Beware the Globalization Fetish

What’s the Latest Development?

Before Harvard political economist professor Dani Rodrik opened a recent lecture on globalization, he surveyed his class and found 90 percent of students preferred free trade to import restrictions. Then he chose two students, John and Nick, and gave them both bank accounts. Given that John has $200 in his account, Rodrik said he could make that $200 disappear and make $300 appear in Nick’s account, increasing the overall wealth of the class. After another class survey, many students were suddenly uncomfortable with this apparently unfair redistribution of income.  

What’s the Big Idea?

Globalization has winners and losers, and our willingness to accept that fact changes depending on the circumstances. If one company works harder to bring better products to market, putting another company out of business, we mostly accept that as fair, though unfortunate the losing company. But what if one company imports cheaper goods from Germany, or moves its labor to China where labor rights are poorly protected, or hires child labor in Indonesia? We should not accept injustice across international borders that we would not accept at home, says Rodrik. 

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