Robert MacCulloch
Robert MacCulloch is a native of New Zealand and worked at the Reserve Bank of NZ before travelling to the UK to complete a PhD in Economics at Oxford University.
Nobel Laureate Joseph Stiglitz, who has visited NZ and has a close relative living here, and secretly advised our Labour Party during the Ardern era, wrote a best-selling book called, Globalization and Its Discontents in 2002. It argued that globalization had hurt many low income workers.
Meanwhile, another famous American economist, Harvard Professor Danii Rodrik, wrote a follow-up book called The Globalization Paradox in 2011 arguing for a leaner global system “that puts national democracies front and center”. It warned of “pushing economic globalization beyond the boundaries of institutions that regulate, stabilize, and legitimize markets. Hyper-globalization in trade and finance, intended to create seamlessly integrated world markets, has torn domestic societies apart”.
Both Stiglitz and Rodrik wrote their books before Trump became president. Globalisation is defined as the free movement of goods, people, and capital across borders. Now Stiglitz and Rodrik, and an army of US academic economists at ivy league universities, are launching nuclear attacks on the president’s domestic and foreign policies which... you guessed it... put his own nation’s democracy “front and centre”, and mark a retreat from globalisation, which they had been supporting.
Rodrik writes, “A crucial difference between the right and left is that the right thrives on deepening divisions in society – “us” versus “them” – while the left ... overcomes these cleavages through reforms that bridge them.” All he reveals with that shallow line is that many of America’s so-called top economists are blinded by partisanship.
This blog is not defending Trump – it’s simply making an observation that US economics is in crisis. Many big names in the subject at ivy league universities are looking like hypocritical, empty vassals. Starting after 2000, many built careers writing about flaws in free markets that undermined the benefits of globalization and began to attack ‘neoliberalists’. They advocated more economic nationalism. Then when Trump was elected who put America first, they exploded in fury at him.
Their argument is based on the idea that it is good to put America first and make it Great Again, but Trump is doing it the wrong way. However these economists have a problem – a majority of Americans voted for him. Stiglitz and others reacted by arguing Trump is a ‘populist’ president, insulting his supporters as being too dumb to understand economics.
What is the preferred policy of the likes of Stiglitz, Rodrik, Nobel laureate Paul Krugman and French economist Thomas Piketty? Higher taxes to fund greater welfare so the losers of globalisation are compensated that way. It is this approach that has become the policy of NZ Labour, which has been heavily influenced by this group of ‘big names’. Labour wants wealth and capital taxes slapped on Kiwis to fund higher welfare, whilst at the same time still promoting a free-trade agenda.
Labour may yet win an election on it, since Stiglitz, Rodrik, Krugman and Piketty are smart. National’s economics advisers are not in their league, being the likes of local yokel lawyers and accountants, owners of local real-estate firms and the PM’s neighbors on Waiheke (let’s not name names, but we could).
This article was originally published by Down to Earth Kiwi.
