2 February 2018   Leave a comment

One of my favorite economists, Dani Rodrik of the Kennedy School of Government at Harvard, published a paper last year entitled “Populism and the Economics of Globalization” which makes the argument that populism arises for a variety of reasons, but that how it manifests itself politically (Rodrik uses the dichotomy of right- and left-wing politics which is suggestive but I suspect is quite misleading).  As usual, he states the argument succinctly:

“It is easier for populist politicians to mobilize along ethno-national/cultural cleavages when the globalization shock becomes salient in the form of immigration and refugees. That is largely the story of advanced countries in Europe. On the other hand, it is easier to mobilize along income/social class lines when the globalization shock takes the form mainly of trade, finance, and foreign investment. That in turn is the case with southern Europe and Latin America. The United States, where arguably both types of shocks have become highly salient recently, has produced populists of both stripes (Bernie Sanders and Donald Trump).”

Rodrik also addresses the sources of the globalization “shock”.  The usual suspects for the disaffection of labor toward globalization are trade (“jobs are being shipped overseas”) and automation (“the robots are taking over”).  Rodrik suggests that the flight of jobs toward low wage areas may be winding down and the real source of labor displacement now is automation:

“Economists understand that trade causes job displacement and income losses for some groups. But they have a harder time making sense of why trade gets picked on so much by populists both on the right and the left. After all, imports are only one source of churn in labor markets, and typically not even the most important source. Demand shocks, technological changes, and the ordinary course of competition with other, domestic firms produce much greater labor displacement than increases in import penetration. While disentangling the effects of automation and globalization is difficult, most existing studies attribute the bulk of the decline in U.S. manufacturing employment to the former rather than the latter.  Yet we do not see populists campaign against technology or automation. What is it that renders trade so much more salient politically?”

Note that trade focuses attention on “others” and is therefore more susceptible to “ethno-national/cultural cleavages”.  If automation is truly the enemy of labor, then workers have to focus their attention on the real source of automation–the indifference of market capitalist politics toward the treatment of labor.  Suzanne Berger offers a roadmap of how this indifference could be addressed looking at the historical record of populism and techniques from other societies which have faced the same issue.


There has been a welcome lull in the hostilities between the US and North Korea as the upcoming winter Olympics in South Korea has brought about a temporary detente between the two states.  The respite is also due to the willingness of the US and South Korea not to hold any military exercises while the Olympics are going on.  The US, however, has upset the lull by extending an invitation to defectors from North Korea to a visit to the Trump White House.  The defectors gave harrowing tales of life in North Korea and of desperate escapes from the regime.  It is important for the world to hear these stories, but there probably was no urgent reason for them to be aired at this particular time.   The North Koreans probably viewed the meeting as a deeply hostile act by the US.  The meeting also comes at a time when there are reports that some in the US Pentagon are concerned that Mr. Trump is moving too easily toward a military response to the US-North Korean impasse.  It also seems as if the US believes that it is working against a very tight deadline before North Korea develops the capability to strike the US homeland.  On 22 January, Norah O’Donnell of CBS News conducted an interview with the Director of the US CIA, Mike Pompeo.  In that interview, Pompeo thought the timeline was very tight:

O’DONNELL: So to be clear, how close is Kim Jong Un to being able to deliver a nuclear attack to the territorial United States?

POMPEO: A handful of months.

O’DONNELL: But correct me if I’m wrong. I do believe you have used that phrase, more than six months ago, you said a handful of months.

POMPEO: It’s true. I hope to be able to say it a year from now as well. … The United States government is working diligently to extend that timeline.

Aggravating the North Koreans during a period of relative calm is not an astute diplomatic move.


And now we need to start getting ready for Sunday (with apologies to all the Patriots Haters)



Posted February 2, 2018 by vferraro1971 in World Politics

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