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It's clear then, that trade can have a negative effect and
migration can have a negative effect on the most vulnerable.
But, I think a basic conclusion that I'd like you to take home from this course is that,
we are in a danger if we react against trade and
globalization of throwing the baby out with the bathwater.
I'm sure you know what this refers to,
if you're an English speaker.
It used to be that there would be a single tub of warm water for the family,
and the father bathe first,
and then the mother, and then the children,
and you go down to the baby and it's time to throw out the bathwater.
Make sure you take the baby out first.
The idea is, if there are problems with the more vulnerable classes in our countries,
let's get rid of those problems,
but not throw the baby,
which is globalization, out the window.
Free trade and migration benefit all countries and have
been the source of our rising incomes in the whole period.
Particularly, after World War II,
when we established free trade,
and migration, and capital flows around the world.
But, it is clear that some people who are often the most vulnerable,
may be hurt in developed countries.
I think, there's a very good chance that we have generated this opposition to
globalization by failing the losers in our political system.
And therefore, populism has been fueled.
These individuals who don't understand why
they can't maintain their position in the middle class,
why their incomes are not rising,
why they're rising at the top.
The economy appears to be progressing,
but it's not doing anything for them.
Globalization does do things for everyone.
It enables the middle and lower classes to afford goods at a lower price.
So, we need to be sure that their incomes and
their transition to other jobs are compensated for,
by those who are gaining from globalization.
There are other considerations that we could
keep in mind and we've mentioned them in this course.
Danny Roderic, talks about an impossible Trinity.
Hyper globalization may not be compatible with national sovereignty and democracy.
Are we entering into
a difficult situation where we have to give up some things we don't want to?
And, this is worth being explored.
Maybe we don't go as far on the path toward globalization as we had gone.
Maybe we try to draw some controls, for example,
on capital flows or some sanctions in the trade arena.
Maybe we make sure migration is legal,
and this would sort of put an outer bound on some of the process of globalization.
There are others who talk about how we need globalization with a human face.
And we need to mention that in Europe, for instance,
where they have had much more intense trade with other countries,
mainly with each other, than the United States has had,
they've had decades and decades of intense trade.
The Europeans have always worked on,
"We're going to take a step forward in trade.
So, let's take a step forward in protecting those who could be hurt."
They've done a better job at this.
And, the United States, which is more new to
globalization because we're such a huge market ourselves,
have not made this pact with our middle
and working class and maybe it's something that we need to take seriously.
Another thing we need to remember, as we conclude,
is that the benefits from globalization are dispersed very widely.
Okay? The individual who is able to obtain a
good at a lower price and gain consumer surplus,
may not know that, that comes from trade.
The person who buys a car in the United States and finds it very affordable,
might not know that the reason for that is that we have integrated
supply chains across North America and
lower Mexican wages are enabling us to have cheaper cars.
So, the benefits may be unseen.
They may be improperly identified.
We may not know it's from trade.
They may be taken for granted.
And so, those who are benefiting the consumers may not go to
their political leaders and defend globalization to keep those benefits.
Maybe the companies that have lost out,
are more likely to push for benefits for themselves,
because they know what their needs are and they
identify them very narrowly, very specifically.
And, they have a motive,
a reason, to go and fight for them.
So, the rising tide of protectionism is probably a picture of companies defending
themselves and the general consumer not knowing
that they benefit and being willing to give in to specific demands by companies.
The bottom line, the message I wanted to give in this course,
is that globalization holds immense benefits for all of us,
for every country engaged in it.
The globalization has been the driver of higher incomes,
in particular, the post-war period,
not only in the developed world,
but also in the developing world.
But, there have been some people left behind.
Let's protect the people who are left behind as economic theory would prescribe.
Let's not throw the baby out with the bathwater,
because we do stand to lose.
Globalization is something worth fighting for.
Gayle AllardProfessor
