Making Globalisation Work - Joseph Stiglitz

Its always a rare opportunity to hear a Nobel Laureate live! Living in India which is at the cusp of transformation, a Fourth Estate - 'The Hindu' through their pioneering journalism is trying to empower citizens with such nobel interactions.

Professor Joseph Stiglitz won the Nobel for his analysis of markets with asymmetric information - in short Information Economics. Today, quick and fast information is the key to success. Information is easy to spread but hard to control, easy to create but hard to trust. Hence, today's economic decisions are based on this Enigmatic, Effervescent Element called Information. The question often comes to mind whether globalisation is the result of quick availability of information or vice versa? That may be a topic for another day. But am sure most Indians would thank both Globalisation and Information for the intellectual resurgence in India.

However, Dr Stglitz started his lecture stating - Globalisation is not working. Bit taken aback at first but as his points unfolded, I was able to get some inking to his thoughts. He mentioned three things to make his point which on hindsight is quite true:

1). Growing disparity between the rich and the poor countries and between the rich and poor in the same country.

2). Asymmetric liberalisation of labour and capital. So, while capital flow has increased multifold, labour movement is still restricted.

3). Money flowing from poor to rich countries which in turn means the rich are managing risks for the poor people.

Sitting in the city where am bearing the fruits of liberalisation in India, I believe the reality in villages is still much unchanged. The growing suicide of farmers in India if that be any indicator of the disparity between rich and poor India.

One may wonder what would happen if capital does not move but just the labourers. So, capital market liberalisation does not lead to faster economic growth but instability as people borrow for which they cannot pay.

Leading the pack of maximum borrowers is the US which borrows at the rate of $3 billion per day and for what cause? So, how do they borrow - people put money in the US markets which provide low returns and then they borrow at high interest rates from US to fund projects in their own country. Net result - US gets the difference.

Dr Stiglitz vehemently crticized the Urguay talks in 1994 which was the birth of GATT and TRIP. This 2 events has caused huge disparity by limiting access to resources and knowledge and forced developing countries to remove social protection all for the interests of greater commercialisation by the West. I remember the strong protests that the Marxists made during the time GATT was signed and wondered if Dr Stiglitz was in some way promoting socialism. Known for his intellectual insurgence, I felt that he opposed globalisation at the cost of the poor.

So, how to make Globalisation work ? He suggested

1). Change Internation trade rules to continue price control of agricultural products

2). Change Intellectual property to benefit most people. It should be am enabled for greater innovation and prevent monopolies.

3). Change International Legal regime to provide investment protection

4). Control global warming by taxing pollution

So, how should India respond to globalisation ?

1). Have balanced role between market and governmnet

2). Capital account convertibility should not be allowed. Capital market liberalisation should be measured to ensure risk does not exceed reward.

3). Foreign banks does not help the economy as they do not lend to small and medium enterprises but to the MNCs.

He proposed the idea of having a global reserve currency so as to remove the dependency of US dollar. This is a point of much intense debate and understanding.

He concluded that Globalisation was not just growth of GDP but sustainable, democratic and equitable development. Development was about transforming lives of people, not just economies!