It is better to be a cow in Europe than a farmer in Africa — at least comparing European farm subsidies to American economic support for African farmers — Nobel Prize-winning author Joseph Stiglitz said Friday.
Stiglitz discussed a number of problems with the United States’ governance of globalization, speaking to an audience of about 200 at the Yale Law School.
The lecture, “The Future of Globalization: Lessons from Cancun and Recent Financial Crises,” was part of a weekend conference organized by the Yale Center for the Study of Globalization.
Stiglitz, an economics professor at Columbia University, told the audience that globalization, if properly managed, can bring enormous benefits.
“We have not managed globalization very well. America, as a superpower, has a special role. Our failures go back a long way, but they have gotten worse in the past three years,” said Stiglitz. “There are reforms that will make globalization work better both for America and for developing countries.”
According to Stiglitz, people viewed globalization with enormous optimism in the early 1990s and heralded trade agreements such as NAFTA enthusiastically. But by the end of the decade, people perceived globalization with increasing pessimism and uncertainty.
“In Latin America in the ’90s, growth was just half of what it had been in the ’60s, and of that growth, a disproportionate amount went to the upper third of the population while unemployment rose by 3 percent,” Stiglitz said. “It was clear that something had gone wrong.”
He quoted an example of a $4 billion farm subsidy the United States provided to 25,000 of its own farmers. According to Stiglitz, the subsidy was ultimately harmful, as it economically disadvantaged 10 million African farmers.
“We subsidized our own farmers to produce more cotton, which they should not have been doing because it is economically inefficient,” Stiglitz said.
Stiglitz spoke about the recent failure of the Cancun round of World Trade Organization negotiations.
“In a nutshell, the Cancun meetings failed because the U.S. and Europe reneged on their promises,” Stiglitz said. “It looked as though the Cancun round was going to make the prospects of developing countries worse off.”
Stiglitz also cited the $600 billion U.S. trade deficit as a fundamental source of instability.
“We are borrowing more than $1.5 million a day,” said Stiglitz. “The richest country in the world, the U.S. is unable to live within its means, but it is telling other countries to do so. The global reserve system seemingly benefits us, but because it is hurting the developing world, it really hurts all of us in the end.”
Stiglitz fielded questions from the audience at the end of his lecture. Audience members said they found the lecture thoughtful and provocative.
“It was very eye-opening as far as getting a better perspective on globalization and how it unfolds,” Paul Escott SOM ’05 said. “Globalization in and of itself is not a bad thing, but developing countries really can’t have this wishful notion that if you cut a deal with the U.S., money will come flowing in quickly.”
Amaris Singer ’07 also said she found the lecture interesting and insightful.
“Of all the prominent speakers I have seen here, he was the first one I really enjoyed listening to. I liked that his approach to globalization was not in trying to protest or stop it but, rather, in trying to shape and manage an inevitable process,” Singer said.
Stiglitz won a Nobel prize for his book “Globalization and Its Discontents.”