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Letter to the editor

Here's what globalization ought to look like

By Steven Pearlstein, Washington Post
Published February 29, 2008

For the past 30 years, American capitalism has been on a roller-coaster ride. In the early 1980s, the U.S. economy was written off as unproductive, unimaginative and self-indulgent, doomed to fall behind Japan and Germany with their superior business cultures and economic models.

As it turned out, America's obituary as an economic superpower was premature. By the turn of the millennium, the Anglo-American economic model was back on top. Communism was dead and buried and American-led tech boom was in full swing. It was a glorious comeback, to be sure. But just as we were about to settle into a new period of smug triumphalism, things started to unravel again. Productivity slowed, along with the pace of innovation. And the bursting of two investment bubbles has raised serious questions about the ability of unregulated markets to allocate capital.

Most significantly, the stagnation in wages and income for the vast majority of households - as top executives and industry superstars are walking off with the lion's share of gains from economic growth - has created a backlash against trade and immigration and eroded political support for further globalization.

I have no doubt that Americans overstate the degree to which globalization is responsible for this economic malaise, just as I have no doubt that economists and business executives understate it. But as Matthew Slaughter, a Dartmouth economist and one-time Bush economic adviser has written recently, it doesn't much matter how the responsibility is apportioned

Given that political reality, it's disappointing there hasn't been a more serious debate by the presidential candidates.What none of the candidates has offered is what Americans most desire: a grand bargain that would restore confidence in the competitiveness of the U.S. economy and make it possible for the country again to embrace globalization. If we could get beyond stale ideology, it's not hard to imagine what such a grand bargain would look like - a bit of Sweden combined with a strong dose of Silicon Valley, spiced with a pinch of Putin's Russia.

Sweden has been successful in retooling its once-socialist economic model by embracing the notion that the government should protect workers rather than jobs. What Silicon Valley can contribute to a new American economic model is not just its fantastic technology, but its entrepreneurial spirit. Finally, we might learn a thing or two from Putin's Russia about playing hardball on the global stage. Rather than spending a decade begging China to stop manipulating its currency, we should slap a 30 percent tariff on Chinese imports and let them spend a few months negotiating with us.

Americans have nothing to fear from globalization except their unwillingness to do something about it. A presidential campaign ought to offer the perfect opportunity for figuring out what that might be.

[Last modified February 29, 2008, 00:52:24]