"Globalization’s Government"

Jeff Sachs:

Globalization’s Government, by Jeffrey D. Sachs, Commentary, Project Syndicate:  ...Economic globalization has, of course, produced some large benefits for the world, including the rapid spread of advanced technologies... It has also reduced poverty sharply in many emerging economies – indeed, for this reason alone, the world economy needs to remain open and interconnected.

Yet globalization has also created major problems that need to be addressed. First, it has increased the scope for tax evasion... Moreover, globalization has created losers as well as winners. In high-income countries, notably the US, Europe, and Japan, the biggest losers are workers who lack the education to compete effectively with low-paid workers in developing countries. ... Globalization has also fueled contagion. The 2008 financial crisis started on Wall Street, but quickly spread to the entire world... Climate change, infectious diseases, terrorism, and other ills that can easily cross borders demand a similar global response.

What globalization requires, therefore, are smart government policies. Governments should promote high-quality education, to ensure that young people are prepared to face global competition. They should raise productivity by building modern infrastructure and promoting science and technology. And governments should cooperate globally to regulate those parts of the economy – notably finance and the environment – in which problems in one country can spill over to other parts of the world. ...

The world’s most successful economies today are not in Asia, but in Scandinavia. By using high taxes to finance a high level of government services, these countries have balanced high prosperity with social justice and environmental sustainability. This is the key to well-being in today’s globalized economy. Perhaps more parts of the world – and especially the world’s young people – are beginning to recognize this new reality.