Chicago Journal

When free trade and terrorism mix
Even economist Gary Becker, AM’53, PhD’55, was flummoxed by the title of the Graduate School of Business panel discussion he headlined this past March at the Gleacher Center. “I had to ask, what did you mean, ‘Exploring the Limits of Globalization’?” Becker quipped.

Photo by Dan Dry

Panelists Gary Becker and Robert Wright see dangers ahead for the global economy.

It did seem an odd topic for the laissez-faire GSB to put forth. It seemed odder still given that the event’s cosponsor, the Chicago Council on Foreign Relations, is headed by Marshall Bouton, PhD’80, an economist trained in the Chicago School. But if the overflow crowd of 350 expected to hear Chicagoans change their longtime tune on free trade, Becker was the first to reassure (or dismay) them. He and his fellow panelists—Bouton and Robert Wright, a contributing editor at the New Republic, Time, and Slate magazines—agreed that globalization knows no limits except those imposed upon it by outside hands, the most worrying of all being terrorism.

Becker focused his comments on the potential limits imposed on globalization by critics who argue that the system is inherently structured in the interest of rich nations at the expense of poor ones. Those critics, warned Becker, “will get their way if terrorism or war result in a significant stoppage in the global flow of goods, trade, and people. Imperfect as it is,” he continued, “the global trading system offers poor nations the best opportunity to free their people from poverty.”

Globalization, he argued, actually benefits poor nations most, with the greatest declines in poverty since the 1950s occurring in poor, rural nations. The gains have come in part because globalization means such countries “no longer have to be good at a number of things.” They can specialize—as, for example, China has done in textiles and toys—and import the rest, including not only high-tech goods but also advances in knowledge.

The biggest obstacles to globalization that Becker sees are rich countries’ efforts to protect their goods and the recent trend among wealthy nations to restrict the global movement of people—whether it’s immigrants, workers, or students studying abroad—“partly as a result of 9/11 and partly due to a growing anti-immigration movement.” The result, Becker argued, is “unfortunate for both receiving and sending nations,” and it’s the poor countries that stand to lose the most.

Panelist Wright, author of Nonzero: The Logic of Human Destiny (Pantheon, 1999), echoed Becker’s concerns about terrorism’s effects on globalization. The vast technological growth that has accompanied the rise of free trade, he noted, has been both a boon and an Achilles heel. “Technology makes it easier for terrorists to mobilize and recruit,” he pointed out, “and once broadband hits the world, this will become a significant problem.” It’s only so long, he warned, before Osama bin Laden will be able to “mainline his recruitment videos” via high-speed Internet. The sole counterforce Wright sees is a “rich, fine-grained economic interdependence” stretching around the globe that by its very existence is “conducive to a more tolerant outlook.”

Will the critics cited by Becker ever embrace efforts to achieve such interdependence? They might, Wright insisted, if economic globalization were accompanied by a move toward global governance and a “moral globalization.” Neither a Pax Romana presided over by the United States nor mere balance of power are enough, Wright said. “The modern world requires some sacrifice of national governance,” with an attendant “moral exercise” for all people to “appreciate the circumstances of a person who looks on the surface to be evil. That takes moral imagination.”

While Becker waxed poetic on the gains for poor countries and Wright pushed for a future in which nations sacrifice sovereignty for the greater good of the global economy (making Becker visibly cringe), the Council on Foreign Policy’s Bouton directed the audience’s attention to the “here and now.”

The problem with a global economy paired with the uncertainty of terrorism, he said, is that the uncertainty spills over to Americans’ attitudes about free trade. According to the Council’s nationwide survey conducted last year, the third most important goal Americans offer for U.S. foreign policy is protecting the jobs of American workers—cited by 85 percent of survey respondents. (Combatting terrorism came in first at 91 percent, and preventing the spread of nuclear weapons was a close second at 90 percent.) Some 56 percent of respondents believed that globalization was “mostly good for everyone but them.” Globalization cannot reach its greatest good, Bouton argued, until citizens’ general uneasiness about its affects on their own lives dissipates. How to do that was left open for debate.

Bouton’s wasn’t the only topic left open at evening’s end. What form Wright’s system of global governance might take and how to keep wealthy nations from stymieing the global flow of people are similar challenges that remain to be solved in the rather Chicagoan effort to keep the world safe for free trade.

—S.A.S.