er] (as are people like Krugman who have made similar points) about the last point he raises, and it is interesting to note that he is willing to talk about things like safety net or the difficulty of retraining.