Populism and the Economics of Globalization by Dani Rodrik Article Analysis (Essay Example)

Globalization has taken a different spin in today’s world. There is quite reasonable evidence from diverse settings that globalization shocks have played an important role in driving up support for populism, particularly in right-wing movements. I start by analyzing the arguments by Dani Rodrick that political backlash occurs as a result of economic globalization in his article ‘populism and the economics of globalization.’ I will further provide explanations on how Britain is connected to the rise of populism and how Rodrik’s article will improve our knowledge of economic globalization in the world. I will end this paper, with why Dani Rodrik’s article is important, my position on the harms of populism, and possible solutions. 

According to the article by Rodrik (2017, p.3), his argument is that the history of economic globalization makes it possible to predict that political backlash would occur at advanced stages of its implementation. When populists come to power, they can do lasting economic and political damage. Populism arises in greater liberalism, openness, and globalization and this produces inequality. Rodrik’s article focuses on the effects of neoliberalism. In this case, rather than fighting neoliberalism, the political forces that dominate the left side of the political spectrum accepted it. Decades of neoliberalism are what led to the increase in right-wing populism.  One of the populist movements that I can relate to was the implementation of the gold standard which however was hard to obtain because it wouldn’t stabilize the exchange rate and doesn’t provide flexibility in the supply of money. Populism has provided a base for inequality, an example is the life of people and the poverty rate today. I also want to note that it is not dependent on the existence of the base whether it will go to the left or right, Rodrik doesn't mention why this base has not yielded genuine politics (Rodrik, 2017, p.7)

Models of trade and distribution among countries lead to inequality and difference in a price change, leaving countries unbalanced and uncompensated due to globalization and trade shocks according to (Rodrik, 2017,p. 15-20) let us look at it this way, while China or NAFTA has caused trade shocks in many countries, like the United States and others, basically western capitalists are saying that as wages are increasing in these countries, like Britain and America, the trade shocks tend to increase. It is possible to liberalize trade to enable countries to import cheaper goods, at which point we all should benefit from our ability to purchase more, however, this can lead to the loss of jobs and stagnant wages as Rodrik identifies with the issue of balance and compensation being more costly. If the government was organized to compensate those who suffer a job loss or wage stagnation, it would have been better but in some countries, this compensation has not existed so people are left to suffer. Rodrik is saying that such compensation does not exist at all. A part of the trade is redistribution and it benefits those who are not producers of the goods imported in large amounts while impacting those who remain producers of the goods imported.

Following the vote to leave the European Union, the rise of populism mainly in right-leaning areas was due to Britain's desire to regain control over immigration and reassume its national sovereignty. This encouraged free trade that resulted in inequality and uneven competition among industries. (Gamble,2017, p.3) noted that in the case of Britain, with populism dominating its political economy, the UK voted in 2016 to leave the European Economic Union. A lot of Brexit voters' concerns revolved around immigration and concerns about their current recession, which coincided with rising levels of immigration and what they believed would lead to their economy's downfall. It seems that Britain has lost out to globalization, either in terms of trade competition or from new immigrants. Gamble (2017) highlighted the point that despite the fact that they left Brexit, the level of immigration will still increase not to even talk of the fact that Brexit was increasing free trade, it is quite obvious that the U.K government wants a more flexible border control and free trade. (Rodrik,2017) is also of the same opinion that the Brexit campaign in the United Kingdom makes free trade explicit as an advantage of leaving the European Union, stating that it would allow Britain to pursue freer trade policies. (Rodrik,2017,22) also argues that economist is in favor of free trade even though they recognize the impact. 

However, my opinion on this is that I am against free trade rather I argue for managed trade. Production skills are very important, the more a state produces the more skills it has which also makes both imports and exports to be balanced. Trade is indeed beneficial because it allows states to specialize nevertheless could be a form of domination. The efforts of the government to achieve measurable trade, specific market shares, or targets for a certain product are essential.  also strongly agree with Rodrik's claim that trade between rich and low-wage countries has led to unfair competition and this results in far more opposition and inequality to the world's financial system. However, I disagree with the idea that the problem is immigrants, instead, they should blame bad trade, a pro-capitalist, neoliberal ideology.  Rodrik argues that the left-wing populists like Britain, Greece, Spain, and the United States look for who and what to point fingers at rather than facing the real threat. Such trade shocks have been felt by countries in different ways and a good example of this was how president Trump, encouraged the blame on immigrants. Nonetheless, Kesselman, Krieger, and Joseph (2017, p.33) point out that recent political developments in the United States and Britain demonstrate populism's unpredictable powers.

Dani Rodrik’s article on ‘populism and the economics of globalization is one that I find very interesting, it explains how populism is a major factor in the world today and how some countries may react to globalization which may result in either good or bad results. He wrote his paper to focus on the issues of populism, the inequality that it produces, and creating awareness about how states should do better. Globalization is an essential factor that leads to populism, however, the concept of managed trade supports possible solutions to populism like creating healthy national economies that can involve interactions with other nations for mutually beneficial purposes (Class slides,2022)

Consequently, populism can be seen as an extreme manifestation of the power of the people in action. Rodrik’s article depicts the frustration and anger of countries like Britain and the United States for the quest to basically acquire ‘more.’ It is true that Rodrik is skeptical that populism will disappear, but it seems to me that it has become a distinctive feature of the radically right-wing, which means it has come to stay.