James K. Galbraith on the miracle of globalization

Finally, it is not true that the remedy to the problems of globalization is “more globalization.” We often hear, for instance, that cutting trade barriers to farm goods from the Third World is the big solution to many development problems. Don’t believe it. Yes, some tropical products (sugar, orange juice) face severe protection. But most do not. And even if all the agricultural barriers came down, few developing countries could get ahead much just by expanding their farms. There are ecological limits. There are limits to the quality of the soil. Most of all, there are severe problems of oversupply. There is too much coffee in the world as it is: New supplies only drive the price down. Sugar would work the same way, and so probably would wheat and beef.

Confronting the problems of the stricken Third World will require a balanced approach. What the poorest countries need perhaps most of all is sustainable finance, permitting them to build their infrastructure, their human resources, their public health systems and their industries — both for domestic consumption and foreign trade. This is an old formula. But it is one with a track record: It worked in Europe after World War II, and then in Japan, Korea and in China, each of which saw decade after decade of sustained growth and industrial transformation.

Here’s the rub: Pursuing these goals will require placing the world’s private financiers under a degree of regulation and control — such as we used to have in the real golden age of development, from 1945 to 1970. That, of course, is not on the Economist’s agenda. But it should be on ours.