I cannot recall an author who has better tackled the issue of globalisation, time and time again, than Professor Joseph Stiglitz who has just hit the book stalls with his Making Globalisation Work.

Although technical, his arguments are simplified in such a manner that they can be read and understood by people who have never bothered to read anything about economics.

In his writing, Stiglitz pushes forward various home truths; foremost of which are the following:

• That there is no simple measure of economic well-being and that unfortunately, the standard measure, gross domestic product per capita is misleading;

• That one cannot underestimate the importance of equitable and sustainable development and growth since there can be a situation as there has been in the United States over the last half decade, wherein GDP is rising while most individuals are worse off.

• That GDP can be rising, yet standards of living can be falling, as the environment becomes degraded to the extent that life expectancy can even decrease.

But perhaps his most important home truth is that GDP can be misleading for another reason since it measures the value of what is produced in the country, not the income of the citizens of the country.

To underline and emphasise this argument, he cites as an example a situation where a developing country opens up a mine with low royalties, most of the value of what is produced may accrue to the foreign owners and when account is taken of the environmental degradation and resource depletion, the country may be actually worse off.

His running theme is that even Adam Smith was aware of some of the limitations of free markets, since further research has shown why free markets by themselves often do not lead to what is best.

In his new book, he stated that the reason that the invisible hand often seems invisible is that it is often not there.

His main preoccupation is that there is a risk that unless globalisation can be made more fair, so that there are more winners and fewer loses, there may even be a backlash.

Although some argue that globalisation is a recent discovery, he argues that the degree of global integration as measured for instance, by the ratio of trade or capital flows to GDP, was higher before World War I than during the inter-war period.

He is of the opinion that poverty continues to remain a big problem in the emerging economies, since poverty alleviation programmes have failed to lift millions from the grip of hunger and disease.

He bases this argument on the fact that inequality within most countries, and the disparity between the richest and the poorest countries have been increasing and globalisation as it has been managed has sometimes contributed to these problems.

I like Stiglitz because apart from criticising things that go wrong, he spells out a wide agenda of what needs to be done.

It might be purely hypothetical and in some cases, pie in the sky but at least the man has a vision and sense of direction – something which other economists often lack greatly.

Stiglitz will not be consistent with past writings unless he hits out at his favourite “hate” – the IMF.

He states that as the IMF has increasingly lectured others about the importance of governance, problems in its own political legitimacy have increasingly impaired its efficacy.

How the UHM never found fault with Nationalist budgets

I was recently interviewed by Net TV on whether I think the UHM leans towards the Nationalist Party or not.

The pity is that they only carried 45 seconds of a four-minute interview.

Without coming out with a categoric “yes” or “no”, I mentioned that while they had gone to the streets and even called Labourites “traitors”, according to a December 1997 report in The Times, in connection with one of two budgets which Labour has presented during the last 20 years, never have I seen them take the Nationalists to task for any of the budgets that they presented during the past two decades.

Now that Dr Gonzi is expected to come out with the anticipated “sweeteners” in tomorrow’s budget, rather than pleading with him to ease the burdens of an over-taxed working and middle class, the same union which never thought twice about making excessive demands at the time of a Labour government pre-1987 has called on the government to exercise caution not to undo the fiscal “reforms” that have been introduced as a result of the last year’s sacrifices and belt-tightening.

The song might change but the singer remains the same.

Whoever said that the UHM leans towards the Nationalist Party?

Feel free to reach your own conclusions.

Particularly when reading their comments on the day after the budget for 2007.

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