Our World in 2018

GLOBAL VS. LOCAL WORLDS
be achieved on an issue-by-issue basis,
and the boundaries will shift as the
world economy and popular opinion
change.
Harvard University economist Dani
Rodrik, whose writings expose the
weaknesses of neoliberal globalization,
suggests that, in some areas, we should
be expanding or consolidating the
nation-state’s power. Such an approach
would recognize, for example, domestic
preferences when it comes to food- and
product-safety standards, or the need
to moderate so-called Investor-State
Dispute Settlement processes, which
are frequently criticized for undercutting
domestic laws.
If we are to tame globalization and
respect national identities, we must
strike the right balance between
the national autonomy most citizens
desire and the international
agreements most countries so
patently need.
National governments must
also recognize the value of
self-imposed restrictions on
resist currency manipulation. But
macroeconomic imbalances may be
best reduced by reciprocal, cooperative
agreements.
Of course, nation-states will want
to make their own tax decisions to suit
local cultures and circumstances. But
a failure to cooperate to tackle unfair
tax competition and to close down
offshore tax havens will irrevocably
damage every country’s revenue base
and its domestic plans for spending on
education, health care, and security.
In 2018 and beyond, we should
establish realistic plans for responding
to the backlash against globalization by
managing globalization better. No one
has a complete roadmap for balancing
national autonomy and international
cooperation. But the best way to begin
is to focus international cooperative
greatest, or the costs of non-cooperation
are the highest. But we will also have
to deal directly and forthrightly with
distributional questions, whether in
trade, climate change, investment, or
the development and deployment of
technologies.
First, it is time to create a worldwide
early warning system for financial
markets that is based on globally
applicable standards for capital
adequacy, liquidity, transparency, and
accountability, and includes agreed
trigger points for action when risks
multiply. For example, New York
University economist Roman Frydman
has proposed a mechanism to impose a
ceiling on new debt creation when asset
prices escalate too quickly.
More broadly, we need to expand
the scope of post-crisis financial-
.
next crisis hits, we will still not know
what is owned or owed by whom,
where, and on what basis. Critics will
be right in asking why we failed to learn
.
Second, we need to reform global
supply and value chains. Of course we
should have fair intellectual-property,
tariff, and non-tariff rules. But we
must also address the fundamental
injustices that are at the heart of global
supply chains, fueling today’s antiglobalization
protests. Intelligent reform
of global supply chains should stamp
out environmental free riders; reverse
the current race to the bottom in labor
laundering; eliminate transfer-pricing
and tax-avoidance schemes that allow
for goods to be taxed – at a lower rate –
in countries they never enter; and shut
down the tax havens that now hold
trillions of dollars.
Third, we need to improve
macroeconomic cooperation. For
the past decade, growth in global
output and trade have been much
lower than they should and could
have been. Proposals such as the G20
Mutual Assessment Process (MAP)
and the International Monetary Fund’s
“imbalances” initiative have made only
token progress.
In 2009, I proposed a nominal
growth target for the world economy,
as a way to secure a faster recovery
from the post-crisis recession. Then, in
2010, the G20 reached an agreement
under which major exporting countries
such as China would limit their currentaccount
surpluses to 4%, and major
importing countries such as the US
.
Robert Skidelsky of Warwick
University recently updated this
Keynesian idea with a detailed proposal
136 2018 | OUR WORLD