A push away from “globalism” that is taking place in many loud pockets of the world is pushing experts to humbly take notice. With the rift between the public and policy-making experts fully exposed, leading voices are trying to re-ground the conversation on “globalism”.
First, Lawrence Summers calls for a “responsible nationalism” over a “reflex globalism”:
A new approach has to start from the idea that the basic responsibility of government is to maximise the welfare of citizens, not to pursue some abstract concept of the global good. People also want to feel that they are shaping the societies in which they live. It may be inevitable that impersonal forces of technology and changing global economic circumstances have profound effects, but it adds insult to injury when governments reach agreements that further cede control to international tribunals. This is especially the case when, for reasons of law or practicality, corporations have disproportionate influence in shaping global agreements.
Lawrence Summers in The Financial Times, 10 July 2016
Second, Dani Rodrik redirects focus from global governance back to national governments as the most important agents to tackle most of our economic problems. Rodrik highlights the point that an individual country both benefits and suffers the most from economic policies that can have adverse impacts on other countries. It is thus in the nation’s own domestic interest to address those economic challenges that directly effect other countries. Beggar thy neighbor policies aside, global governance is a “false promise” in terms of fixing real economic problems like high income inequality and slow productivity growth. Instead, Rodrik suggests the “creation of global norms and procedural requirements designed to enhance the quality of domestic policymaking”. The idea is that domestic policymaking is what needs to improve, and global norms should be designed to help individual nations function better (he goes even further to stress norms for “democracies”).
Both Summers and Rodrik make valid points that are refreshing to hear as the rift widens between experts and the public on the merits of globalization, but in their resistance to greater global governance (where governance is literally defined) they overlook the need for greater global cooperation.
If the term governance were to be taken literally, there is indeed little chance that internationally agreed upon rules that control economic policies can fix domestic problems and prevent national policymakers from ever enacting beggar thyself policies, as Rodrik calls it. Summers refers to “ceding control to international tribunes” as adding insult to injury for ordinary citizens, perhaps most applicable to regional unions like the European Union. At the global level, however, what we need more of, and are seeing more of, is a type of global cooperation where the ultimate policy discretion remains with the nation state.
Last year was a historic one in terms of global cooperation. The Paris Agreement on climate change represents the type of global “governance” needed for global challenges: The Agreement is not a treaty that is legally binding and enforced by courts and arbitration tribunals, which is exactly what makes it the type of public problem solving that could work on a global scale. Anne-Marie Slaughter rightly notes that “the Paris agreement is a sprawling, rolling, overlapping set of national commitments brought about by a broad conglomeration of parties and stakeholders. It is not law.”
On economic development, the Sustainable Development Goals (SDGs) represent a different yet similar type of global cooperation. The SDGs provide targets and goals for governments to use as a guideline when deciding on their own national priorities. Recognizing that countries have their own priorities, constraints and set of stakeholders, the multilateral effort in setting the SDG agenda is an example of the type of global cooperation that emphasizes the sovereignty of each country.
Rodrik’s suggestion for a set of global norms that are designed to help countries function better is quite similar to the nature of major global arrangements like the Paris Agreement and the SDGs. Both the Paris Agreement and the SDGs have national commitments at their core, leaving it up to the countries to enact policies that help them and thus the world around them. Though these two historic examples provide national governments with targets or goals, Rodrik is suggesting sets of norms and procedures that are process-oriented. Yet, the way in which countries would cooperate to come up with such a set of norms and procedures calls on the type of cooperation we saw that led to the Paris Agreement and SDGs.
As Rodrik eloquently described in an earlier article National Governments, Global Citizens, the global economy functions better when national governments have control over regulatory policies and an expanded scope to rebuild frayed social contracts. Global institutions are a collection of member-states, and thus their accountability to the citizens of individual governments remain indirect and often unclear. The shift away from international treaties and expanded control of sovereignty by global bodies is evident, paradoxically perhaps, through the increased scale of global cooperation that we are seeing through the Paris Agreement and the SDGs. Today’s economic problems like low inflation, low output growth and declining real interest rates have a common global element, and thus global cooperation through fora like the G-20 remains high on national agendas.