This paper aims to articulate a set of reforms that may bring the benefits of free trade to a wider populace, thereby increasing domestic support for and ethical merit of the free trade regime. Counter to the opinion above, I argue that the current form of globalization must include economic compensation and political involvement of the disadvantaged. To deploy this argument, I begin with theoretical critiques of the allegedly neutral world market, followed by a political interpretation of the institutional changes in decision-making and political power. After presenting a survey of several existing responses to the problems of globalization, I conclude by offering another strategy for reform while addressing possible objections.
[...] In that sense, NAFTA can be interpreted as a domestic shield against foreign competition. (Cox 375) Yet within its trade triangle, decisions have continually supported the interests of businesses. Chapter 11 gives businesses the historically unprecedented ability to claim financial reparations from states for grievances. Categorically, large firms have earned the ideological trust of Congress, NAFTA, and the WTO. The shadow of a protectionist past continues to haunt decision-making bodies today, who seem to fear that opening their ears to the interests of labor and environment can only lead to high tariffs. [...]
[...] (Kapstein 369) Free trade entails a set of at least three tensions, each of which cast doubt upon its inherent neutrality or desirability. While it may be true that central decision-makers bear the responsibility of confronting these dilemmas, the nature of decision-making itself has changed. This history reflects the ideology of globalization, its institutions, and its interests. Deflecting and Diffusing Responsibility Even as the steady lowering of tariffs and intensification of global competition has generated conflicts, the not-so-central decision-makers of the free trade regime have catered to multinational enterprises, decentralized power, and made authority less accessible. [...]
[...] Frieden and David A. Lake, eds. New York: St. Martin's Press Fieldhouse, David. New Imperial System? The Role of Multinational Corporations Reconsidered.” International Political Economy. Jeffrey A. Frieden and David A. Lake, eds. New York: St. Martin's Press Freeman, Richard B. Your Wages Set in Beijing?” International Political Economy. Jeffrey Frieden and David A. Lake, eds. New York: St. Martin's Press Grieco and Ikenberry. State Power and World Markets. New York: W.W. Norton [...]
[...] But a Tobin-style tax on financial transactions would not deter entrepreneurialism; more importantly, it would deter speculation and hot money flows. The idea of government spending provokes responses as well. Robert Z. Lawrence criticizes suggestions for increased fiscal expenditure on public works by invoking the threat of inflation. (Krugman et al. He claims that in the United States has reached a growth ceiling and that demand-side economics will not solve supply-side problems. Yet, while government spending may rightly be criticized, this logic does not equally apply to government investment. [...]
[...] social insurance.” Following the Hecksher-Ohlin theorem, a state will submit before international trade the products requiring use of its relatively abundant factor of production. (Grieco and Ikenberry 42) On the one hand, this specialization of the economy around a comparative advantage minimizes the opportunity cost of production. Yet on the other hand it increases the risk of poor economic returns due to sectoral shocks and volatile markets. In other words, an economy which places all its productive eggs in one basket will have a fuller, but riskier, basket. [...]
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