Editor's Note: Dani Rodrik is a Professor of International Political Economy at Harvard University and he is the author of The Globalization Paradox: Democracy and the Future of the World Economy. For more from Rodrik, visit Project Syndicate or follow it on Facebook and Twitter. The views expressed in this article are solely those of Dani Rodrik.
By Dani Rodrik, Project Syndicate
As if the economic ramifications of a full-blown Greek default were not terrifying enough, the political consequences could be far worse. A chaotic eurozone breakup would cause irreparable damage to the European integration project, the central pillar of Europe’s political stability since World War II. It would destabilize not only the highly-indebted European periphery, but also core countries like France and Germany, which have been the architects of that project.
The nightmare scenario would also be a 1930’s-style victory for political extremism. Fascism, Nazism, and communism were children of a backlash against globalization that had been building since the end of the nineteenth century, feeding on the anxieties of groups that felt disenfranchised and threatened by expanding market forces and cosmopolitan elites.
Free trade and the gold standard had required downplaying domestic priorities such as social reform, nation-building, and cultural reassertion. Economic crisis and the failure of international cooperation undermined not only globalization, but also the elites that upheld the existing order.
Editor's Note: Dani Rodrik is Professor of International Political Economy at Harvard University and author of The Globalization Paradox: Democracy and the Future of the World Economy. For more from Rodrick, visit Project Syndicate's website, or check it out on Facebook and Twitter.
We may live in a post-industrial age, in which information technologies, biotech, and high-value services have become drivers of economic growth. But countries ignore the health of their manufacturing industries at their peril.
High-tech services demand specialized skills and create few jobs, so their contribution to aggregate employment is bound to remain limited. Manufacturing, on the other hand, can absorb large numbers of workers with moderate skills, providing them with stable jobs and good benefits. For most countries, therefore, it remains a potent source of high-wage employment. FULL POST
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