Quotes from Making Globalization Work, by Joseph Stiglitz

- ‘In the former Soviet Union, the transition from communism to the market, which was supposed to bring new prosperity, instead brought a drop in income and living standards by as much as 70 percent.’ (ix)

- ‘My research on the economics of information showed that whenever information is imperfect, in particular when there are information asymmetries – where some individuals know something that others do not (in other words, always) – the reason that the invisible hand seems invisible is that it is not there. Without appropriate government regulation and intervention, markets do not lead to economic efficiency.’ (xiv)

- ‘In Making Globalization Work, I attempt to show how globalization, properly managed, as it was in the successful development of much of East Asia, can do a great deal to benefit both the developing and the developed countries of the world.’ (xv-xvi)

- ‘Attitudes toward globalization, and the failures and inequities associated with the way it has been managed, provide a Rorschach test for both countries and their people, revealing their fundamental beliefs and attitudes, their perspectives on the role of government and the market, the importance they attack to social justice, and the weight they put on noneconomic values.’ (xvi)

- ‘These ‘free market’ economists are also more inclined to believe that markets, by themselves, without government intervention, are efficient, and that the best way to help the poor is simply to let the economy grow – and, somehow, the benefits will trickle down to the poor. (Interestingly, such beliefs have persisted, even as economic research has undermined their intellectual foundations.)’ (xvi)

- ‘Globalization, like development, is not inevitable – even though there are strong underlying political and economic forces behind it. By most measures, between World War I and World War II, both the pace and extent of globalization slowed, and even reversed. For example, measures of trade, as a percentage of GDP, actually declined.’ (xviii)

- ‘This book is as much about how politics has been used to shape the economic system as it is about economics itself.’ (xviii)

- ‘Globalization encompasses many things: the international flow of ideas and knowledge, the sharing of cultures, global civil society, and the global environmental movement. This book, however, is mostly about economic globalization.’ (4)

- ‘I believe that globalization has the potential to bring enormous benefits to those in both the developing and the developed world. But the evidence is overwhelming that it has failed to live up to this potential. This book will show that the problem is not with globalization itself but in the way globalization has been managed. Economics has been driving globalization, especially through the lowering of communication and transportation costs. But politics has shaped it. The rules of the game have been largely set by the advanced industrial countries – and particularly by special interests within those countries – and, not surprisingly, they have shaped globalization to further their own interests. They have not sought to create a fair set of rules, let alone a set of rules that would promote the well-being of those in the poorest countries of the world.’ (4)

- ‘Around the world, countries that have opened up their banking sectors to large international banks have found that those banks prefer to deal with other multinationals like Coca-Cola, IBM, and Microsoft. While in the competition between large international banks and local banks the local banks often appear to be the losers, the real losers were the local small businesses that depended on them. The puzzlement of some listeners, convinced that the presence of international banks would unambiguously be better for everyone, showed that these businessmen had paid little attention to similar complaints from Argentina and Mexico, which saw lending to local companies dry up after many of their banks were taken over by foreign banks in the 1990s.’ (6)

- ‘ ‘The current process of globalization is generating unbalanced outcomes, both between and within countries. Wealth is being created, but too many countries and people are not sharing in its benefits. They also have little or no voice in shaping the process. Seen through the eyes of the vast majority of women and men, globalization has not met their simple and legitimate aspirations for decent jobs and a better future for their children. Many of them live in the limbo of the informal economy without formal rights and in a swathe of poor countries that subsist precariously on the margins of the global economy. Even in economically successful countries some workers and communities have been adversely affected by globalization. Meanwhile the revolution in global communications heightens awareness of these disparities…these global imbalances are morally unacceptable and politically unsustainable.’ [World Commission on the Social Dimensions of Globalization report] The commission surveyed seventy-three countries around the world. Its conclusions were startling. In every region of the world except South Asia, the United States , and the European Union (EU), unemployment rates increased between 1990 and 2002.’ (8)

- ‘The commission also found that 59 percent of the world’s people were living in countries with growing inequality, with only 5 percent in countries with declining inequality. Even in most of the developed countries, the rich were getting richer while the poor were often not even holding their own. In short, globalization may have helped some countries – their GDP, the sum total of the goods and services produced, may have increased – but it had not helped most of the people even in these countries.’ (8-9)

- ‘The way globalization has been managed has taken away much of the developing countries’ sovereignty, and their ability to make decisions themselves in key areas that affect their citizens’ well being. In this sense, it has undermined democracy.’ (9)

- ‘Perhaps most important, the economic system that has been pressed upon the developing countries – in some cases essentially forced upon them – is inappropriate and often grossly damaging. Globalization should not mean the Americanization of either economic policy or culture, but often it does – and that has caused resentment.’ (9)

- ‘Critics of globalization point to the growing numbers of people living in poverty. The world is in a race between economic growth and population growth, and so far population growth is winning. Even as the percentages of people living in poverty are falling, the absolute number is rising. The World Bank defines poverty as living on less than $2 a day, absolute or extreme poverty as living on less than $1 a day. Think for a minute what it means to live on one or two dollars a day. Life for people this poor is brutal. Childhood malnutrition is endemic, life expectancy is often below fifty years, and medical care is scarce. Hours are spent each day searching for fuel and drinkable water and eking out a miserable livelihood, planting cotton on a semi-arid plot of land and hoping that this year the rains will not fail, or in the backbreaking toil of growing rice in a meager half acre, knowing that no matter how hard one works there will be barely enough to feed one’s family.’ (10)

- ‘ China ’s economic growth, which was based on exports, has lifted several hundred million people out of poverty. But China managed globalization carefully: it was slow to open up its own markets for imports, and even today does not allow the entry of hot speculative money.’ (10)

- ‘The sad truth, however, is that outside of China , poverty in the developing world has increased over the past two decades. Some 40 percent of the world’s 6.5 billion people live in poverty (a number that is up 36 percent from 1981), a sixth – 877 million live in extreme poverty (3 percent more than in 1981). The worst failure is Africa, where the percentage of the population living in extreme poverty has increased from 41.6 percent in 1981 to 46.9 percent in 2001.’ (11)

- ‘Historically, Africa is the region most exploited by globalization: during the years of colonialism the world took its resources but gave back little in return.’ (11)

- ‘At the international Monetary Fund, the international institution charged with oversight of the global financial system, a single country – the United States – has effective veto. It is not a question of one man one vote, or one country one vote: dollars vote.’ (12)

- ‘The head of the World Bank, the international organization charged with promoting development, has always been appointed by the president of the United States (without even having to consult his own Congress). American politics, not qualifications, are what matters: experience in development, or even experience in banking, is not required. In two instances – the appointments of Paul Wolfowitz and Robert MacNamara – the background was defense, and both these former secretaries of defense were associated with discredited wars ( Iraq and Vietnam ).’ (13)

- ‘Making globalization work will not be easy. Those who benefit from the current system will resist change, and they are very powerful.’ (13)

- ‘Poverty has, at least, become a global concern. The United Nations and multinational institutions such as the World Bank have all begun focusing more on poverty reduction.’ (13-14)

- ‘At Monterrey, Mexico, in March 2002 at the International Conference on Financing for Development, which was attended by 50 heads of state or government and 200 government ministers, among others, the advanced industrial countries committed themselves to substantial increases in assistance – to 0.7 percent of their GDP (though so far few countries have lived up to these commitments, and some – especially the United States – are a far way off.’ (14)

- ‘Once a year, the leaders of the major industrial countries (called the G-8) get together to discuss major global problems. At the 2005 G-8 summit, held in Gleneagles, Scotland, the leaders of the advanced industrial countries agreed to write off completely the debt owed to the IMF and the World Bank by the poorest eighteen countries of the world, fourteen of which are in Africa.’ (15)

- ‘As I write this, the world’s developing countries owe roughly $1.5 trillion to creditors including international banks, the IMF, and the World Bank. Approximately one-third of that is owed by low-income countries.’ (15)

- ‘Trade liberalization – opening up markets to the free flow of goods and services – was supposed to lead to growth. The evidence is at best mixed. Part of the reason that international trade agreements have been so unsuccessful in promoting growth in poor countries is that they were often unbalanced: the advanced industrial countries were allowed to levy tariffs on goods produced by developing countries that were, on average, four times higher than those on goods produced by other advanced industrial countries. While developing countries were forced to abandon subsidies designed to help their nascent industries, advanced industrial countries were allowed to continue their own enormous agricultural subsidies, forcing down agricultural prices and undermining living standards in developing countries.’ (15-16)

- ‘A failure of environmental stability poses an even greater danger for the world in the long run. A decade ago, concern about the environment and globalization was limited mostly to environmental advocacy groups and experts.’ (17)

- ‘There will be grave problems ahead if everybody emits greenhouse gases at the rate at which Americans have been doing so. The good news is that this is, by now, almost universally recognized, except in some quarters in Washington ; but the adjustments in lifestyles will not be easy.’ (17)

- ‘The United Nations was created to prevent the wars that had proven such a scourge during the first half of the twentieth century. With memories of the Great Depression of the 1930s still fresh, two new economic institutions were established: the International Monetary Fund and the World Bank. At the time, much of the developing world was still colonized; these institutions were clubs of the rich countries, and their governance reflected this. They quickly established ‘old boy’ rules to enhance their control: the United States agreed that Europe could appoint the head of the IMF, with an American in the number two position; and Europe agreed that the U.S. president could appoint the head of the World Bank.’ (18)

- ‘Some 150 years ago, the lowering of communication and transportation costs gave rise to what may be viewed as the earlier precursor of globalization.’ (19)

- ‘The conventional wisdom that the United States ’ development was the result of unfettered capitalism is wrong.’ (19)

- ‘Government not only regulates banking and insures depositors but also tries to ensure that credit flows to underserved groups and, at least until recently, to all regions in the country – not just the big money centers.’ (20)

- ‘Economic globalization has outpaced political globalization.’ (21)

- ‘… India , where much of the population is still illiterate and the median income is just $2.70 a day.’ (25)

- ‘Education is important – but if there are no jobs for those who are educated, there will not be development.’ (26)

- ‘Development is a process that involves every aspect of society, engaging the efforts of everyone: markets, governments, NGOs, cooperatives, not-for-profit institutions. A developing country that simply opens itself up to the outside world does not necessarily reap the fruits of globalization. Even if its GDP increases, the growth may not be sustainable, or sustained. And even if growth is sustained, most of its people may find themselves worse off.’ (26)

- ‘While East Asia averaged 5.9 percent growth over the past thirty years (6.5 percent during the past fifteen years), Latin America and Africa have been in a race for the lowest overall growth rate, with sub-Saharan Africa’s per capita income actually dropping an average 0.2 percent each year over the past thirty years.’ (30)

- ‘Importantly, these governments made sure that the benefits of growth did not go just to a few, but were widely shared. They focused not only on price stability but on real stability, ensuring that new jobs were created in pace with new entrants to the labor force. Poverty fell dramatically – in Indonesia , for example, the poverty rate (at the $1-a-day standard) fell from 28 percent to 8 percent between 1987 and 2002 – while health and life expectancy improved and literacy became close to universal. In 1960, Malaysia ’s per capita income was $784 (in 2000 U.S. dollars), slightly lower than that of Haiti at the time. Today, it is over $4,000. The average level of education in South Korea in 1960 was less than four years; today, South Korea leads in high-tech industries such as chip production, and its income has increased sixteenfold in the past forty years. China began its journey later, but its achievements have in some ways been even more remarkable. Incomes have increased more than eightfold since 1978; poverty at the $1-a-day standard has fallen by three-quarters.’ (31)

- ‘Government intervened carefully, but pervasively, in the economy. Of course, they did all the usual things that are expected of government. They expanded education and higher education simultaneously, recognizing that success required both universal literacy and a cadre of highly skilled individuals capable of absorbing advanced technology. They invested heavily in infrastructure such as ports, roads, and bridges, all of which made it easier to transport goods and so drove down the cost of doing business and of shipping goods out of the country.’ (31-32)

- ‘Some countries, such as China, Malaysia, and Singapore, invited in foreign investment; others, namely South Korea and Japan, felt more comfortable without it and grew just as well. Even those that invited in foreigners made sure that the guest firms transferred technology and trained local workers, so that they were contributing to the nation’s development effort.’ (33)

- ‘The debate about capital market liberalization was more tendentious. Even as they have opened up their markets for long-term investment, the two Asian giants – India and China – have restricted short-term capital flows. They recognized that you cannot build factories and create jobs with money that can move in and out overnight. They had seen the record of instability that had accompanied these flows, risk that came without evident reward.’ (34)

- ‘During the 1980s, many of these countries – perhaps succumbing to pressure from the IMF and the U.S. Treasury – opened up their markets to the free flow of capital. For a while capital flowed in, but then sentiment changed and it fled out. The result was a crisis that spread across the region and beyond.’ (34)

- ‘In 1980, fighting its own problem of inflation, the United States initiated interest rate increases that climbed to over 20 percent. These rates spilled over to loans to Latin America, triggering the Latin American debt crisis of the early 1980s, when Mexico , Argentina , Brazil , Costa Rica , and a host of other countries defaulted on their debt. As a result of the debt crisis, the region suffered three years of decline and ten years of stagnation, a performance so poor that it came to be called the lost decade.’ (36)

- ‘As countries like Argentina adopted the Washington Consensus policies, praise was heaped upon them. When price stability was restored and growth resumed, the World Bank and the IMF claimed credit for the success; the case for the Washington Consensus had been made. But, as it turned out, the growth was not sustainable. It was based on heavy borrowing from abroad and on privatizations which sold off national assets to foreigners – the proceeds from which were not invested. There was a consumption boom. GDP was increasing, but national wealth was diminishing. Growth was to last a short seven years, and was to be followed by recession and stagnation. Growth for the decade of the 1990s was only half what it had been in the decades prior to 1980, and what growth there was went disproportionately to the rich.’ (36)

- ‘A growing consensus against the Washington Consensus reflected in the election of leftist governments in Brazil , Venezuela , and Bolivia . These governments have often been castigated for being populist, because they promise to bring education and health benefits to the poor, and to strive for economic policies that not only bring higher growth but also ensure that the fruits of that growth are more widely shared. In a democracy, it seems natural – not wrong – for politicians to strive to enhance the well-being of the average citizen.’ (36-37)

- ‘Decreases in life expectancy – in Russia it fell by a stunning four years between 1990 and 2000 – confirmed the impression of increasing destitution.’ (37)

- ‘Advisers from the West rushed to Eastern Europe to guide those countries through their transitions. Many believed, mistakenly, that ‘shock therapy’ was needed – that the transition to Western-style capitalism should take place overnight through rapid privatization and liberalization. Instantaneous price liberalization brought with it – predictably – hyperinflation. Prices inUkraine at one point increased at the race of 3,300 percent a year. Tight monetary policy (high interest rates with little credit available) and fiscal authority (tight budgets) were used to bring down the hyperinflation; they also brought down the economies, which slid into deep recessions and depressions. Meanwhile, rapid privatizations were giving away hundreds of billions of dollars of the countries’ most valuable assets, creating a new class of oligarchs.’ (37-38)

- ‘Though the Russian government had been told repeatedly by its advisers from the IMF, the U.S. Treasury, and elsewhere that privatization would lead to growth and investment, the outcome was disappointing: output fell by one-third.’ (38)

- ‘It is now widely agreed that the speed of the reforms in the former Soviet bloc countries was a mistake. The privatizations were done before sound regulations and strong tax laws were put into place. As government revenue dropped, spending on health and infrastructure collapsed. One of the legacies of Russia ’s past was a high-quality education system, but this quickly deteriorated as budgets were slashed. At the same time, the old social safety nets were being cast aside. The results were grim: poverty in the former Soviet bloc countries increased from 1987 (shortly before the beginning of transition) to 2001 by a factor of ten.’ (39)

- ‘Several [African] countries made major strides in improving literacy, and were it not for the AIDS epidemic there would have been great advances in health and life expectancy. But even these successful countries failed to attract much foreign investment.’ (41-42)

- ‘The advent of the Internet proved to be the most important turning point. New technology meant that at last India could reap the benefits of its long-term investments in education, and inadequacies in infrastructure were less of a hindrance.’ (43)

- ‘ India ’s success, in fact, has much in common with that of China . In both, there is emerging a middle class of several hundred million that is beginning to enjoy the bountiful life that those in the West have had for so long, and in both countries there are still huge gaps between rich and poor. India did far less well than China in reducing poverty – but it has done far better in preventing the rise of inequality, the disparities across regions and between the very top and the rest. Still, both China and India , even as they reach new peaks of success, have recognized that they cannot continue as they have done until now. Both governments have committed themselves to focusing on helping the lagging rural sector; both are worried about creating new jobs for the new entrants to the labor force ( India has actually created a guaranteed employment scheme for rural areas).’ (43-44)

- ‘In the array of statistics and anecdotes describing developing countries – some totally depressing, some conveying enormous hope – it’s important to remember the big picture: success means sustainable, equitable, and democratic development that focuses on increasing living standards, not just on measured GDP. Income is, of course, an important part of living standards, but so too is health (measured, for instance, by life expectancy and infant mortality) and education.’ (44)

- ‘Growth must be sustainable.’ (45)

- ‘Papua New Guinea is cutting down its tropical rainforests, home to an immense range of species; the sales improve its GDP today, but in twenty years there will be nothing more to cut. Still, because GDP is relatively easy to measure, it has become a fixation of economists. The trouble with this is that what we measure is what we strive for. Sometimes, increases in GDP are associated with poverty reduction, as was the case in East Asia. But that was not an accident: governments designed policies to make sure that the poor shared in the benefits.’ (45)

- ‘If economic growth is not shared throughout society, then development has failed.’ (45)

- ‘In China, at least in earlier stages of development, senior management typically received no more than three times the income of an ordinary workers; in Japan, ten times. (By contrast, in recent years the compensation of senior managers in the United States has been hundreds of times that of ordinary workers.’ (45-46)

- ‘It is not just income – even the income of the average individual – that matters but overall standards of living.’ (46)

- ‘What matters, of course, is not just the size of government but what government does. A central component of China ’s rapid growth was township and village enterprises established by the local communes. The government got out of agriculture and gave families the right to control the land, and agricultural productivity soared. At the same time, the central government moved away from micromanaging every detail of the economy to managing the overall economic framework, including ensuring a supply of finance for the development on infrastructure. As China ’s transition evolved, the government realized that continued success would require stronger laws concerning corporate governance. It realized too that, in the zeal to strengthen the market, areas such as rural education and health had been left behind. The 2006 five-year plan sets out to redress these imbalances.’ (49)

- ‘People are at the core of development’ (50)

- ‘The Nobel laureate Amartya Sen has emphasized the enhanced capabilities that education brings, and the resulting freedom that development brings to individuals. Just as the focus on GDP results in too narrow a focus for development strategies, so too a focus on the number of years of schooling may lead to too narrow a focus for education policies. The number of years of schooling is an important indicator of how well a country is doing in advancing education, but just as important is what schools teach. Education needs to be compatible with the work that people will do once they leave school. In Ethiopia, the government of Meles Zenawi realized that even if its most ambitious development programs succeed, most of the people going to rural schools today will still be farmers when they grow up, so it has been working to redirect curriculum in order to make them better farmers.’ (50)

- ‘Markets, government, and individuals are three of the pillars of successful development strategy. A fourth pillar is communities, people working together, often with help from government and nongovernmental organizations. In many developing countries, much important collective action is at the local level. In Bali, as in much of Asia, irrigation for agriculture is provided by a network of canals. These are maintained by the community which ensures that the water is shared fairly among the villages and villagers. The story of the Grameen micro-credit bank in rural Bangladesh, which gives small loans to poor rural women – who have a far better repayment rate than the rich urban borrowers – is well known.’ (51)

- ‘Were it not for BRAC and Grameen, the Bangladeshi farmers would be even poorer than they are now. Health is better and birth rates are lower as a result of their efforts and those of similar organizations. Life expectancy is up 12 percent in twelve years, to sixty-two years in 2002, and population growth rates are down to 1.7 percent from 2.4 percent in 1990. The micro-finance model used by BRAC and Grameen has been copied all over the world. What makes their programs so successful is that they come out of the communities they service and address the needs of the people in those communities.’ (52)

- ‘The World Bank now has a program that allocates $25,000 grants to communities to spend as they please. Thailand is one of several countries imitating the program and putting decision making into the hands of local communities. There is a compelling argument for these programs: the people in the village know better than anyone else what will make a difference to their lives; they know how the money is spent, and any corruption hurts them directly. Having invested in the planning and execution of a project, they are more likely to feel ownership, a commitment to see it through to success, and therefore more likely to see it receive the funds required to maintain it.’ (53)

- ‘Educating people but not having jobs for them is a recipe for disaffection and instability, not for growth.’ (54)

- ‘When government officials are eking out a living on a minimal wage, it is understandable, though not forgivable, that they demand bribes before they will do the job they were hired for. At least these ill-gotten gains are used to pay for food or education for their children. Singapore showed that with strong punishment and high government salaries, this kind of corruption could be quickly stamped out.’ (55)

- ‘In Uganda , the government has been publicizing all checks sent to the local level, so that villagers know what they should be receiving.’ (55)

- ‘The developed countries should do more to reduce opportunities for corruption, by limiting bank secrecy, increasing transparency, and enforcing anti-bribery measures. Every bribe requires both a briber and a bribee – and too often the briber comes from a developed country. Corruption would occur even if there were not safe havens to which the money can go, and in which the corrupt can sustain their lifestyle after their wrongdoing has been discovered; but secret bank accounts make it easier.’ (56)

- ‘As globalization and new technology reduce the gap between parts of India and China and the advanced industrial countries, the gap between Africa and the rest of the world is actually increasing.’ (57)

- ‘Not only is the world not flat: in many ways it has been getting less flat.’ (57)

- ‘Of course, in the developing countries had solved all of their own problems better, if they had had more honest governments, less influential special interests, more efficient firms, better education workers – if, in fact, they did not suffer from all the afflictions of being poor – then they could have managed this unfair and dysfunctional globalization better.’ (58)

- ‘The rest of the world cannot solve the problems of the developing world. They will have to do that for themselves. But we can at least create a more level playing field. It would be even better if we tilted it to favor the developing countries. There is a compelling moral case for doing this. I think there is also a compelling case that it is in our self-interest. Their growth will enhance our growth. Greater stability and security in the developing world will contribute to stability and security in the developed world.’ (59)

- ‘It is not in the United States’ interests to have a poor, unstable country on its southern border, and NAFTA supporters hoped the pact would bring Mexico’s economy forward and help this country, rich with art and history and culture, prosper. Instead, more than ten years later, it is clear that NAFTA has not succeeded. While it has not been the disaster that its critics predicted, neither has it brought all the benefits that were claimed by its advocates.’ (62)

- ‘In part, free trade has not worked because we have not tried it: trade agreements of the past have been neither free nor fair.’ (62)

- ‘It is easy for those in the advanced industrial countries to seize the opportunities that the opening up of markets in the developing countries affords – and they do so quickly. But there are many impediments facing those in the developing world.’ (62)

- ‘These are among the reasons that when, in February 2001, Europe unilaterally opened up its markets to the poorest countries of the world, almost no new trade followed.’ (63)

- ‘It is not a matter of special interests opposing liberalization, but of citizens correctly perceiving the world as it is.’ (63)

- ‘Not only did NAFTA not lead to robust growth; it can even be argued that in some ways it contributed to Mexico ’s poverty. Poor Mexican corn farmers now have to compete in their own country with highly subsidized American corn (though the relatively better-off Mexican city dwellers benefit from lower corn prices). A fairer trade agreement would have eliminated America ’s agricultural subsidies and its restrictions on imports of agricultural goods, like sugar, into the United States . Even if the United States did not eliminate all its subsidies, Mexico should have been given the right to countervail – that is, to impose duties on US imports to offset the subsidies. But NAFTA does not allow that.’ (64)

- ‘The one part of Mexico’s economy that was successful, at least in the years immediately after NAFTA, was the area just south of the border. So-called maquiladora factories sprang up, supplying American manufacturers like General Motors and General Electric with low-cost parts. Employment grew 110 percent over NAFTA’s first six years, compared with 78 percent over the previous six years…Equally telling is what happened after the first flush of NAFTA. After the early years of growth in the maquiladora region, employment there too actually started to decline, with some 200,000 jobs lost in the first two years of the new millennium.’ (65)

- ‘In a country that lacks capital, such as machinery and technology, labor will be less productive and wages will be lower.’ (67)

- ‘Eventually unskilled wages in China will be higher…The argument is persuasive, except for one detail: in many countries, unemployment rates are high and those who lose their jobs do not move on to higher-wage alternatives but onto the unemployment rolls.’ (67)

- ‘If monetary policies are working well, jobs should be created in tandem with jobs that are lost.’ (67)

- ‘Even if they do not actually lose their jobs, unskilled workers in advanced industrial countries see their wages decrease.’ (68)

- ‘Politicians and economists who promise that trade liberalization will make everyone better off are being disingenuous. Economic theory (and historical experience) suggests the contrary: even if trade liberalization may make the country as a whole better off, it results in some groups being worse off. And it suggests that, at least in the advanced industrial countries, it is those at the bottom – unskilled workers – who will be hurt the most. The world of Adam Smith and the free trade advocates, in which free trade will make everyone better off, it’s not only a mythical world of perfectly working markets with no unemployment; it is also a world in which risk doesn’t matter because there are perfect insurance markets to which risk can be shifted.’ (68)

- ‘There are numerous instances in which advanced industrial countries have opened up their markets, but the gains in exports have been limited. These countries will need some form of assistance – aid for trade – to help them take advantage of the new opportunities. Some used to argue that trade was more important than aid; trade helps a country to stand on its own. But it is better to see aid and trade as complements: both are needed for successful development.’ (70)

- ‘Countries often need time to develop, in order to compete with foreign companies; to get this time, they may have to protect their nascent industries temporarily.’ (70)

- ‘…the ‘infant industry argument’ for protection. It was a popular idea in Japan in the 1960s – and in the United States and Europe in the nineteenth century. Most successful countries did in fact develop behind protectionist barriers; critics of globalization accuse countries like Japan and the United States , which have climbed the ladder of development, of wanting to kick the ladder away so that others can’t follow.’ (71)

- ‘Critics argue that, too often, protected infants never grow up, and demand to be permanently insulated from outside competition. More generally, special interests grab hold of any argument, including the infant industry argument, to push protectionist measures in pursuit of higher profits – which impose enormous costs on the rest of the economy.’ (71)

- ‘They cite statistical studies claiming that trade liberalization enhances growth. But a careful look at the evidence shows something quite different. It shows that countries, like those in East Asia, that have become more integrated into the global economy have grown faster. It is exports – not the removal of trade barriers – that is the driving force of growth. Studies that focus directly on the removal of trade barriers show little relationship between liberalization and growth.’ (72)

- ‘What, then, should one mean by fair trade? There is a natural benchmark: the trade regime that would emerge if all subsidies and trade restrictions were eliminated.’ (73)

- ‘The Uruguay Round has been based on what became known as the ‘Grand Bargain,’ in which the developed countries promised to liberalize trade in agriculture and textiles (that is, labor-intensive goods of interest to exporters in developing countries) and, in return, developing countries agreed to reduce tariffs and accept a range of new rules and obligations on intellectual property rights, investments, and services. Afterward, many developing countries felt that they had been misled into agreeing to the Grand Bargain: the developed countries did not keep their side of the deal. Textile quotas would remain in place for a decade, and no end to agricultural subsidies was in sight.’ (77)

- ‘Rich countries have granted so-called preferences to developing countries. Rich countries have cost poor countries three times more in trade restrictions than they give in total development aid.’ (78)

- ‘The strengthening on intellectual property rights largely benefited the developing countries, and only later did the costs to developing countries became apparent, as lifesaving generic medicines were taken off the market and developed-world companies began to patent traditional and indigenous knowledge.’ (78)

- ‘The United States and Europe have perfected the art of arguing for free trade while simultaneously working for trade agreements that protect themselves against imports from developing countries.’ (78)

- ‘The United States, which because of its huge cotton subsidies is the world’s largest cotton exporter, to much fanfare offered to open its market to African cotton producers – an offer worth little since it would not be importing much cotton (because of its huge cotton subsidies, America is a cotton exporter, not a major importer).’ (81)

- ‘I believe, however, that it is possible to design a global trade regime that promotes the well-being of the poorest countries and that is, at the same time, good for the advanced industrial countries as a whole – though, of course, some special corporate interests might well suffer. This was, of course, the promise of Doha . The reforms would cost the developed countries little – in most cases nothing at all, as taxpayers would save billions from subsidies and consumers would save billions from lower prices – and developing countries would benefit enormously.’ (82)

- ‘One single reform would simultaneously simplify negotiations, promote development, and address the inequities of the current regime. Rich countries should simply open up their markets to poorer ones, without reciprocity and without economic or political conditionality. Middle-income countries should open up their markets to the least developed countries, and should be allowed to extend preferences to one another without extending them to the rich countries.’ (83)

- ‘The European Union recognized the wisdom of this basic approach when in 2001 it unilaterally opened up its markets to the poorest countries of the world, taking away (almost) all tariffs and trade restrictions without demanding political economic concessions. The rationale was that European consumers would benefit from lower prices and more product diversity; while it would cost European producers a negligible amount, it could be of enormous benefit to the poorest countries; and it was a strong demonstration of goodwill. The European initiative should be extended to all advanced industrial countries, and markets should be opened up not just to the poorest but to all developing countries.’ (83)

- ‘As Europe has rightly pointed out, the United States often uses its defense expenditures to subsidize a range of industries. Boeing has benefited from military expenditures in aircraft design, and the software industry has benefited enormously from a whole range of government expenditures that helped develop the Internet and even the browser. Indeed, commercial benefits are often put forward as one of the justifications for the huge level of defense expenditures.’ (84-85)

- ‘A decade after the Uruguay Round, more then two-thirds of farm income in Norway and Switzerland came from subsidies, more than half in Japan, and one-third in the EU. For some crops, like sugar and rice, the subsidies amounted to as much as 80 percent of farm income. The aggregate agricultural subsidies of the United States , EU, and Japan (including hidden subsidies, such as on water), if they do not actually exceed the total income of sub-Saharan Africa, amount to at least 75 percent of that region’s income, making it almost impossible for African farmers to compete in world markets. The average European cow gets a subsidy of $2 a day (the World bank measure of poverty); more than half of the people in the developing world live on less than that.’ (85)

- ‘The most often-heard reason for continuing these subsidies in the United States is that subsidies are essential to maintaining the small family farmer and traditional ways of life. But the vast bulk of the money goes to large farms, often corporate ones. These subsidies have become simply another form of corporate welfare. Looking across all crops, some 30,000 farms (1 percent of the total) receive almost 25 percent of the total amount spent, with an average of more than $1 million per farm. Eighty-seven percent of the money goes to the top 20 percent of the farmers, each of whom receives on average almost $200,000. By contrast, the 2,440,185 small farmers at the bottom – the true family farmers – get 13 percent of the total, less than $7,000 each.’ (86)

- ‘If the developed countries believe they need a transition period for the abolition of subsidies, it should be done be eliminating all subsidies to farmers making in excess of, say, $100,000, and capping subsidies to any one farmer at, say, $100,000. Since the vast majority of those living in developing countries depend directly or indirectly on agriculture for their livelihood, eliminating subsidies and opening agricultural markets would, by raising prices, be of enormous benefit. Not all developing countries, however, would benefit. Importers of agricultural goods would suffer as prices rise. Among and within the developing countries, there would be losers and winners: farmers would be better off, while urban workers would face higher food prices. The way to solve this transitional problem would be for industrial countries to provide assistance to help the developing countries through the adjustment period – even a fraction of what they now spend on agricultural subsidies would do. Cotton is an exception. If cotton subsidies were removed, the effect on producers would be significant but the effect on consumers would be negligible. Since the cost of the raw material represents such a small fraction of the value of a finished garment, a substantial increase in the price of cotton would hardly be reflected in the prices paid for textiles and apparel. This is one of the reasons that there is currently such a strong demand by developing countries for the elimination of cotton subsidies.’ (87)

- ‘While reducing agricultural tariffs and subsidies has received enormous attention, that is not enough to create fairness. Tariff structures themselves need to be made pro-development. One would think that agricultural countries could can the fruits and vegetables they grow, and so earn more than they make from exporting raw produce. It would be easy to do and would create jobs. But they do not, because developed countries design their tariffs in a way that discourages this kind of industrializing, by placing higher tariffs on manufactured goods than on raw materials; the more manufacturing involved, the higher the tariff. This is known as tariff escalation.’ (86-87)

- ‘Some forty countries, including the United States, have laws requiring the use of local ships for transporting goods domestically. In the United States, the Jones Act of 1920 requires not only that the ships be owned by Americans but that they be built in American shipyards and manned by Americans. (The history of protectionism goes back much further, to the first session of Congress in 1789.) America does not have a comparative or absolute advantage in shipping – indeed, as long ago as 1986, it was estimated that the Jones Act cost America more than $250,000 for every job it saved. Shipping provides a wonderful opportunity for a pro-poor trade agenda that would focus on unskilled-labor-intensive services.’ (88-89)

- ‘For the past couple of decades, the United States and the EU have pressed, with considerable success, for liberalization of capital markets, which enables investment to flow more freely around the world, arguing that this is good for global efficiency. But even modest liberalization of labor flows would increase global GDP by amounts that are an order of magnitude greater than the most optimistic estimates of the benefits of capital market liberalization. Furthermore, liberalizing migration would benefit developing countries.’ (89)

- ‘But the cost of sending remittances can be very high, eating up a significant fraction of the amount sent. Developed countries need to facilitate the transfer of remittances to developing countries (as the United States is already doing), so that these countries can reap the full benefits of migration.’ (89)

- ‘What is needed is an international tribunal to judge whether a country is guilty of dumping (or engaging is other unfair trade practices).’ (94)

- ‘A past focus on manufacturing has moved to high-skill services, capital flows, and intellectual property rights. A development-oriented trade agenda would be markedly different. First, it would remain narrowly focused on those areas where a global agreement is needed to make the international trade system work. The developing countries simply don’t have the resources to negotiate effectively on a broad range of topics. And second, it would focus on areas of benefit to developing countries: unskilled-labor-intensive services and migration. There are some new topics that would be added: circumscribing bribery, arms sales, bank secrecy, and tax competition to attract businesses, all of which hurt developing countries, and all of which can only be controlled by international cooperation.’ (97-98)

- ‘Trade is not a zero-sum game, in which those who win do so at the cost of others; it is, or least it can be, a positive-sum game, in which everyone can be a winner. If that potential is to be realized, first we must reject two of the long-standing premises of trade liberalization: that trade liberalization automatically leads to more trade and growth, and that growth will automatically ‘trickle down’ to benefit all. Neither is consistent with economic theory or historical experience. If there is to be support for trade globalization in the developed world, we must make sure that the benefits and costs are more evenly shared, which will entail more progressive income taxation. We have to be particularly attentive to those whose livelihood is being threatened, and this will require better adjustment assistance, stronger safety nets, and better macro-economic management – so that when individuals lose their jobs, they can find better ones. We have to put in place policies that will lead wages, especially at the bottom, which in the United States have stagnated for years – to rise.’ (99-100)

- ‘Wages can only rise if productivity increases, and this will require more investment in technology and education. Unfortunately, in some of the advanced industrial countries, most notably the United States, just the opposite has been happening: taxes have become more regressive, safety nets have been weakened, and investments in science and technology (outside the military) have been declining as a percentage of GDP, as has the number of graduates in science and technology.’ (100)

- ‘Increasingly, those in the advanced industrial countries are recognizing that such help is also a matter of self-interest.’ (100-101)

- ‘The developing countries will provide a robust market for the goods and services of the advanced industrial countries.’ (101)

- ‘As in the United States and elsewhere in the world, generic drugs in Morocco cost a fraction of brand-name drugs. American drug companies know that as soon as the generics come in, their profits will plummet. So they have devised a number of clever strategies to delay the introduction of generics into the market, including restricting the use of data that proves the safety and efficacy of the drug – and preventing the generic firms from even beginning to produce the drugs until the patent expires. The protestors were especially fearful of delays in the introduction of generic AIDS drugs, delays that would leave most patients unable to afford medicines that could save their lives. Some NGOs argued that the restrictions on generics in the agreement could increase the effective duration of patent protection to nearly thirty years, from its current twenty years, and would make generic drugs even less accessible in Morocco than they are in the United States.’ (104)

- ‘As they signed TRIPs, the trade ministers were so pleased they had finally reached an agreement that they didn’t notice they were signing a death warrant for thousands of people in the poorest countries of the world.’ (105)

- ‘To critics of globalization, the fight over intellectual property is a fight over values. TRIPs reflected the triumph of corporate interests of billions of people in the developing world. It was another instance in which more weight was given to profits than to other basic values – like the environment, or life itself.’ (105)

- ‘Patents, for instance, give an inventor the exclusive right to markets his innovation for a limited period of time, currently twenty years.’ (107)

- ‘Copyrights give the writer of a book of the composer of a song the exclusive right to sell that book or song for a much longer period – in the United States, the length of the author’s life plus seventy years.’ (107)

- ‘More generally, because patents impede the dissemination and use of knowledge, they slow follow-on research, innovations based on other innovations. Since almost all innovations build on earlier innovations, overall technological progress is then slowed.’ (110)

- ‘Today, the world of innovation is far different from what it was a century ago. The days of the solitary inventor working on his own are, by and large, gone, although there are still apocryphal stories such as that of Hewlett and Packard working in their garage. To oversimplify, basic ideas bubble out of research universities and government-funded research laboratories: both major breakthroughs, like understanding the genetic structure of life or lasers, and smaller one, such as advances in mathematics, surface physics, or basic chemistry. Sometimes these get translated into specific products and innovations by university researchers; commonly, however, corporations do this work.’ (111)

- ‘Today we have the Linux computer operating system, which is also based on the principle of open architecture. Everyone who participates is required to accept that it is an open source, a dynamic program that is being constantly improved by thousands of users. A free, viable alternative to Microsoft’s operating system, it is expanding rapidly, especially in developing countries. An offshoot of Linux, the browser Mozilla Firefox, has been growing even faster. Not only is it free, but it seems to be less subject to the security problems that have plagued Microsoft’s Internet browser.’ (112)

- ‘Time was all the developing countries won – a few years until the intellectual property provisions would come into force – and, seemingly, some flexibility in, for instance, compulsory licensing of drugs in the event of a health crisis like AIDS. (With a compulsory license, the generic manufacturer is allowed to manufacture the needed drug without the consent of the patent holder, though typically there is a standard royalty rate. This obviously erodes monopoly power, which is why the patent holder refuses to grant the license voluntarily). Intellectual property does not really belong in a trade agreement. Trade agreements are supposed to liberalize the movements of goods and services across borders. TRIPs was concerned with a totally different issue – in some sense, it was concerned with restricting the movement of knowledge across borders.’ (116-117)

- ‘In fact, there already existed an international organization to deal with intellectual property: the World Intellectual Property Organization (WIPO), one of the specialized agencies of the Untied Nations. It was established in its current form in 1970, although, in fact, international cooperation in this area dates back more than a hundred years, to 1893. But WIPO has a critical limitation: it has no enforcement mechanism. There was little the Untied States or the EU could do to a country that did not respect intellectual property rights. Under TRIPs, the advanced industrial countries could at last use trade sanctions to legally [sic] enforce intellectual property rights, and the drug and media industries were ecstatic.’ (117)

- ‘The International Labor Organization, for example, has forged a global agreement on core labor standards, forbidding, for instance, the use of child and prison labor. Whether a country complies with these labor standards can of course affect trade. For example, we could certainly have had a trade-related labor standards agreement.’ (117)

- ‘New drugs and vaccines can, of course, make a big difference to the well-being of those in the developing countries. But the current system has not been working – it has not been investing in research to produce to produce the drugs to attack the diseases that are prevalent in developing countries, and, not surprisingly, few drugs have been [sic] been produced. We need to reform the global innovation system to encourage the development of medicines that treat and prevent such diseases.’ (118)

- ‘One of the simplest ways for the developed countries to help developing countries is to ‘waive’ the tax, allowing them to use the intellectual property for their own citizens, so that their citizens can obtain the drug at cost. Critics might say: But then the developing countries are simply free-riding on the advanced industrial countries. To which the answer is: Yes, and they should. There is no additional cost imposed on the developed countries. And the benefits to the developing countries would be enormous: increased health is not only of value in its own right, but it would contribute to increased productivity. A start in this direction has already been made. Students at some research universities are arguing that universities should insist that, as a part of their licensing agreements with drug manufacturers, drugs be provided to developing countries at deeply discounted prices.’ (120)

- ‘The American drug companies argue in justification for their stance that any attempt to allow trade in generic drugs – for example, allowing South Africa to export to Botswana – will mean the drugs will eventually come into the United States and spoil the market there. But there are already huge disparities in prices (for instance between prices in Europe and the United States), and the problem, while present, is limited. The pharmaceuticals industry is one of the most regulated in the world, with most of the cost of drugs being paid by insurance companies and governments – so incentives to buy drugs at European prices are weak, and it is not easy to do so. It is even less likely that Americans (or Europeans) will get their drugs from South Africa or Botswana.’ (122)

- ‘The argument that the monopoly pricing of drugs leads to more innovation is undermined by the fact that most drug companies spend far more on advertising than on research, more on research for lifestyle drugs (e.g., drugs for hair growth or male impotence) than for disease-related drugs, and almost none on research for the diseases prevalent in the poorest countries, such as malaria or schistosomiasis.’ (122-123)

- ‘Providing these countries with access to lifesaving drugs will have, at most, a negligible effect on the drug companies’ investment in the diseases that affect poor countries. The drug companies garner little revenue from developing regions anyways – African sales represent under 2 percent of the total.’ (123)

- ‘There should, of course, be more research on the diseases afflicting developing countries; but the best and most cost-effective way to promote this is not by implementing more stringent intellectual property rights. It is clear that market incentives haven’t been working, and, by themselves, are not likely to do so. Most of the money for financing research will have to come from the government and foundations of developed countries.’ (123)

- ‘One proposal is to have developed-world governments make a purchase guarantee. If a vaccine against AIDS is invented, for instance, the governments and foundations providing the guarantee might pledge to spend at least $2 billion buying the drug. Or if a more effective drug against malaria than what exists at present is discovered, they might pledge to spend at least $3 billion. The one major problem with this idea is that it would leave the problem of monopoly in place: drug companies would still have an incentive to raise prices and curtail production in order to maximize their revenues, rather than maximizing the social benefits. Also, because no one wants a medicine that is a bit less effective even if it is cheaper, this would be a winner-take-all system: a company that makes a just slightly better product will get all the sales and rewards.’ (124)

- ‘More effective would be a fund that directly encourages innovations of benefit to developing countries. A prize system, in which researchers are rewarded for the value of their innovations, would make incentives in the right direction.’ (124)

- ‘Almost half of the 4,000 plant patents granted in recent years by the United States pertain to traditional knowledge obtained from developing countries.’ (126)

- ‘There ought to be an international agreement recognizing traditional knowledge, and prohibiting bio-piracy.’ (127)

- ‘Discussions over global standards for intellectual property should be taken out of the WTO and put back into a reformed WIPO, a World intellectual Property Organization in which the voices of academia as well as corporations, consumers as well as producers, the developing as well as the developed countries, are all heard.’ (128)

- ‘Western democracies have government finance legal assistance for the poor. If a poor person cannot afford legal representation, there is a high likelihood he will be treated unfairly unless he has a court-appointed lawyer. This is even more true in the international arena.’ (128)

- ‘Fairness requires that the advanced industrial finance strong legal assistance for the developing countries to help them fight claims such as those related to bio-piracy, and to ensure that they can get compulsory licenses for lifesaving medicines when circumstances warrant it.’ (128)

- ‘If the issue of access to AIDS drugs were put to a vote, in either developed or developing countries, the overwhelming majority would never support the position of the pharmaceutical companies or of the Bush administration.’ (132)

- ‘In spite of all the oil, per capital income [in Nigeria] declined by over 15 percent from 1975 to 2000, while the number of people living on less than $1 a day quadrupled from 19 million to 84 million. Saudi Arabia and Venezuela are other examples of countries where oil wealth has not been widely shared. Venezuela has more oil wealth than any other country in Latin America, but two-thirds of the population there live in poverty. It is not surprising that the charismatic Hugo Chavez won the 1998 elections handily after running on a platform of poverty eradication.’ (134)

- ‘The problem is simple: when there is a pile of diamonds sitting in the middle of the room, everyone will make a grab for it. The biggest and strongest are most likely to succeed.’ (135)

- ‘Nowhere is this more evident than in parts of Africa, exemplified by the heinous fighting over diamonds between government and rebels in Sierra Leone during the 1990s that killed 75,000 people and left 20,000 amputees, 2 million displaced people, and large numbers of children psychologically damaged by having been forced into combat, or worse.’ (135)

- ‘It is not accident that so many resource-rich countries are far from democratic. The riches breed bad governance. Governments that come to power by grabbing resources and using force have a markedly different sense of responsibility toward their citizens and their country’s resources from governments that emerge through the will of the people. In democracies, a leader stays in power by enhancing the well-being of its citizenry; democracies are accountable to their citizens. In undemocratic resource-rich countries, dictators use strength and weapons to remain in power. Arms purchases are funded by control of the revenues from oil and other commodities.’ (136)

- ‘Wealth generates power, the power that enables the rules class to maintain that wealth.’ (137)

- ‘The Foreign Corrupt Practices Act of 1977 made it illegal for Americans to bribe foreign governments.’ (139)

- ‘There is now an OECD convention on bribery, but enforcement is difficult and incomplete. As of December 2005, there had yet to be a single prosecution outside the United States under national legislation enacted to implement the convention.’ (139)

- ‘A competitive market should mean that oil and mining companies simply get a normal return on their capital; excess returns should belong to the country owning the resources.’ (141)

- ‘After oil prices skyrocketed in the 1970s, the United States imposed a windfall profits tax on the oil companies. The fact that the typical contract allows the oil companies to walk away with windfall profits suggests that something is wrong with the way these contracts are designed. It is the strategy of the oil, gas, and mining companies to make sure that the government gets as little as possible – while, at the same time, helping the government find arguments for why it is good or even necessary for the government to receive so little. They may say that there are large social benefits from developing the region, and thus development should be encouraged. Giving away the resources, they claim, does this. In fact, giving away resources simply means the government has less money to pay for infrastructure, schools, and other facilities that are absolutely necessary.’ (141)

- ‘Too often, the only benefit to the country from a mine is the few jobs it creates, and the environmental damage of the mine may simultaneously destroy jobs elsewhere (for instance, in fishing, as catches in polluted water diminish) and, sometime in the future, impose enormous budgetary costs as the government is forced to pay for the cleanup.’ (141)

- ‘The argument for privatization is that the private sector is more efficient than the public. This opinion is driven as much by ideology as by hard analysis – there are many examples of highly efficient government oil and mining companies (and examples of inefficient private companies).’ (142)

- ‘Since 1988, Saudi military expenditure has been below 10 percent of GDP only three times.’ (145)

- ‘Oil prices, for example, rose from $18 a barrel at the end of 2001 to more than $70 a barrel in 2006.’ (145)

- ‘…the discovery of oil in the North Sea; while they enjoyed this obvious bounty, the Dutch began to notice that the rest of their economy had slowed. Here was a developed, well-functioning economy that suddenly faced massive job problems because its firms couldn’t compete. The reason was that the inflow of dollars in payment for the North sea oil and gas led to a high exchange rate; at that high exchange rate, Dutch exporters couldn’t sell their products abroad and domestic firms found it difficult to compete with imports.’ (148)

- ‘[Poor people] fail to understand that while the oil money could, for instance, be used to build a local school, which would create jobs, even more jobs would be lost elsewhere in the economy as a result of the appreciation of the currency – the Dutch disease. There is a simple lesson: countries need to finance local expenditures – say, for teachers or workers employed in road construction – with locally raised revenues, for example through taxes, saving the dollars earned from the sale of natural resources for buying the necessary imported goods, or for some future time. This, of course, requires the government to raise taxes to finance the domestic content of its expenditures. The problem is that no government likes to raise taxes, and in countries with high unemployment there is enormous political pressure to spend the oil money at home and at once. The natural resource curse is not fate; it is choice.’ (149)

- ‘Their first priority should be to set up institutions that will reduce the scope for corruption and ensure that the money derived from oil and other natural resources is invested, and invested well. It may be desirable to have some hard and fast rules for that investment – a certain fraction devoted to expenditures on health, a certain fraction to education, a certain fraction to infrastructure. Procedures need to be put into place for independent evaluations of the returns on investments.’ (150)

- ‘They hear the lectures from the West, but they see Western oil companies sending monthly checks to bolster repressive regimes – in, for example, Sudan and Chad – and Western governments providing the arms that maintain the repression. Naturally this calls into question Western priorities: money is seen to reign supreme. The seeming lack of commitment to democracy is, of course, reinforced by event such as the violation of basic human rights at Guantánamo Bay and Abu Gharib.’ (151)

- ‘Transparency has long been recognized as one of the strongest antidotes to corruption.’ (151)

- ‘The government can set the rules, and there are enough honest companies willing to play with rules of transparency. The citizens’ right to know should trump any claims to business confidentiality.’ (152)

- ‘Green net national product (Green NNP) is a measure that subtracts out not just the depreciation of capital but also the depletion of natural resources and the degradation of the environment. It focuses on the income of those within the country – excluding the profits from a mine that go to the overseas owners.’ (154)

- ‘IMF accounting frameworks, which treat spending out of stabilization funds just like any other form of deficit spending, discourage countries from setting up these funds. Stabilization funds are an important tool in helping developing countries to achieve macro-stability.’ (155)

- ‘Without such a broad agreement, there will continue to be a race to the bottom, and the companies and countries most willing to engage in corrupt practices, and least willing to be transparent, will have an advantage over the others.’ (156)

- ‘Even worse than corruption is the armed conflict that mineral and oil resources finance. Again, the international community could do more to make it more difficult and more expensive to acquire arms. We have a responsibility to choke off supply at the source – the manufacturers of arms who profit from this nasty business – or at least to impose a heavy tax on the sale of arms and to check the source of the money which pays for them.’ (156)

- ‘On July 5, 2000, the United Nations Security Council imposed a ban on the import (direct or indirect) of rough diamonds from Sierra Leone not accompanied by a certificate of origin from the Sierra Leone government. Uncertified Sierra Leone diamonds are now known as ‘conflict diamonds’.’ (156)

- ‘Certified lumber would be harvested in an environmentally sustainable way, so that not only the current generation but future generations too could benefit from the forests…the beginnings of such programs already exist in Indonesia and Brazil.’ (156-157)

- ‘There is a role for some international body – perhaps the World Bank – to help ensure that developing countries are treated well by the oil and other extractive industries.’ (158)

- ‘There is a need for an international agency to monitor environmental damage.’ (158)

- ‘Trade sanctions can be used against companies and countries that engage in unfair trade practices – and failing to subscribe to the extractive industries transparency initiative and other anti-bribery measures should be treated as an unfair trade practice.’ (159)

- ‘Where will the people of the developed countries and their governments stand? In support of the few in those countries who own and run the rich corporations, or in support of the billions in the developing nations whose well-being, in some cases, whose very survival, is at stake?’ (159)

- ‘If we had access to a thousand planets, it might make sense to use one to conduct such an experiment, and if things turn out badly – as I believe this experiment will – move on to the next. But we don’t have that choice; there isn’t another planet we can move to. We’re stuck here on Earth.’ (161)

- ‘The second approach – and the only practicable one for global natural resources – involves government itself managing the common resource, restricting the amount of grazing or fishing. Throughout history, this is the way that common resources have often been managed. Communities impose social and legal controls that prevent the kinds of negative externalities represented by overfishing and overgrazing.’ (163)

- ‘The Maldives, a small nation of 1,200 islands in the Indian Ocean with a population of 330,000 – a tropical paradise – will be totally submerged in as little as fifty years, according to reliable predictions. Along with many other low-lying islands in the Pacific…’ (167)

- ‘Bangladesh and the Maldives are facing a fate far worse than that caused by even the worst of wars.’ (167)

- ‘Developing countries often pollute a great deal per dollar of GDP, because they often have old and inefficient cars and machines. Among the developed countries, the United States is one of the worst. As of 2003, the United States was about as energy efficient as Uruguay and Madagascar. Britain, Ireland, Denmark, and Switzerland use two-thirds as much energy per dollar of GDP; Japan uses half as much.’ (170)

- ‘Simply matching Japan’s energy efficiency would have reduced U.S. emissions by more than half.’ (171)

- ‘The United States also bears less of the brunt of global warming; some economists and businessmen have noted that parts of the United States may be better off, as growing seasons in the northern states lengthen. At the 2006 annual meeting in Davos, those from the oil industry talked about the new opportunities that global warming is providing: the melting of the polar ice cap will make the oil beneath the Arctic more accessible.’ (172)

- ‘Under the Kyoto Protocol, each developed country is obligated to reduce emissions by a certain amount, and so there has to be agreement about the target for each country. The current system focuses on reduction of emissions relative to1990: the more a country polluted in 1990, the more it is entitled to pollute in the future. The United States polluted more, so according to the system it should have the right to continue to pollute more.’ (175)

- ‘Even if the United States kept the level of emissions per capita to its 1990 level (which it has so far failed to do), China at its current rate of growth, will have more than 200 years before its emissions per capita catch up.’ (175)

- ‘America might take a stance that the level of pollution allowed should be related to production, and since America produces more it should be allowed to pollute more. If the Kyoto approach is to work, a compromise will have to be found between targets based on emissions per dollar of GDP and targets based on emissions per capita.’ (175-176)

- ‘When the United States tried to force Thailand to use turtle-friendly nets for catching shrimp – the nets then being used were killing endangered species of turtle – by threatening to prevent shrimp caught in the old-fashioned nets from entering the United States, the WTO sustained the U.S. position. It established the principle that maintaining the global environment is important enough that normal access to markets, which the WTO guarantees for its members, can be suspended when a country’s export industries endanger it. When the Untied States brought its case, it apparently did not consider the long-term implications, but some on the WTO body were aware of the far-reaching consequences of their decision. The precedent set by this case should apply to U.S. companies that pollute through high levels of greenhouse gas emissions during the manufacturing process; Europe, Japan, and others adhering to the Kyoto Protocol should restrict or tax the import of American goods that are produced in ways that unnecessarily pollute the atmosphere.’ (177)

- ‘In recent years, about 20 percent of the increase in atmospheric concentrations of greenhouse gases came from deforestation. In other, words, the damage done by deforestation is comparable to the damage done by the world’s largest polluter, the United States.’ (178)

- ‘While Kyoto recognized the role that planting forests could play – countries are given ‘credit’ for planting trees – it did nothing about deforestation. This was a big mistake, for it makes countries like Papua new Guinea doubly better off if they cut down their ancient hardwood trees and replant…countries should be given incentives to maintain their forests.’ (179)

- ‘Led by Papua New Guinea and Costa Rica, a group of developing countries calling themselves the Rainforest Coalition put forward an innovative proposal in January 2005, offering to commit to greenhouse gas limits but asking in return that they be able to sell carbon offsets not just for new forests but for avoided deforestation. Countries would, under this proposal, be paid for not cutting down their forests.’ (179)

- ‘Under the common tax proposal, all of these issues are avoided. Each country would keep the revenue it receives from the tax, rather than having to give the money to another country. As a result, the costs of pollution reduction are relatively small. In fact, the country as a whole might be better off; it can use the revenue from the carbon tax to reduce other taxes, such as those on savings, investment, or work. These lower taxes would stimulate the economy, with benefits far greater than the cost of the carbon tax. This is consistent with a general economic principle: it is better to tax things that are bad (like pollution) than things that are good (like savings or work).’ (182)

- ‘The energy companies in almost every country will not like this. All companies prefer getting a subsidy, which is what allowing countries the unfettered right to pollute amounts to. I do not want to suggest that it will be easy to overcome the weight of the energy-producing and energy-using lobby. It may only be possible under the threat of the kinds of trade sanctions described earlier.’ (182)

- ‘…the burden of adjustment on most countries – other than the producers of oil and gas – is likely to be limited.’ (183)

- ‘If the United States continues to refuse to reduce its emissions, trade sanctions should be imposed. If this is done, I feel confident that America will respond to the economic incentives provided.’ (184)

- ‘Europe must use the foundations of the international trade law we have created to force any recalcitrant country, any rogue state – including the United States – to behave responsibly. Europehas to be willing…’ (185)

- ‘In its fiscal year ending 2005, U.S. retailer Wal-Mart’s revenues were $285.2 billion, larger than the combined GDP of sub-Saharan Africa.’ (187-188)

- ‘Los Angeles once had the world’ largest urban rail system (1,100 miles of track), until a group led by General Motors bought it out, dismantled it and replaced it with GM buses.’ (189)

- ‘Much of the public policy and economic theory in the last hundred years has been directed at identifying major market failures and analyzing the most efficacious and least costly ways of correcting them, for instance through regulations, taxes, and government expenditures. Modern economics has shown, similarly, that social welfare is not maximized if corporations single-mindedly maximize profits.’ (190)

- ‘Only about half of [Wal-Mart’s] 1.4 million employees are covered by health-care benefits.’ (192)

- ‘The Indian government did try to prosecute Union Carbide executives for the thousands of deaths at Bhopal, where a chemicals plant exploded in 1984, but Union Carbide was an American company and the United States refused to cooperate. Charges against the executives, including CEO Warren Anderson, were brought before an Indian court in 1991; when they did not appear to face charges, India pressed for their extradition. Finally, in September 2004, the U.S. State Department refused the extradition request without explanation.’ (193)

- ‘[At Bhopal] more than 20,000 people were killed and some 100,000 more bear lifelong health damage, including respiratory illness, eye disease, neurological and neuromuscular damage, and immune system impairment. The total number affected was even larger; those eventually receiving compensation, including dependents, will probably number closer to 600,000. The disparity between the terrible damage and what the company was forced to pay – an estimated $500 per person – is also huge, by any reckoning. Dow Chemical has since bought the Bhopal plant, taking all of Union Carbide’s assets but assuming none of the liability.’ (194-195)

- ‘Important as it is, the BSR [business social responsibility] movement is not enough. It must be supplemented by stronger regulations. Those who are really serious about higher standards should welcome regulations that support the codes of conduct they publicly endorse, for such regulations would protect them from unfair competition from those who do not adhere to the same standards. Regulations will help prevent a race to the bottom.’ (199)

- ‘In the United States, those who are convicted in a criminal action may go to jail and those who can show that they have paid higher prices as a result of monopolization receive triple damages (three times the amount overcharged by the monopolists).’ (200)

- ‘Globalization of monopolies requires a global competition law and a global competition authority to enforce it, allowing both criminal prosecution and civil action in any case in which anti-competitive behavior affects more than one jurisdiction.’ (203)

- ‘When a company has egregiously violated a nation’s environmental laws, the CEO and others who made the decisions and took the actions should be held criminally liable.’ (204)

- ‘Several changes would go a long way toward repairing the system. The first is to allow those in other countries to sue in the home country of the offering corporation. The United States has allowed such suits since 1789 under the Alien Tort Claims Act, which allows those injured abroad to bring suit in the United States for any injury ‘committed in violation of the law of nations or a treaty of the United States.’ ’ (205)

- ‘A complementary reform would be to allow judgments made in foreign courts to be enforced by courts in the advanced industrial countries.’ (205)

- ‘Some firms are wary about being subject to foreign courts, claiming that the courts are stacked against them. This is simply one of the prices that one has to, and should, pay if one wants to do business in a country.’ (206)

- ‘Mining companies, for example, often incorporate subsidiaries to run a particular mine, so that when the mine is exhausted – and all that remains are the costs of cleanup – the subsidiary goes bankrupt, leaving the parent unscathed. A simple rule would be that in certain classes of liabilities, such as those associated with environmental abuses, any entity owning more than, say, 20 percent of the shares of a company could be held liable even if the corporation itself went bankrupt.’ (206-207)

- ‘When a large number of individuals have been injured in a similar way, they should be able to band together to bring a single suit. We need to make it easier to pursue global class action suits.’ (208)

- ‘The United States’ passage of the Foreign Corrupt Practices Act in 1997 was a major step in the right direction. Every government needs to adopt a foreign corrupt practices act, and penalties should be imposed on governments that do not enact or enforce such laws.’ (208)

- ‘The G-8 could itself bring this about, simply by forbidding any of their banks to have dealings with the banks of any jurisdiction that did not comply. The United States has shown that collective action can work: it has been effective in stopping the use of banks for financing terrorism. The same resolve should be used against corruption, arms sales, drugs, and tax evasion.’ (209)

- ‘In August 2002, I visited Moldova, a small, largely agricultural, landlocked country with 4.5 million inhabitants squeezed between Romania and Ukraine. It had been one of the richest of the Soviet republics, but since the beginning of its transition from communism in 1991 its GDP had plummeted some 70 percent.’ (211)

- ‘When crises occurred, the IMF lent money in what was called a ‘bail-out’ – but the money was not really a bail-out for the country; it was a bail-out for Western banks. In both East Asia andLatin America, bail-outs provided money to repay foreign creditors, thus absolving creditors from having to bear the costs of their mistaken lending.’ (217)

- ‘When in the late 1970s and early 1980s the United States raised interest rates to nearly 20 percent in a battle to throttle back its persistent inflation, Argentina found itself unable to meet its debt repayment. Debts were restructured, but there was inadequate debt forgiveness, and for much of the 1980s money flowed from Latin America to the United States and other advanced industrial countries. Latin America stagnated. It was not until the end of the decade that there was serious debt forgiveness – and only then did growth resume.’ (220-221)

- ‘There are other ways in which the IMF was responsible for the emerging crisis. The IMF had encouraged Argentina to privatize social security – which resulted in a reduction in revenues coming into the government (through social security taxes) faster than it resulted in a reduction in expenditures (for the retired); had Argentina not privatized social security, even at the time of crisis its deficit would have been close to zero. The IMF had not only insisted on the privatization of public utilities like water and electricity but insisted that when they privatized, prices be linked to those in the United States; this meant that when prices rose in the United States, Argentineans had to pay more and more for basic necessities – making the country less competitive and increasing the level of social unrest.’ (222)

- ‘With no IMF program in place, Argentina then did something that no one had expected. It began to grow. Without IMF-style contractionary policies, without the flow of money out of the country to repay creditors, and helped by the large devaluation of its currency, Argentina racked up three years of growth of 8 percent or more.’ (223-224)

- ‘Argentina’s story has many lessons for what should, and should not, be done both by countries and by the international community (especially the IMF). It shows, once again, that even countries that seem to be behaving well and borrowing moderately can wind up with crushing debt as a result of forces beyond their control and beyond their borders.’ (224)

- ‘In other words, default can, in a relatively short time, actually lead to an enhanced net inflow of capital.’ (225)

- ‘The leaders of the advanced industrial countries, the G-8, at their summit meeting in June 2005 at Gleneagles, Scotland, agreed to provide up to 100 percent debt relief for the eighteen poorest countries of the world, fourteen of which are in Africa.’ (227)

- ‘Already, debt relief has been criticized for rewarding not just the unlucky but the irresponsible. Countries that have gone to great efforts to keep their debt under control should not be effectively punished by getting less aid than those that have been profligate. Today, the developing countries that have repaid what was owed, at least to the point where they no longer qualify for debt relief, worry that debt relief is commandeering money that might otherwise have been available to them – especially at the World Bank, where repayment of loans provides a major source of money for lending. Only time will tell whether the advanced industrial countries will make up for the shortfall, so that the World Bank can maintain its lending programs.’ (228)

- ‘Combining more assistance in the form of grants with more diligence on the part of lenders will make it less likely that so many of the poorest countries in the world will, in the future, be burdened with excessive debt. In one category of lending, the moral case for debt forgiveness is especially compelling. These are referred to as ‘odious debts’; they were incurred by a government that was not democratically chosen, and the borrowed money may even have helped a brutal regime stay in power. Whatever the motivation of the lender – whether political (to buy favor in the Cold War) or economic (to get access to rich mineral resources) – it is immoral to force the people of these debtor countries to repay the debts. Iraq’s debt incurred under Saddam Hussein is in this category, as is that of Ethiopia which, until 2006, was still paying back the debts incurred by the hated Mengistu regime and its Red Terror, which brutalized the country from the fall of Haile Selassie in 1974 to its overthrow in 1991. Mengistu Haile Mariam used the money to buy arms to suppress those who opposed his tyranny. The current government has actually been paying for the arms that were used to kill its fellow fighters as they struggled to establish a new regime.’ (228-229)

- ‘Chileans today are repaying the debts incurred during the Pinochet regime, South Africans the debts incurred during apartheid. Had Argentina not defaulted on its debt, Argentineans would still be paying down the loans that financed the ‘dirty war’ from 1976 to 1983, in which an estimated 10,000 to 30,000 Argentineans disappeared.’ (229)

- ‘The United Nations could keep a list of countries for which contractors and creditors would be put on notice that their contractors and creditors would be put on notice that their contracts and debts will be reexamined once the regime is gone. Governments and banks that lend money to oppressive regimes would know that they risk not getting repaid. Guidelines for what are acceptable contracts and debts could be established: loans to build schools would be permitted, while loans to purchase arms would not be.’ (230)

- ‘To many, the issue is not just whether the debts should be repaid or the contracts honored but whether Western institutions should be liable for some of the damages that resulted from the continuation of the regimes they helped perpetuate.’ (231)

- ‘What happened then [in East Asia] was what happened in so many other places: private liabilities were in effect nationalized. The IMF provided the governments with the dollars to repay the Western creditors. The creditors were protected, the borrowers were left off the hook – and taxpayers in developing countries were left with the burden of repaying the IMF.’ (231)

- ‘Five key reforms are required. Do no harm…Return to counter-cyclical lending…Risk reduction…Conservative borrowing…International Bankruptcy laws.’ (234-238)

- ‘When the Paris Club insists as a condition for debt relief that Iraq subscribe to shock therapy and adopt Washington Consensus economic policies, it is taking away Baghdad’s economic sovereignty. In November 2004, they agreed to forgive 30 percent of Iraq’s $40 billion debt, and another 30 percent in three years’ time, if Iraq complied with an IMF program that would entail adopting the privatization and liberalization program that the Bush administration had wanted Iraq to adopt all along. At the time, prospects for shock therapy working in Iraq appeared to be even bleaker than in Russia, where the IMF had imposed the same recipe and produced a 40 percent decline in its GDP. Iraq’s economy similarly has not fared well, though part of the blame lies with the insurgency, part with the inadequacy of U.S. efforts to reconstruct the infrastructure.’ (234)

- ‘One of the most important advances in economics over the past century was the insight of John Maynard Keynes that government, by spending more and lowering taxes and interest rates, could help countries recover from a recession. The IMF rejected these Keynesian policies, adopting instead pre-Keynesian policies focusing on government deficits; these entail raising taxes and cutting expenditures in recessions, just the opposite of what Keynes recommended. In virtually every case where they tried, IMF policies worsened the downturn.’ (235)

- ‘The fourth reform mirrors what should be done in the case of the highly indebted poor countries: countries should borrow very conservatively, and when they do borrow they should do so in their own currencies. If markets or governments can’t – or won’t – do anything to shift the burden of risk, then developing countries should be especially conservative in borrowing.’ (237)

- ‘The United States argued hard on behalf of Iraq (though only a small amount, some $4.5 billion, was owed to the United States). Under American sponsorship, Iraq eventually got debt relief.’ (238)

- ‘There is obviously considerable uncertainty about future growth, and here Argentina has come forward with an ingenious solution: a GDP bond, which pays more if growth is stronger. This has the further advantage of aligning the interests of creditors and debtors; creditors now have an incentive to help the economy grow faster.’ (240)

- ‘One might argue for an even greater degree of culpability on the part of the lender – for example, when a World Bank project fails because insufficient attention has been paid to environmental impact or because there has been an inadequate economic analysis. The World Bank is supposed to have the experts, and – particularly in the past – developing countries relied on its expertise. But when the project fails or does not perform up to expectations, it is not the World Bank that bears the consequences but the developing country, which is still responsible for repaying the loan.’ (243)

- ‘Most of the [developing countries’ reserve] bonds are short-term U.S. Treasury bills (usually referred to as ‘T-bills’), which in recent years have yielded as low as 1 percent.’ (245)

- ‘Using a conservative estimate of 10 percent as the average percent difference between the two, the actual cost to developing countries of holding the reserves is in excess of $300 billion per year. That’s huge. To put it into perspective: it represents four times the level of foreign assistance from the whole world. It represents more than 2 percent of the combined GDP of all developing countries; it corresponds roughly to estimates of what the developing countries need in order to achieve the Millennium Development Goals, including reducing poverty by half.’ (249)

- ‘With nearly two-thirds of reserves being held in dollars, the United States is, in this sense, the major recipient of these benefits. If the interest rate America has to pay is just one percentage point lower than it otherwise would be on these $3 trillion of loans from poor countries, what America receives from the developing countries via the global reserve system is more than it gives to the developing countries in aid.’ (250)

- ‘The consequences of increases in medium- and long-term interest rates may be particularly serious, given the high level of indebtedness of individual households, many of whom took out large mortgages in response to the unusually low interest rates. What matters is not the average level of indebtedness but the number of households that will face difficulties in meeting their debt obligations. The increasing fraction of mortgages having interest rates that are variable makes this particularly worrisome.’ [a correct prediction] (257)

- ‘There is a certain irony in China having, in effect, funded a tax cut for the richest people in the richest country on earth. Rather than lending money to the United States to increase consumption by these people, it could lend its money to its own people or it could finance investment in its own country. It would be far easier for China to redirect production toward its own consumers or investment than it would be for the United States to find an alternative source of cheap funding for its deficits. Fortunately, however, the long-term economic consequences of tensions in U.S.-China relations are today but a shadowy cloud on the distant horizon. They merely add one further layer of uncertainty in a global financial system that is already straining.’ (259-260)

- ‘There is one country that can – so far – maintain a trade deficit without precipitating a crisis, and that is the United States. The United States has become not just the consumer of last resort, but also the deficit of last resort. It has been able to get away with this because it is the richest country in the world and because other countries have wanted to hold dollars in their reserves. But even if the United States can mount deficits longer than other countries, it cannot do so indefinitely. There will be a day of reckoning.’ (265)

- ‘Today, some 770 million people around the world remain unable to read or write; one of the Millennium Development Goals calls for every child in the world to complete primary education by 2015. The cost would be small, between $10 billion and $15 billion a year, but so far the international community has not been forthcoming with the money needed.’ (267)

- ‘Americans were worried about jobs, in manufacturing – in which some 2.8 million jobs were lost from 2001 to 2004 – and even in the high-tech and service sectors. In some sense, outsourcing is not new: U.S. companies have been sending jobs overseas for decades. The number of manufacturing jobs in the United States has been shrinking since 1979, and the fraction of Americans working in manufacturing has been declining since the 1940s. (In 1945, 37 percent of working Americans were employed in manufacturing, while today the figure is less than 11 percent.)’ (270)

- ‘It will take decades to fully [sic] overcome the knowledge gap and the capital shortage in the developing world. The good news is that there will be a strong force pulling up wages in Chinaand India. The downside is that there will be a strong force pushing down wages for unskilled workers in the West.’ (272)

- ‘America’s standing in the world has long been based not just on its economic and military power but on its moral leadership, on doing what is fair and right.’ (274)

- ‘One of the successes of the last three decades has been the creation of strong democracies in many parts of the developing world.’ (275)

- ‘For America, coping means recognizing that globalization will mean downward pressure on unskilled wages. The advanced industrial countries have to continue upskilling their labor forces, but they also have to strengthen their safety nets and increase the progressivity of their income tax system; it is the people at the bottom who have been hurt by globalization.’ (275)

- ‘Investments in research, which will increase the productivity of the economy, are also important. These investments yield high return.’ (275)

- ‘The end of the Cold War gave the United States, the one remaining superpower, the opportunity to reshape the global economic and political system based on principles of fairness and concern for the poor; but the absence of competition from communist ideology also gave the United States the opportunity to reshape the global system based on its own self-interest and that of its multinational corporations. Regrettably, in the economic sphere, it chose the latter course.’ (277)

- ‘The agenda for collective action should focus on those items that represent the most essential areas for benefiting the entire global community. Other items should not be on the agenda.’ (280)

- ‘I list the major elements of any reform package: Change in voting structure at the IMF and the World Bank, giving more weight to the developing countries. At the IMF, the United Statesremains the single country with an effective veto.’ (282)

- ‘Changes in representation – who represents each country. So long as trade ministers determine trade policy and finance ministers determine financial policy, other related concerns, like the environment or employment, will be given short shrift. One possible change is to insist that when there are areas of overlapping concerns, all the relevant ministries will be represented. When intellectual property divisions are being discussed, surely the science and technology ministries – who may not only have a more balanced position but will even know something about the matter – should be at the table.’ (282)

- ‘The major countries should be joined in negotiations by representatives of each of the various major groups: the least developed countries, the small agricultural exporters, and so on. In fact, some progress in this direction is already taking place.’ (282)

- ‘Increased transparency. Because there is no direct democratic accountability for these institutions (we do not vote for our representatives to these institutions or for their leadership), transparency, enforced through strong freedom of information acts, is vital. Ironically, these institutions are less transparent than the more democratic of their members governments.’ (282)

- ‘The deliberate discussions of the WTO and other international organizations would also be helped if there were an independent body to evaluate alternative proposals and their impact on developing countries…While the World Bank and the IMF presently do this – and, indeed, spend a considerable amount of money on such evaluations – the evaluation units have typically relied heavily on temporary staff supplied by the Fund or the Bank. Though this has an advantage in that they are well informed about what is going on, it is hard for them to provide a fully independent evaluation. The task of evaluation should be moved – to the UN, for instance.’ (283)

- ‘There should be an international tribunal to determine whether, as each agreement is proposed, it is legal, with the burden of proof lying with the countries trying to fragment the global trading system.’ (284-285)

- ‘What is needed, if we are to make globalization work, is an international economic regime in which the well-being of the developed and developing countries are better balanced: a new global social contract between developed and less developed countries. Among the central ingredients are: A commitment by developed countries to a fairer trade regime, one that would actually promote development…A new approach to intellectual property and the promoting of research, which, while continuing to provide incentives and resources for innovation, would recognize the importance of developing countries’ access to knowledge, the necessity of the availability of lifesaving medicines at affordable pries, and the rights of developing countries to have their traditional knowledge protected. An agreement by the developed countries to compensate developing countries for their environmental services, both in preservation of biodiversity and contribution to global warming through carbon sequestration…California – has already shown that there can be enormous emission reductions without eroding standards of living…A renewal of the commitments already made by the developed countries to provide financial assistance to the poorer countries of 0.7 percent of GDP – a renewal accompanied this time by actions to fulfill this commitment. If America can afford a trillion dollars to fight a war in Iraq, surely it can afford less than $100 billion a year to fight a global war against poverty…A host of institutional (legal) reforms – to ensure, for instance, that new global monopolies do not emerge, to handle fairly the complexities of cross-border bankruptcies both of sovereigns and companies, and to force multinational corporations to confront their liabilities, from, for instance, their damage to the environment. If the developed countries have been sending too little money to the developing world, they have also been sending too many arms; they have been part and partner in much of the corruption; and in a variety of other ways, they have undermined the fledgling democracies.’ (285-286)

- ‘Elements of this global social contract are already in place. At the international meeting on finance for development convened by the UN in Monterrey, Mexico, in March 2002, the advanced industrial countries made a commitment to increase their aid to 0.7 percent of GDP.’ (287)

- ‘The globalization debate has become so intense because so much is at stake – not just economic well-being, but the very nature of our society, even perhaps the very survival of society as we have known it.’ (288)

- ‘The United States’ Helms-Burton Act of 1996 imposes sanctions against foreign firms that trade with Cuba, even when the laws of those countries allow them to do so.’ (289)

- ‘The richest country, the United States, knows it can get what it wants – it can do what it wants whenever its concerns, especially its security concerns, are at risk. The rest of the world, at least so far, has not been willing to stand up. Too many have just been swept along in a U.S.-orchestrated euphoria for globalization, regardless of how it has been designed and managed. But the time will come when the United States cannot do whatever it wants. The forces of global economic, social, political, and environmental change are more powerful in the long run than the capacity of even the mightiest nation to shape the world according to its interests of perspective.’ (290)

- ‘The Bush administration, too, having previously announced its rejection of the Kyoto Protocol, the International Criminal Court, and major agreements designed to contain the arms race, also walked away from the UN when it went to war in Iraq with a preemptive attack in violation of international law. The UN proved the value of deliberative democracy: after carefully weighing the evidence presented of an imminent threat from weapons of mass destruction, it concluded that the evidence was insufficient to justify a departure from long-standing precepts and embark on preemptive warfare. The conclusion proved correct; no weapons of mass destruction were found. The world’s sole superpower has simultaneously been pushing for economic globalization and weakening the political foundations necessary to make economic globalization work. It has justified its actions as strengthening democracies globally, but it has undermined democracy. It has talked about human rights, but has trod on those rights in its brazen defense of its right to use torture in contravention of the UN Convention Against Torture, and in a myriad of other ways.’ (291)

- ‘One of the main forms that differential treatment takes is giving developing countries longer to adjust. Well-functioning markets facilitate adjustment by helping to redeploy resources. When markets work well, it doesn’t take long for an unemployed worker to find an alternative job; when markets don’t work well, it may take an extended period, during which he may remain unemployed. This is one of several reasons why less developed countries need longer to adjust, and will need financial assistance to help them in the adjustments toward a more liberalized trade regime.’ (306)

- ‘A UN report concluded that the cost of achieving these goals was modest – but substantially greater than current levels of expenditure on foreign assistance: it suggests that a plausible level of overall development assistance required for the attainment of the Millennium Development Goals during the coming decade will be $135 billion in 2006, rising to $195 billion in 2015. These figures are roughly equivalent to 0.44 percent and 0.54 percent of donor GDP.’ (336)