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Two Papers By Thomas Palley On Globalisation

Summary:
Thomas Palley has two new papers on globalisation:Globalization Checkmated? Political and Geopolitical Contradictions Coming Home to RoostThree Globalizations, Not Two: Rethinking The History And Economics Of Trade And GlobalizationThe first paper places Donald Trump’s trade wars in a broader political economy perspective. The second paper divides modern globalisation in two periods: 1945-90 and 1990-present.I especially liked the footnote 5 in the first paper where he says that the public has been right on international trade and not economists:The trade deficit has been a major channel of deindustrialization. This channel is easily understood by the general public, which has therefore made the deficit a catch-all symbol for the negative effects of globalization. Of course, other

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Thomas Palley has two new papers on globalisation:

  1. Globalization Checkmated? Political and Geopolitical Contradictions Coming Home to Roost
  2. Three Globalizations, Not Two: Rethinking The History And Economics Of Trade And Globalization

The first paper places Donald Trump’s trade wars in a broader political economy perspective. The second paper divides modern globalisation in two periods: 1945-90 and 1990-present.

I especially liked the footnote 5 in the first paper where he says that the public has been right on international trade and not economists:

The trade deficit has been a major channel of deindustrialization. This channel is easily understood by the general public, which has therefore made the deficit a catch-all symbol for the negative effects of globalization. Of course, other macroeconomic factors are also involved in determining the deficit, and economist advocates of neoliberal globalization try to belittle the public for not getting this. The public are not economists, and they are also right about the trade deficit’s deleterious economic effects. If anything, it is the economists who have misunderstood the deficit (Palley, 2012, Chapter 7). In the 1980s, economists invented the “twin deficits” hypothesis that blamed the trade deficit on the budget deficit. That hypothesis collapsed in the 1990s when the budget moved to surplus but the trade deficit kept growing. After that, economists invented the “saving shortage” hypothesis which blamed the deficit on lack of household saving. That hypothesis collapsed in the 2000s when the trade deficit continued even as the economy suffered from demand shortage. There is a macroeconomic linkage between the trade deficit, the budget deficit, and household saving, making them cousins (Blecker, 2013). However, structural factors (e.g. globalization) and an over-valued dollar exchange rate have been the decisive factors (Palley, 2015). In sum, the general public has been more right than economists.

Nice papers on the globalisation backlash.

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