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Why Globalization Works (Yale Nota Bene) Paperback – Illustrated, June 10, 2005
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"Let a splendid new book on globalization be the last for a while: it will not be bettered soon. . . . [A] marvelous new book. . . . Mr. Wolf’s new book, Why Globalization Works, is the fullest and most sophisticated treatment to date of the case for globalization. All the topics he addresses . . . have been addressed elsewhere, but never before with such depth of thinking, and in one place . . . The definitive treatment of the subject, and an absorbing read for anybody with an appetite for moderate intellectual exertion."—Economist
"A powerful addition to the growing literature on globalization. . . . Why Globalization Works . . . should help move the public debate away from whether to be for or against globalization and towards how best to strengthen the working of the global economy."—Stanley Fischer, Financial Times
"Wolf offers a powerful defence of the global market economy."—The Sunday Telegraph
"No one has summarized more coherently the recent, voluminous research. . . . Elegantly and persuasively, Wolf marshals the facts."—Niall Ferguson, Sunday Telegraph
"Wolf is always thoughtful, and mainly readable."—David Smith, The Sunday Times
"Accessible and clearly argued. . . . A wealth of material on every page."—Bruce Bartlett, Wall Street Journal
"A powerful book."―Washington Post
"One of the world’s most respected economic journalists . . . offers a patient and persuasive refutation of many of the arguments most frequently marshaled by critics of trade liberalization. . . . Wolf’s book offers a series of highly effective rejoinders to the main criticisms marshaled by opponents of globalization. For those of us concerned with one of the most far-reaching issues of our time, this elegant and passionate defense of trade liberalization is essential reading."—Arvind Panagariya, Foreign Affairs
"A splendid overview of the global economic challenges of today. It is informed, careful in its dissection of the arguments and well written. . . . Essential reading for those who would like to understand the real problems facing us."—Stephen Green, International Affairs
"Wolf's tome can provide value for anyone engaged in the field of international law, particularly economic law, because of the keen insight he offers."―Steve Charnovitz, The American Journal of International Law
Received rating of "Outstanding" from the 2005 University Press Books Committee
"This brilliant book should be read by anyone who cares about the future of the developing world—that is, anyone who cares about the future. Wolf’s book will be the definitive statement of the case for market-based globalization."—Lawrence Summers, President, Harvard University
"Wolf provides not just a devastating intellectual critique of the opponents of globalization, but a civilised, wise and optimistic view of our economic and political future. It is vital that his message be widely read and understood."—Mervyn King, Governor of the Bank of England
"As Wolf slices and dices both the critics and the cheerleaders of economic globalization, he offers a deeply reasoned and cogently explained case for its inevitability. A definitive analysis."—Kenneth Rogoff, Harvard University
A distinguished international economist here offers a powerful defense of global market economy. Martin Wolf explains how globalization works, critiques the charges against it, argues that the biggest obstacle to global economic progress has been the failure not of the market but of governments, and offers a realistic scenario for economic internationalism in the post 9/11 age.
- Item Weight : 1 pounds
- Paperback : 416 pages
- ISBN-10 : 9780300107777
- ISBN-13 : 978-0300107777
- Dimensions : 5.1 x 1 x 7.8 inches
- Publisher : Yale University Press; 2nd edition (June 10, 2005)
- Language: : English
- ASIN : 0300107773
- Best Sellers Rank: #1,232,193 in Books (See Top 100 in Books)
- Customer Reviews:
Top reviews from the United States
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In Why Globalization Works, Martin Wolf, chief economics commentator of The Financial Times and a one time economist for the World Bank brings a scholarly defense of economic liberalization, along with a scathing reprimand for its critics. Mr. Wolf tends to be overtly analytical in style, the book is neatly organized in five parts and most of the chapters have numbered lists of issues that the author plans to tackle. This tool is both, the book's strength as well as its weakness. The cold hard data is hard to argue against but at the same time, I found myself lost in the numbers many a time.
I would like to discuss two (out of several) interesting observations from the book. The first is the comparison of the market to American football, an "ordered brawl" as opposed to say a street fight with no rules (the book mentions "folk football" instead of street fight). This comparison is attributed to the book Reinventing the Bazaar by John McMillan of UC Berkeley. That's the best metaphor of free market capitalism I have ever heard and something I will be repeating to associates in the future.
The second observation that I found interesting was Mr. Wolf's response to the allegation that wages, in China for example are so overwhelmingly low that they will invariably drive down wages for developed countries as well. An average Chinese worker engaged in manufacturing makes about $730 annually (or did according to the book, published in 2004), while similar German, American and British workers earned $35,000, $29,000 and $24,000 respectively. Mr. Wolf's response is that the Chinese worker is also that much less productive than his/her Western counterpart. He then follows up his claim with enough statistics, footnotes and references to satisfy the most discerning reader.
Finally, I really enjoyed the utter disdain Mr. Wolf shows for critics like Naomi Klein. He holds no punches in his criticism of the Canadian anti-globalization activist on her absurd positions on world trade and her diatribe against "corporations"
In spite of the excessive reliance on numbers and the extreme organization, this is an important and necessary book. Recommended
Wolf's main thesis is that liberalization of the global economy has lifted more people out of poverty in the past few decades than ever before in history. To support these views Wolf relies strongly on evidence from South and East Asia (China and India) to support his claims that globalization works. He also draws a lot on South American economies when explaining failures in different economies. It would have been interesting to see some deeper analysis of economies in Eastern Europe and specifically Russia that, layman such as myself, understand to have purportedly had a market economy for nearly two decades now.
The most powerful chapters in WGW are those where Wolf defends globalization against the criticism of the myriad of interest groups that are opposed to an integrated economy. Some of these criticisms include claims that globalization has a negative impact on the environment (at the local level he shows it actually improves the environment) and that localization is better (which Wolf argues is actually more dangerous than globalization since being able to purchase food anywhere in the world provides states with more security than if they were relying their own crops at home).
For me his most eye opening defense was against critics of child labor and the so called sweatshops that transnational companies use in the developing world. Wolf argues that to prevent child labour in these countries would border on the criminal and suggests critics in rich countries compare the plight of the poor to the alternatives they have in their own countries rather than the alternatives in the countries where victims suffer extreme poverty. Wolf suggests that child labour in multi-national companies enhances the livelihoods of these countries and suggests that if they were not employed in these companies with comparatively high working standards (when compared to local companies) these children would work find work in more dangerous, local factories, starve or become child prostitutes.
The same is said of the working conditions in labor intensive industries where companies have been accused of employing people in sweatshops. Wolf argues that many of those employed are women and this provides them with status and independence in patriarchal societies and provides them with freedoms they never previously had. He also argues these types of practices are pulling these people out of the grip of extreme poverty.
Although Wolf clearly advocates globalization, he is not averse to challenging some of the assumptions, pitfalls and difficulties in the way globalization has been implemented. For example, even though he argues that liberalization of capital accounts is probably a good thing, he acknowledges that done incorrectly and without proper consideration, the system can tank and lead to both economic and fiscal crisis. Wolf also finds it disgraceful that rich countries levy disproportionate costs on poor countries who wish to export goods and services into developed markets. He argues that rich countries do not impose such high costs on each other and argues these actions inhibit economic growth in the poorest nations on earth.
Why Globalization Works is a great introductory book on the topic. It is well structured, well argued, covers all the bases and answers many of the critics' questions. Wolf has compiled an impressive array of data to support his views and the critics would need to counter with equally compelling evidence. Added to this the book is well written and fairly accessible. WGW just may be, to quote the Economist, "the definitive treatment of the subject."
Top reviews from other countries
I found Martin Wolf’s book indeed a blueprint for a better world.
The author, Martin Wolf, is associate editor and chief economics commentator at the Financial Times. He defines globalisation as the increased economic integration of the major world economies. It corresponds to a reduction of barriers to trade (tariff and non-tariff barriers) among the major economies, which, in turn, has resulted in vastly increased trade volumes in the last two decades. He argues that globalisation, so defined, is nothing new; indeed, the global economy was even more integrated before World War I than it is today; in addition, to falling barriers to trade, there were fewer barriers to the movement of people (migration). This led to sustained migration from Europe to the United States, from the United Kingdom to Australia and New Zealand, and from East Asia to the Caribbeans.
Like a brilliant general, Martin Wolf marshals the facts to support the case that increased economic integration in the last two decades has led to a significant reduction of poverty, most notably in China and India. So far so good. But what about the criticisms levelled against globalisation by articulate critics like Noreena Hertz and Naomi Klein?
Martin Wolf concedes that the anti-globalisation movement is not a homogeneous movement; it consists of many groups from mainstream single-issue advocates (NGOs), environmentalists, industry lobbies and, at the extreme, chic left-wing socialists and right-wing nationalists. Therefore, not all the issues raised by the movement were addressed. However, Martin Wolf addresses the more credible criticisms--using the facts and the numbers. These include:
1. GLOBALISATION LEADS TO A RACE TO THE BOTTOM
This argument, popularised by Naomi Klein, suggests that lax environmental regulations in The Third World has lured polluting industries from the rich world to the Third World. Therefore, in order to compete, regulations in the rich world have become more lax.
Martin Wolf demonstrates that this argument is nonsense. The evidence (foreign direct investment) shows that most rich-world investment is in--surprise, surprise--the rich world, not the Third World. Moreover, environmental regulations in the rich world have become more stringent since the 1980s; there is no evidence of a "race to the bottom" á la Naomi Klein. Would you rather invest in low-tax, unregulated Haiti than in high tax, regulated Sweden?
2. GLOBALISATION ERODES GOVERNMENT'S ABILITY TO RAISE TAXES
Using data from national governments and the OECD, Martin Wolf demonstrates that in all rich world countries, tax revenues as a percentage of GDP has been increasing since the 1980s. In some countries, for example Sweden, tax revenues are almost 50 percent of GDP. No, contrary to critics, rich-world governments have been effective at raising taxes even in the era of globalisation.
3. GLOBALISATION LEADS TO LOSS OF JOBS
Martin Wolf challenges the popular image of globalisation - outsourcing and offshoring. He shows--using the most recent research on the subject--that offshoring and outsourcing are beneficial to the rich-world as a whole. However, there are individual losers in the game: relatively unskilled workers who lose their jobs to low-cost foreign competitors. The challenge, therefore, is not to stop offshoring but to develop systems that can retrain workers who lose their jobs.
4. GLOBALISATION PROMOTES SWEATSHOPS IN THE THIRD WORLD
Most people are familiar with sweatshops where, under appalling conditions, children make Nike shoes for suburban Western consumers. The sweatshops have rightly sparked protests in The West and led to boycotts of brand name products. Martin Wolf argues that while the indignation at the sweatshop is justified, boycotting the brands may be counter-productive.
It is true that no Westerner would like to work in a sweatshop, but it begs the question, why would an Indonesian woman work in a sweatshop? The answer: the sweatshop (bad as it is from our point of view) is a better means of livelihood that her other options - early motherhood, an abusive husband, work on a farm or, worse still, prostitution.
Moreover, sweatshops are not unique to East Asia. The rich-world had its version of sweatshops in the late nineteenth century. Therefore, boycotting Third World products is akin to closing the door to Third World countries who are seeking to develop and become rich.
5. THE WASHINGTON CONSENSUS
According to Wolf, the charge that the IMF, the World Bank and the WTO have mismanaged globalisation is true. Even though he is very apologetic to the IMF, he agrees that the Washington consensus (capital market liberalisation, deregulation and tariff eradication) was naïve and poorly applied. He advocates reforming these institutions to give voice to the poor as well as the rich world.
At bottom, the anti-globalisation debate revolves around the question: who can be prosperous and who can't be? We, in the West, are used to being relatively prosperous; we are so prosperous that we often romanticise the poverty ("purity") of "simple Third World natives" Furthermore, we assume that the rise of China and India must be a threat to our collective sense of self; a sense that there is something that's "not right" about rich China.
Martin Wolf argues that global prosperity is not a zero-sum game. Nothing consigns a country to poverty better than absence from the global trading and economic system. If we care about global prosperity and the eradication of poverty, then we should campaign for more globalisation (between the Third and Rich Worlds). For sticking to the facts, using state-of-the-art research--and a liberal dose of British wit--to highlight the gains of globalisation and to refute (and sometimes confirm) the claims of the anti-globalisation movement, Martin Wolf's Why Globalization Works deserves four stars.