But this globalisation had a dark side — a large and growing chasm between rich and poor. While trade globalisation is associated with lower inequality, financial globalisation — the big story of recent years — increased it.
Even ignoring other important policy elements, does it make sense to say we should be restricting elements of globalisation in order to “reduce inequality”. So here, I’m ignoring the efficiency costs, I’m ignoring the fact that any arbitrary restrictions will have an arbitrary welfare cost on individuals – but I’m still not convinced.
Why? The problem is too little globalisation, not too much. We need to open the borders – after all nations are just large labour unions, they benefit their members to the detriment to the REAL poor people in the world – those that live in the third world.
But instead of focusing on opening up borders, and helping those that are genuinely poor, the IMF is more interested in complaining about the fact that financial deregulation has made it easier for those who are willing to save to save – and for those who are impatient to get themselves into debt.
Putting on my normative hat, I have close to no sympathy for those who couldn’t find a way to save in the first world relative to the sympathy I feel for those who are born into abject poverty.