ETHICS AND GLOBALIZATION The Tradeoffs Underlying Our Policy Choices A conference at the Peterson Institute for International Economics made possible by the generous support of the Stavros Niarchos Foundation and cosponsored by The New Republic Adam S. Posen, President, Peterson Institute for International Economics The Honorable Barney Frank, Congressman, D-MA, 1981–2012 (Keynote Speaker) William Galston, University of Maryland Thomas Pogge, Yale University Anne Krueger, Johns Hopkins School of Advanced International Studies Michael Froman, The White House Dani Rodrik, Harvard University William R. Cline, Howard F. Rosen, and Ethics and Globalization: The Tradeoffs Underlying Our Policy Choices A conference at the Peterson Institute for International Economics Arvind Subramanian, Peterson Institute for Made possible by the generous support of the Stavros Niarchos Foundation International Economics Conference co-sponsored by January 7, 2013 9:15 Opening: The Need for Challenging Choices Adam Posen, Peterson Institute for International Economics 9:30 Session I - Pursuit of Domestic vs Global Welfare William Galston, University of Maryland Anne Krueger, Johns Hopkins School of Advanced International Studies Edited by Steven R. Weisman Thomas Pogge, Yale University Arvind Subramanian, Peterson Institute for International Economics Moderator: Steven R. Weisman, Peterson Institute for International Economics 11:00 Coffee break 11:15 Session II – Balancing Economic Goals between Generations David Blanchflower, Dartmouth College William Cline, Peterson Institute for International Economics Jagadeesh Gokhale, Cato Institute Neil Howe, Center for Strategic and International Studies Moderator: Noam Scheiber, The New Republic 1:00 Lunch Address: The Honorable Barney Frank (Congressman, D-MA, 1981-2012) 2:15 Session III – Expecting Ethical Duties from Private Actors George David, Retired Chairman & CEO, United Technologies Corporation Kimberly Ann Elliott, Center for Global Development Sir Evelyn Robert de Rothschild, E.L. Rothschild Charles Sabel, Columbia University Moderator: Stelios Vasilakis, Stavros Niarchos Foundation 3:45 Coffee break 4:00 Session IV – Reconciling Global Governance and Local Accountability Michael Froman, The White House Andrew Moravcsik, Princeton University Dani Rodrik, Harvard University Howard Rosen, Peterson Institute for International Economics Moderator: Steven R. Weisman, Peterson Institute for International Economics ETHICS AND GLOBALIZATION The Tradeoffs Underlying Our Policy Choices A conference at the Peterson Institute for International Economics made possible by the generous support of the Stavros Niarchos Foundation and cosponsored by The New Republic PETERSON INSTITUTE FOR INTERNATIONAL ECONOMICS 1750 Massachusetts Avenue, NW Washington, DC 20036-1903 (202) 328-9000 FAX: (202) 659-3225 www.piie.com Adam S. Posen, President Edward A. Tureen, Director of Marketing and Publications Copyright © 2013 by the Peterson Institute for International Economics. All rights reserved. No part of this book may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying, recording, or by information storage or retrieval system, without permission from the Institute. For reprints/permission to photocopy please contact the APS customer service department at: Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923; or email requests to: [email protected] The views expressed in this publication are those of the authors. This publication is part of the overall program of the Institute, as endorsed by its Board of Directors, but does not necessarily refl ect the views of individual members of the Board or the Advisory Committee. Table of Contents Preface v Opening: The Need for Challenging Choices 1 Adam S. Posen, Peterson Institute for International Economics Session I: Pursuit of Domestic vs Global Welfare 5 William Galston, University of Maryland Anne Krueger, Johns Hopkins School of Advanced International Studies Thomas Pogge, Yale University Arvind Subramanian, Peterson Institute for International Economics Moderator: Steven R. Weisman, Peterson Institute for International Economics For related materials, see: Global Versus National Welfare Session II: Balancing Economic Goals between Generations 29 David Blanchfl ower, Dartmouth College William R. Cline, Peterson Institute for International Economics Jagadeesh Gokhale, Cato Institute Neil Howe, Center for Strategic and International Studies Moderator: Noam Scheiber, The New Republic For related materials, see: Handouts and Intergenerational Discounting and Global Economic Policies Keynote Address 65 The Honorable Barney Frank (Congressman, D-MA, 1981–2012) Session III: Expecting Ethical Duties from Private Actors 79 George David, Retired Chairman & CEO, United Technologies Corporation Kimberly Ann Elliott, Center for Global Development Sir Evelyn Robert de Rothschild, E.L. Rothschild Charles Sabel, Columbia University Moderator: Stelios Vasilakis, Stavros Niarchos Foundation For related materials, see: Trade and Worker Rights in Bangladesh: Forget the Twig and Use the Giant Carrot Session IV: Reconciling Global Governance and Local Accountability 99 Michael Froman, The White House Andrew Moravcsik, Princeton University Dani Rodrik, Harvard University Howard Rosen, Peterson Institute for International Economics Moderator: Steven R. Weisman, Peterson Institute for International Economics For related materials, see: Addressing Effi ciency and Equity in the Global Economic System, Unemployment Insurance Programs, and http://piie.com/publications/papers/rosen20130107-h1.pdf Participant Biographies 129 Recommended Futher Reading 133 Preface The central mission of the Peterson Institute for International Economics has been to make globalization economically and politically sustainable for the people of the United States and of the world. We have generally analyzed and researched policies with an eye to achieving the greatest good for the greatest number, but we have always been mindful of the distributional effects of those policies and of globalization itself. Naturally, the Institute’s commitment, and our primary toolkit, is to think in terms of a purely economic cost-benefi t analysis point of view. But it is not always that straightforward, as the ethicists, philosophers, policymakers and economists taking on the issue in this volume suggest. As the Institute starts a new year with new leadership in 2013, we plan to begin confronting some of the policy failures of the last few years in the West, and the fl aws of the economic models underlying those failures. That is a necessary step to reconsidering how to manage globalization going forward. To this end, on January 7, we organized and hosted a path-breaking conference on “Ethics and Globalization: The Tradeoffs Underlying Our Policy Choices” at the Institute in Washington, DC. We brought together an unusual range of scholars and practitioners from different disciplines to engage with each other on the ethical and moral challenges posed by the accelerating pace of economic integration and the international fl ow of goods, services, capital, technology, people and ideas. This volume consists of edited transcripts of that day-long discussion. The Institute has of course long been proud to foster a spirited debate on this subject. One of our bestselling publications, for example, was Has Globalization Gone Too Far? (1997), by Dani Rodrik of the Harvard Kennedy School of Government (who participated in this conference). Rodrik’s challenge has led to other Institute publications, including Has Globalization Gone Far Enough? (2004) by Robert Z. Lawrence, a senior fellow at the Institute and a colleague of Rodrik’s at Harvard, and Scott C. Bradford. So we are no strangers to the debate. The idea for this focused ethics and globalization conference came together in interaction with the Stavros Niarchos Foundation, which has generously supported our work on this innovative project. Along with a remarkable array of scholars and specialists, we were honored to have former Representative Barney Frank, who served in Congress as a Democrat from Massachusetts for 32 years, deliver the keynote address. Congressman Frank was a tireless champion of the disadvantaged throughout his career. He was also a resolute defender of international fi nancial institutions and the Federal Reserve, thus exemplifying the kind of balancing that ethical globalization requires. His keynote address appears in this volume as well. My opening remarks at the conference were entitled, “The Need for Challenging Choices,” and I meant that in two senses. First, we brought together on our panels and in our audience many infl uential people in public service and the private and nonprofi t sectors, and we were asking them to challenge the choices that many of them were already making. Second, I was trying to describe the nature of the challenging choices that confront us all. Our fi rst session was on the “Pursuit of Domestic vs. Global Welfare.” Its purpose was to shed light on how a policymaker, or someone leading in a democratic society, should be thinking about the benefi ts of economics for the globe as a whole versus that of their home constituency. One of the core beliefs at this Institute is that globalization has not only been ongoing, but has been overwhelmingly good on net for the world—the ultimate fact on the ground of globalization over the last 20 years is that a billion-and-a- half people