There is an alternative hypothesis, however, which Mr Cowen mostly disregards: that redistribution provides insurance against economic dislocation and therefore softens resistance to globalisation. It’s worth pointing out that the world has experienced two great eras of globalisation. The first combined minimal redistribution with minimal political power for non-elites. The second combined universal suffrage with substantial redistribution. I don’t think it’s unreasonable to conclude that redistribution is the price democracies pay for globalisation.
And that makes perfect sense! Reducing barriers to trade generates net gains, but those gains will occasionally be distributed in highly unequal fashion. If gains are concentrated and no provision is made for redistribution, then a voting majority might well conclude that openness is a losing proposition. Mr Cowen seems to want voters to recognise that whether or not they personally are made better off by globalisation it is a good thing to support, because it enables the enrichment of poor areas of the globe. But few voters are content to have their economies run as charities (and a good thing for economists that they aren’t, as that would make a baseline assumption of rational self-interest look pretty absurd).
The more pleased globally minded egalitarians are with emerging-market trends over the past generation, the more concerned they ought to be with national income inequality. Mr Cowen’s piece looks like an effort to guilt elites into abandoning a realistic view of the political economy of globalisation by charging them with nationalism. Either that, or he is expressing what are essentially plutocratic concerns, hiding behind the gentler cloak of egalitarianism.
Vir: The Economist