Globalization

GLOBALIZATION: BENEFICIAL OR DETRIMENTAL?
ZIELINSKI 1
Globalization: Beneficial
or Detrimental?
- Connor Zielinski
Readings:
“A New Deal for Globalization”- Scheve and Slaughter
“Globalization and Its Challenges”- Fischer
“The Globalization Rorschach Test”- Brune and Garrett

ZIELINSKI 2
Introduction
In today’s world, globalization and trade openness is the forefront of democratic
economic policies. In history globalization flourished in the late 19th, early 20th, century
until the onset of the the two World Wars which led to many countries adopting
protectionist economic policies. After the World Wars, the world made several attempts
to increase globalization by creating institutions like the IMF, and the World Bank, and
establishing monetary policies. Globalization was so important because it is said to
promote economic growth, lowers price fro consumers, and allows access to technology
and capital funds for developing countries. Globalization also comes with its drawbacks.
Globalization is said to create more poverty in developing countries, greater income
inequality within developed countries, and greater inequality internationally.
Globalization has also be accused of causing the development of the welfare state;
established in order to mitigate the negative affects of globalization within a developed
nation.
This paper will discuss three articles that look into the actual affects of
globalization, both internationally and nationally, discuss why the affects of globalization
are important in todays world, and identify important questions that these articles leave
unexamined. This paper will also look at why some believe globalization is beneficial,
and why some believe it is detrimental.
Discussion
The first paper to be examined will be A New Deal for Globalization. Scheve and
Slaughter explain that the American public is leaning more towards protectionist policies
for two main reasons: labor market performance, and inequality in income. They explain

ZIELINSKI 3
that “policy is becoming more protectionist because the public is becoming more
protectionist, and the public is becoming more protectionist because incomes are
stagnating or falling”1. They are stagnating or falling due to the adverse affects that are
commonly associated with globalization. In this case, it is the uneven distribution of
wealth; the rich get richer, the poor get poorer. The authors explain that only those with
professional graduate degrees have seen growth in pay from 2000 to 2005, while
everyone else’s (including those with a nonprofessional master’s degree) pay as
decreased2.
The second reason is poor labor-market performance. Labor-Market
performance has become worse and many less skilled workers place blame on
globalization. Globalization tends to create more competition among the less skilled
workers because many companies choose to outsource, leading to the lowering of
wages. This negative view of globalization can also be attributed to the education gap
between high skilled workers and lesser skilled workers, as evidence from Hiscox’s
experiment has found3.
The authors of the New Deal for Globalization offer two ways to fix the effects of
globalization. It is through “link[ing] trade and investment liberalization to a significant
income redistribution”4. By keeping trade and investment liberalization, the U.S. has a
common estimate of annual income gain of $500 billion and then coupling this with
1
Scheve and Slaughter, A New Deal for Globalization, (Foreign Affairs, 2007), 38
2
Ibid, 40
3
Hiscox, Through a Glass and Darkly (International Organization, 60.3)
4 4

ZIELINSKI 4
eliminating payroll tax for citizens who are under the national income median, Scheve
and Slaughter suggest that this redistribution of wealth will help offset the costs of
globalization5.
The second article this paper will consider is Globalization and Its Challenges,
written by Stanley Fischer. He focuses on the effects of globalization, both nationally
and globally, and how to overcome the challenges faced with globalization. Fisher
agrees with Scheve and Slaughter in that “inequality has risen within many countries”
however he elaborates that “it is likely that inequality among the world’s citizens
declined during the last decades of the 20th century”6. Fischer argues that most
countries have experienced growth and a increase in income when they increased trade
liberalization. This is because they are able to take advantage of the global market,
especially developing countries because they have access to technology and capital
flows that they otherwise would not have if they did not enter the global market.
The challenges that Fischer outlines are making the growth of countries,
internationally, more uniform and decrease global poverty and inequality. He claims that
“attitudes to globalization in the industrialized countries will be the key to the future of
the global economy”7. Fischer places responsibility on the governments to enact
policies in order to mitigate the negative affects of globalization. Policies inline with a
welfare state and labor-market reform are key in strengthening globalization in both
developed economies and developing economies.
5
Ibid, 44-45
6
Fischer, Globalization and Its Challenges, (American Economic Review, 93.2, 2003), 11
7
Ibid, 23

ZIELINSKI 5
The final article, The Globalization Rorschach Test by Brune and Garrett,
discusses how globalization can both seem positive and negative depending how you
look the the data. The first example they give is the difference between the United
Nations’ Human Development Report 2002 which showed that inequality has risen
between countries. Then then show that Sala-i-Martin showed little change in inequality
between countries using adjusted rates. They then explain that many different studies
have come to different results regarding market integration. Experiments by Agenor
2003, Cornia & Court 2001, Kremer & Maskin 2002, agree that market integration has
increased inequality with-in country, while Barro 2000, Heston & Summers 1991,
Higgins & Williamson 1999, Kapstein & Milanovia 2002, and Schults 1998, found that it
has reduced inequality and Dollar & Kraay 2001 found that it has had no impact on less
developed nations8. Brune and Garrett, even though there are conflicting views, share
three conclusions about the impact on globalization on inequality within countries. The
first is that the distribution of income has been huge among countries, leading to “big
effects on poverty in the developing world”9, the second is that labor has played a role in
differences in inequality and finally that computerization has made more of an impact
than globalization on inequality10.
This article agrees with the other two by saying that in order to mitigate the
negative affects of globalization, the government must enact policies that create more of
a welfare state and compensate the ‘losers’ of globalization. More specifically
8
Brune and Garrett, The Globalization Rorschach Test, (Annu. Rev. Polti. Sci. 8.1, 2005), 415.
9
Ibid, 416
10
Ibid, 416

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“government spending on education, health care, and physical infrastructure may pro
due…collective goods that are…vitally important in the era of globalization”.
Connection
All these articles have connecting themes in them. They all point out the negative
and the positive aspects of globalization. The negative aspect mainly of globalization is
the growing inequality among developed nations. The rich are getting richer and the
poor are getting poorer. Why is this? Globalization causes the labor-market to worsen
because the trade openness allows us to get goods at a cheaper price, which requires
developed countries to need less unskilled laborers. This links the education gap and
the sentiments that are pro-protectionist. Lowskilled laborers usually have a lower level
of education. It is shown by Hiscox that by having a lower level of education, you are
more likely to support protectionist policies, while if you have a higher education (some
college) your views about globalization change. You have a better understand about
how the economy benefits from globalization and you are more likely to support it.
These articles differ slightly whether globalization has increased inequality
globally or decreased inequality. I believe that it is too difficult to determine whether
globalization has increased or decreased inequality. China and India are good
examples of how globalization has decreased inequality. China’s poor “alone fell by 150
million [people]” and stats show “declines in India’s poverty rate, from about 40
percent…to 26 percent”11. As Fisher states, “there can be little doubt that, in both India
and China, the growth policy during the period was pro-globalization, pro-entry into the
1111

ZIELINSKI 7
global economy. However, the poverty rates are rising in Sub-Saharan countries, and
(to a lesser extent) Latin America.
The final theme that all the articles have in common is the way to over come the
negative effects of globalization. Each article gives a different way to either build or
enhance a welfare state. This is because countries that embrace globalization must
compensate the losers of globalization through a welfare state. If not they run the risk of
the citizens favoring protectionist economic policies.
In the first article, Sheve and Slaughter are in favor of globalization and suggest
that in order to make it work, there needs to be “a radical change in fiscal
policy…however, [not] making the personal income tax more progressive, as is often
suggested”12. They suggest that, in the case of the US, we should redistribute the
Federal Insurance Contributions Act (FICA) payroll tax.
In the second article by Fischer, he agrees with the notion to better the welfare
state. He offers four ways to better US policy. The first is by having a “greater emphasis
on social justice, through health cans education spending, economic social safety nets,
and infrastructure spending”13. The need for education spending is, again, linked to
Hiscox’s findings of a education gap in relation to views on globalization. The second
way he suggest to better economic policy, agreeing with Scheve and Slaughter, is by
having a efficient tax system that will be able to distribute the wealth among the
population evenly. Third, by strengthening the financial system, and fourth by labor-
12
13

ZIELINSKI 8
market reform14. Labor market reform will allow less skilled laborers who are affected by
globalization, to find jobs in the labor market.
Finally, in the final paper by Brune and Garrett, they argues the same as the
other two papers; to create a better welfare state. They argue that “government
spending on education, health care, and physical infrastructure may well produce
economically important collective goods that are undersupplied by the market but also
vitally important in the era of globalization”15. This again, like stated for the other two
articles, is in order to compensate the losers of globalization.
Further Examination
Further examination is always needed with a topic like this that is so vast. One
main concern that needs to be addressed is the way poverty, and economic inequality is
measured. In, The Globalization Rorschach Test by Brune and Garrett, they ran into a
measurement problem more than once when looking at measurements from different
sources. Some found that inequality has risen using one measurement, however other
authors found that it was either staying the same or declining using a different
measurement. This needs to be addressed so we can get a clear picture of the effect
that globalization has on both developing countries and developed countries. Brune and
Garrett offer that “scholars might be better off using simpler measure of statistical
association…and then [think] harder about the underlying micro foundations of the
proposed causal arguments”16. Further research can be done into examining how Sub-
14
Ibid, 24
15
16

ZIELINSKI 9
Saharan countries and Latin American can use globalization to their advantage and
integrate into the global economy. Also how they can lower their poverty rates and
inequality rates both nationally and globally.
Conclusion
I believe that these articles highlight and discuss the most important advantages
and disadvantages associated with globalization. I believe that from the articles
globalization is, in reality, beneficial not only for developed countries but also developing
countries. I agree with Brune and Garrett, Fischer, and Scheve and Slaughter, that in
order to make globalization work for everyone, a country must look towards welfare
programs like redistribution, public goods like health care and education. With out these
citizens will to start to favor protectionism. In all, globalization is important and beneficial
for the growth of every country, and the global economy as a whole.

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Works Cited
Brune, Nancy, and Geoffrey Garrett. "THE GLOBALIZATION RORSCHACH
TEST: International Economic Integration, Inequality, and the Role of Government."
Annual Review of Political Science 8.1 (2005): 399-423. Print.
Fischer, Stanley. "Globalization and Its Challenges." American Economic Review
93.2 (2003): 1-30. Print.
Hiscox, M.J. 2006. “Through a Glass and Darkly: Attitudes Toward International
Trade and the Curious Effects of Issue Framing.”
International Organization 60(3):755—780.
Scheve, Kenneth, and Matthew Slaughter ”A New Deal for Globalization."
Foreign Affairs (July 2007): 34-47. Print.

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