The April 10 New York Times devoted half its op-ed space to an elaborate attempt to demonstrate the benefits of globalization, with charts showing that “more globalized” nations do better than “less globalized” on measures ranging from average inflation to the rule of law. But one obvious measure of economic health, the economic growth rate, is conspicuously absent—perhaps because those statistics would have directly contradicted the op-ed’s point.
“Globalizing Good Government,” written by Richard W. Fisher and W. Michael Cox of the Federal Reserve Bank of Dallas, chided opponents of a French law that would have made it easier to fire young employees (the law has since been scuttled) for “misunderstanding the realities of our globalizing economy.” Fisher and Cox argued that “the more globalized nations tend to pursue policies that achieve faster economic growth,” while “the least globalized countries are prone to policies that interfere with markets and lead to stagnation.”
“It is clear that countries with solid policies will be more successful in the global economy,” the op-ed concluded. “If our data demonstrate anything, it is that globalization prompts a race to the top by pushing countries to abandon policies that burden their economies in favor of those that fuel growth and economic opportunity.”
It’s true that on several of the policies favored by the authors, like “favorable corporate taxes” and “capital market openness,” countries did do better—from Fisher and Cox’s point of view—the more globalized they were. But do such policies actually result in faster economic growth? The obvious way to begin to answer such a question is to compare the various groups of countries in terms of growth in gross domestic product. Since the op-ed authors neglected to do this, FAIR looked up the most recent statistics available from the United Nations Conference on Trade and Development—the change between 2003 and 2004—and found some surprising results.
Contrary to the op-ed’s claims, the “most globalized” group—which includes the U.S. and Canada, Australia and New Zealand, several European countries and Singapore—actually had the lowest average growth rate, at 3.6 percent. The “more globalized” group, including Japan, South Korea, Malaysia, Panama and most of the other European countries, did just slightly better, with an average growth rate of 3.7.
Growing much faster than either of those groups were the “less globalized”—a category that includes Asian countries like Taiwan and Thailand, African countries like Uganda and Nigeria, Latin American countries like Mexico and Argentina, and Europe’s Romania and Ukraine. These nations grew at a 6.2 percent clip. (Statistics on Taiwan, which are not kept by the U.N., come from the CIA Fact Book.)
The fastest growth rate was found among the “least globalized”—in other words, the group with “policies that interfere with markets and lead to stagnation.” This group, which includes China, India, Russia, Brazil and Venezuela, had an average growth rate of 6.3 percent. (Of course, the fact that China is counted among the “least globalized” when its exports amount to 42 percent of its GDP—versus 7 percent for the U.S.—calls into question the whole classification scheme used by the op-ed.)
Do such figures prove that resisting globalization leads to faster growth? Of course not; there are many variables involved, including the fact that the “least globalized” countries generally start at a lower level of development. But looking at the actual growth rates does call into question the op-ed’s facile assertion that pro-corporate policies are the same thing as “policies that achieve faster economic growth.” The New York Times op-ed page should have done some factchecking before offering this misleading opinion piece to its readers.
ACTION: Please contact the New York Times op-ed page to ask why the authors of “Globalizing Good Government” were not asked to provide the obvious statistics that would have tested their claims that the policies they advocate lead to faster growth.
David Shipley, Op-Ed Page Editor
New York Times