In Defense of Globalization - The Reviews

Last month I nearly got a migraine just trying to find one review from one respectable publication for our selection. This month I confronted a completely different migraine inducing challenge, too many reviews to sift through. I will focus on the flaws, faults and flops in the hopes of inspiring a spirited discussion next Tuesday.

Most reviewers note that there are already a myriad of books on globalization but that Dr. Bhagwati's work is a welcome addition. Outlook India declares that "In Defense of Globalization" (henceforth referred to as IDoG) comes "not a day too late." The Economist is equally thankful noting that most Globalization books weigh in on the negative aspects of Globalization. The anonymous reviewer declares that IDoG will help restore the balance. BusinessWeek and Barron's liked it so much that they both named IDoG to their respective best books of the year lists for 2004.

Writing in Foreign Affairs Richard Cooper finds Bhagwatti's arguments persuasive while The Economist, among others, lauds the author for taking the anti-globalist's arguments seriously. The Economist is also thrilled that the book is less than original:

Despite coming late to the discussion, it rightly strives for no big new take on the subject, for no grand, previously overlooked and bogus theme around which to organise the material. Its plan is simple and straightforward.

Ironically the least enthusiastic reviews for IDoG come from ideological opposites. Blueprint the house publication of the DLC finds fault in the book failing to answer a the most fundamental question of all, why are there trade policies and agreements? Philip Gold, a moderate-conservative writing in the Washington Times is sympathetic but still finds a number of flaws:

The first is economics' Other Great Axiom. If it's true that the invisible hand guides self-interested actors to produce the common good, it's also true that in economics, everything is bad news for somebody. Mortgage rates go up: good for lenders, bad for borrowers. Mortgage rates go down: bad for lenders, good for borrowers. Much of this endless disruption he dismisses as mere "micro-level" problems that sort themselves out over time. But he never even mentions the absolutely important and non-temporary problem of American job loss and immigrant influx. More people than Pat Buchanan's Amen Corner are fretting this one.

The second problem is that the world is not filled with free-trading libertarians, and there is such a thing as economic warfare. China comes to mind. And given the desire of much of the world to see America taken down an exponential notch or two, and the potential uses of the euro as an international currency, we would do well to beware of walking into ambushes camouflaged as free trade.

Finally, as Mr. Bhagwati points out, economics deals in value, not values. Things that seem economically unimportant and tangential can be very important in other ways, and it's not always the misguided idealists and screamers who make them so.

In marked contrast with every other reviewer Gold expresses a disdain for Bhagwatti's prose proclaiming the book to be one that "only and economist could love." At the Boston Globe George Scialabba likes the book but is troubled by Bhagwatti's willingness to overlook data that contradicts his arguments:

Bhagwati brushes aside claims that NAFTA has resulted in stagnant or lower wages for American workers and absolves it for job losses and worsening inequality. Other economists disagree. The Economic Policy Institute and the Center for Economic Policy Research, among others, have found that NAFTA is directly implicated in all three social problems: job loss, stagnant wages, and increased inequality. There is no ''expert" consensus on these matters. Readers in search of enlightenment should certainly read Bhagwati, Paul Krugman, and Thomas Friedman, but they should also take a look at Robert Kuttner, Harvard economist Dani Rodrik, and the CEPR website.

The claim is also echoed by the lefty American Prospect and over at Flak.com there is also a similar argument:

The fact is that while the institutions of globalization — the World Bank, IMF and World Trade Organization — push developing countries to "open up" to trade, the governments of the United States and European Union continue to spend billions subsidizing their own (mostly wealthy) farmers and keeping out foreign (mostly poor) competitors. But the subsidies issue, though squarely on the table of global trade talks now in Geneva, does not appear in Bhagwati's discussion.

The second step — growth reduces poverty — is even more arguable. Recent evidence has certainly shown that aggregate poverty has fallen during the age of globalization, by about half from 1981 to 2001. But the majority of this progress was made in China, where the distribution of resources is centrally controlled and foreign trade is far from free. Outside of Asia, poverty has actually increased or stagnated. For example, while Latin American and Caribbean countries opened up to trade and grew an average 1.6 percent during the nineties, poverty in the region rose by 0.1 percent. But Bhagwati clearly prefers the aggregate figure.

At the New York Times University of Chicago economist Daniel Drezner also finds a problem:

The book's fatal flaw, however, is its off-kilter relationship with the business cycle. During boom times, antiglobalizers score political points by stoking fears of cultural debasement and environmental degradation. During leaner years, naked self-interest becomes the salient concern: in the current economic climate, American opponents of globalization talk less about its effect on the developing world and more about the offshore outsourcing of jobs. Bhagwati could undoubtedly rebut this argument, but unfortunately he devotes only a single page to it. Readers looking for answers to the jobs question should check out Douglas Irwin's engaging ''Free Trade Under Fire.'' But tuck away ''In Defense of Globalization'' -- it will serve as a useful guide for better times.

I am sure that Dr. Irwin appreciates the plug but he has a different take on Bhagwati's book. Writing for Finance and Development, a publication of the World Bank, Irwin heaps praise:

No other book on globalization covers as wide a range of issues as Bhagwati's. Indeed, his book is the best one-stop shopping for readers seeking a panoramic view of all the controversies that make up the globalization debate

Finally we get to the Austrians over at the Mises Review. These free market die-hards provide a back handed compliment stating that Dr. Bhagwati manages "to stumble close to the truth." While the original BusinessWeek review found IDoG's lack of free market orthodoxy compelling and persuasive:

But unlike many other free traders, the Bombay-born Bhagwati isn't an ideologue for laissez-faire capitalism and radical deregulation. He believes that, while governments should open their borders to free trade in goods and services, they should simultaneously fix things that are broken in the workings of their domestic economies, such as inadequate social safety nets.

The Miseans object that the legal right to strike is contrary to free market principles. Despite the fact that Austrians place a great deal of responsibility for the Great Depression on the the Smoot-Hawley Tariff bill the critic in the Mises Review failed to note what reviewer did at Blueprint - that the tariff was enacted in 1930 not 1934 as it says in IDoG.

Ok that's it for me. See y'all at Books and Books.