Questioning Accepted Truths

IMF Blog, November 30, 2016

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2016 has been a year of political upheaval, with accepted truths about the power of globalization being questioned by electorates in Europe, the United States, and elsewhere.
Many voters appear to be rejecting the adverse consequences of globalization by casting their ballot for antiestablishment messages and candidates.
The piece is dated November 30, 2016.

John Powers: former machinery repairman from the United States; retrained as an electrician and now makes "$12 an hour"; described as a "60-year-old Air Force veteran." He reports having had "five places shut down on me or have forced reductions in my working career" and comments: “The system did what it was supposed to do. It got you to school. Nobody’s going to guarantee you anything anymore. All they can do is help you.”
Walter Ascona: a Peruvian copper miner who credits free trade and investment with providing him "a good living" and hopes to "continue working here, because it is an essential part of my life."
Remembrance: James Gordon, longtime member of the F&D advisory board, passed away in October; the author notes "We will miss him."

Sebastian Mallaby: after decades of increasing cross-border movements of capital, goods, and people, only migration "continues apace." He notes that capital flows "have collapsed" and trade "has stagnated." But he suggests trade and finance may be resetting "to a more sustainable level consistent with continued globalization."
Maurice Obstfeld, IMF Chief Economist: emphasizes that while trade creates immense wealth, "steady globalization since the early 1990s coupled with low economic growth since the financial crisis have left many individuals and communities behind." He concludes: “Globalization offers the potential of economic gains for all, but there is no guarantee that potential will be realized absent decisive government action to support those who suffer from the side effects.”

Key policy implication: decisive government action is required to support those harmed by the side effects of globalization to ensure the potential gains are realized.
Stakeholder roles emphasized:
- Trade unions: Frances O’Grady, General Secretary of the U.K. Trades Union Congress, underscores the constructive role trade unions can play.
- Civil society: Kumi Naidoo, a South African human rights activist, urges a more equal distribution of wealth.
Communication and listening: a central lesson is the need to listen to all sides in the globalization debate, particularly representatives of those "left behind" (e.g., workers in advanced economies).

The piece acknowledges both negative and positive impacts of globalization:
- Negative: communities and individuals left behind, job losses, political backlash.
- Positive: personal prosperity for some (example of mining), potential for wealth creation through trade and investment.

IMFBlog is described as "a forum for the views of the International Monetary Fund (IMF) staff and officials on pressing economic and policy issues of the day."
The IMF is "based in Washington D.C." and is "an organization of 191 countries, working to foster global monetary cooperation and financial stability around the world."
Disclaimer: "The views expressed are those of the author(s) and do not necessarily represent the views of the IMF and its Executive Board."

Source: Questioning Accepted Truths — IMFBlog, November 30, 2016.