Essay About Professor Stiglitz And Author Draws

Globalization and Its Discontents
Essay title: Globalization and Its Discontents
Globalization and its discontents is a book of remarkable insight. The author draws
upon his experiences as chief economist at the World Bank to explain major events in the
global economy of the 1990s. The primary episodes that this book analyzes are the Asian
Crisis and Russia’s post Soviet reforms. Empirical analysis by economists typically relies on
formal statistics. Professor Stiglitz avoids this in his book, and much to his credit. Written
history helps fill out the empirical record and enhances our understanding of economic
processes. The author took full advantage of his position to write about important changes
in the global economy.
Professor Stiglitz also has much to say about how political factors affected policy at the
IMF, US Treasury, and the World Trade Organization. He claims (p XIII) that ideology and
bad economics thinly veiled the actions of special interests. Private interests lobbied
successfully for alleged privatization and liberalization, resulting in crises. Free market
ideology served as intellectual cover for these interests in efforts to justify alleged
misadventures in privatization. Professor Stiglitz claims that experience with these policies
refute the case for rapid privatization, and indicate a need for stronger and more open
international governance.
The examples in this book do support important theoretical arguments regarding
political economy, but not as its author intends. The primary deficiency of this book is in its
understanding of Public Choice concepts. Professor Stiglitz refers specifically to Rent
Seeking, which he describes as a theory of “how Special interests use tariffs and other
protectionist measures to increase their incomes at the expense of others” (p. 13). He
associates this theory with ideological fervor and claims that market failure arguments better
explain problems in developing countries. This attitude towards Rent Seeking is peculiar for
two reasons. First, what he describes is more like the collective action problem of Mancur
Olson than Rent Seeking. Second, the author supplies numerous examples of collective
action problems in the global economy of the 1990’s1.
On page 19, Stiglitz asserts that trade ministers and the WTO and finance ministers and
central