 Professor of Economics and Professor of Political Science at Columbia University. He joined Columbia in 1980 after 12 years as Ford International Professor of Economics at MIT. Professor Baguatti is regarded as one of the foremost international trade theorists of his generation and has also made contributions to development theory and policy, public finance, immigration, and to the new theory of political economy. He is noted for combining important scientific contributions with an ability to dominate the public policy debate on trade questions of the day. He passionately believes that, and I quote him, in social science, such as economics, those who work at the frontiers of the science should also get down into the trenches of public policy in the only way they can through advocacy. He's a frequent contributor to many influential papers such as The Financial Times, Wall Street Journal, The New York Times, to mention only a few. He holds a strong view that, and again, I quote him, the society is best organized when its economics embraces openness in particular in its trade and immigration and when its politics is democratic, not just for the elite few, but in the effective participation of the many. Dr. Baguatti was economic policy advisor to the director general of the GATT, General Agreement on Tariffs and Trade, from 1991 to 1993. He's been a director of the National Bureau of Economic Research and was recently advisor to India's Finance Minister on India Economic Reforms. In fact, his early work, especially India Planning for Industrialization, written with his wife Padma Desai, also a distinguished professor at Columbia, provided the intellectual underpinnings for the major economic reforms now underway in India. Professor Baguatti's impressive publication record includes more than 40 volumes, some translated into several languages and over 200 articles. He's also delivered many prestigious lectures and has won major prizes and awards, such as Frank Seedman Distinguished Award in Political Economy in 1998, Freedom Prize in 1998, Bear Harms Prize, and many more. His teaching and writings have had an extraordinary influence on students of economics. Many of his former students are now prominent economists in their own right. In 1994, scholars and students of economics from around the world gathered at the conference to honor Professor Baguatti in celebration of his 60th birthday. Professor Baguatti is a fellow of the American Academy of Arts and Sciences, the Econometric Society, and has also been elected to the American Philosophical Society, the nation's oldest learned society. On a more personal note, I had a unique opportunity to spend these two days with Professor Baguatti, and I've been very impressed with his genuine enthusiasm, his passion for the field, and current economic issues, and his intense and inexhaustible energy that even the youngest among us might envy. Please join me in welcoming Professor Baguatti. President Stoyer, my fellow economists, and friends, and particularly the young students who are here, it gives me great pleasure to be here, and thank you, Svetlana, for those wonderful remarks. It's customary to say, when one is praised in that way, that my grandmother would have believed it, but I don't. But my wife, who flip-flops between putting me on a pedestal and putting me in my place, she would have said, if she was here, that Svetlana said nothing that my husband hasn't said better before. So, let me get on with globalization. Let's become a buzzword. I had to review Tom Friedman's famous book on the subject in the Wall Street Journal about three years ago, and I remarked that the end of the Cold War and globalization have become two buzzwords, and if your girlfriend throws you out, or your boyfriend throws you out, then the cause has to be one or the other. Everything is attributed, and this is part of the problem, actually, in which I want to come back to, particularly when addressing some of the concerns which Dr. Cobb, in particular, eloquently expressed yesterday, that the cause and effect are of two different phenomena, one bad one, like poverty, and another good one, in my judgment, like globalization. That is really the question at issue, and so I want to return to that. But globalization, aside from being a buzzword, as we know from the streets of Seattle, Prague, Washington, DC, fortunately not your streets during these two days, has become more or less a four-letter word. Actually, if you count the number of letters in it, this is a 13-letter word, which is probably the cause of all the problems. It's an unlucky number, but you would also understand then why the phenomenon describes this in so much trouble in the public policy space. The street theater has naturally received a lot of media attention in reflecting the tactical genius of the people who are doing it. It's a kind of modified version of the guerrilla tactics where you strike at unforeseen places to get your enemy, which is much, much stronger. In this case, you actually strike at well-known places where you couldn't be anticipated to be there at conferences of international institutions, as Joe Stiglis was reminding us today, where the elites of the world gather to discuss globalization. The reporters certainly lap this up because if anybody who has attended these conferences knows they're dreary as hell, and anybody who unfuzz a flag or carries a placard, and particularly if they throw stones through Starbucks and so on, naturally gets played up. And this is brilliant tactical strategy, but an interesting thought does occur that our media does play up these things, and I'm not complaining, just recording. But when it came to our own political conventions, and the two Democratic and Republican parties, then somehow the coverage of the street theater was much lower key, and it sort of reminded me of the Israeli story where somebody asked the Israeli father during the Soviet block days, you know, what are your three children doing? So, oh, one son, the first one is in Russia, Soviet Union. So what's he doing? Oh, he's building socialism. What's the second one doing? Oh, he's in Hungary, doing what? Building socialism, and your third son, he's in Israel, building socialism? Good God, what do you mean? That's our own country. So street theater was marvelous, very productive, very creative, as Joe was emphasizing this morning, when it's directed at things which don't immediately impact on your welfare in a particular way. So I'm a slightly cynical about it, about the street theater part, but you have to ask why this is sort of taken on. And I want to also mention that there are in fact several NGOs, non-computer organizers, I'm gonna come to that, are actually not in the street theater game. They're actually serious people raising serious questions, and I want to turn to those a little further down the line. But let me just ask, why is it that the street theater, you know, I mean that in a non-pejorative way, why is it that it's so dominant right now in the public space? And why are young people who, in my experience, they're always idealistic and wanting to do something good, what is it that that's driving them to these particular attitudes at this particular point where they want to take on globalization as this gigantic evil force which has to be constrained, reshaped, and so on and so forth. And I think in a way that the explanation has to lie in what I call the Fukuyama-Fukou double whammy. Fukuyama, as you know, wrote about the end of history, the end of ideology, that capitalism is triumphed, and this triumphalist spirit is really what's driving the young people who crave for social justice. That's the time when you want to be, and some of us hopefully have it still further on as we get older, but this concern, I think really bothers them because capitalism traditionally has been presented and understood as a force which is really pure markets, pure capitalism, and in some unbridled sense, and that that really is harmful, doesn't pay attention to equity, justice, equality, poverty, eradication, and so on and so forth. So the image of a system which really is not good, to say the least, that being triumphant, I think does create dissonance in your system, and I think in a way it's a rebellion against capitalism itself, which you're finding, and that is really, it's a lack of choice because also communism, which when I was young, that was an alternative. My earliest book in 1966 actually ends the first chapter by citing the Soviet success in many respects, and that's what we were all brought up to believe in those days when we were idealistic. That system we know is bankrupt and it's collapsed, so there's lack of alternative, and lack of alternative, meaningful alternative, effective alternative drives you into this kind of dissonance. Of course, too many choices can do that too. I mean, there's a story of the guy who goes through the Psycat is working on the assembly line, and he says, you know, I'm going bananas, and the Psycat says, why? He says, oh, I'm on the assembly line sorting out the good apples and the bad apples, decisions, decisions all the time. So sometimes having too many choices also can be harmful, but lack of it is equally harmful. So I think that's the first one which I detect is I interact with students, including at Seattle in the streets because I was there, and when I was in debating with Ralph Nader, who is actually a good friend, I'm going to send him $1,000 for his campaign because I think that voice needs to be heard. But my debates are about whether free trade is good and so on and so forth, and we are on excellent terms. But when I went out into the streets, when I was enjoying that sort of thing with the more sort of intellectually oriented NGOs, I did talk with the young, and basically they were concerned and they were not sort of chaotic, the wrong kinds, they were idealistic, they wanted to learn. Then there's also the other, what I call the Foucault, the French philosopher's approach, which is the post, for those of you who are in English lit, it's postmodernism, deconstructionism, all that stuff, subaltern studies looking at things from below rather than from above, and so on. All of that tends to degenerate into an anti-intellectual strand, although it's very highly intellectual, I mean if you can quote French philosophers, and there's nothing more plunky than that, and it really is very impressive, but the net effect of something like deconstructionism, for example, is to lose all anchor, any kind of moral standard, and you see that in many of the people who follow that. And I think there's an anti-intellectual strand which follows from there, which I think you see in the sort of more violent kind of tactics which are used, and here I have another, they're anti-expertise of any kind. You're an economist, so why should you have any particular claim to knowledge about economic matters? Everybody's voice should be heard, including of anybody who has a sort of stake in the system. And the story from the days of the Cambodian situation and the anti-Vietnam War, when I'm told in Heidelberg the students demanded, who are particularly radical, they demanded that in every class, the professor teaching the class must be as ignorant as the students because that would be the only condition under which you could have free democratic balanced inquiry. I would love to go up to my chairman and say, look, that's what I would like to do. I would love that system because that would mean I would have to prepare for no class and I would be on a perpetual sabbatical, which actually some of my colleagues are actually. So I think there are these different types of strands which define the ethos. I mean, it's not a complete description, but the passion with which the young idealistic kids are going out and doing this and worrying about it, I think this is certainly one of them. Then I think there's also what I call the fallacy of aggregation. Joe today, this morning, Joe Stiglitz touched on how there were different types of globalization. I was glad he mentioned that because typically people view globalization, it's just one of these funny words which embraces lots of things, but it does consist of lots of things. It's like a vector if you're in vector algebra with lots of elements in it. He mentioned some, but I would particularly say there's trade, globalization, the sense of international integration and contact between countries, nation-states and communities goes on in the field of trade. So there'd be a free trader like me. Then it goes on in the field of short-term capital flows, which is a very different kind of animal, as Stiglitz correctly emphasized this morning. Then there is direct foreign investment, or corporations, multinational corporations, which are again a source of great dispute in terms of their impact. And then there is migration, which I and Joe Stiglitz forgot to mention, and that's a very important dimension, particularly immigration policies, et cetera. People tend to, and then there are of course non-economic aspects of globalization, diffusion of ideas, as he said, diffusion of culture or suppression of culture, trade effecting culture and so on, upsetting indigenous communities, as Dr. Cobb pointed out, those kinds of worries. So you have non-economic and economic, within economic globalization, those huge numbers of very different things. Now the first thing which we sophisticated economists would say is that we have to distinguish among all of these, both economically and politically. If I exchange my toothbrush for your toothpaste, it would need a deranged mind and a wild imagination to think that that could precipitate an Asian financial crisis. I mean, it would be wonderful if trade had that power, but it doesn't. On the other hand, you take the Asian financial crisis where Washington, imprudently and hastily pushed for globalization, for freeing of capital flows. I think definitely precipitating or helping precipitate as a principal factor, the immense crisis, which actually, if you know the Snoot-Hawley Tariff in 1931, which was the biggest man-made bipartisan, we'll always be aware of bipartisan consensus. That was a big man-made disaster. This is the biggest one after that, and people of Washington doesn't want to own up to it, and I'm all proud of Joe Stiglitz and me and many others who actually are trying to point this out. That is a very different animal. When we point this out, and we have to attribute that, you might ask why did it happen? Why did we push for this? When in the classroom, when we teach economics, we point out that this is a dangerous thing, that in fact, you can get these kinds of crisis. We know from my old teacher, Charlie Kindleberg, who first wrote about panics, manias, and crashes, he's become famous again because it's been proven, and so we know historically this is true. He's gone back about 200 years documenting these kinds of crisis, and every time I opened the mail from him, he's about 82 now, and then he's taken back another 100 years, and pretty soon he'll reach the Garden of Eden, and somehow there'll be a financial crisis there. And it's something you can't forget. How come brilliant macroeconomists at the IMF and the Treasury forgot? And that's where I've come up with this notion of the Treasury Wall Street complex. Wall Street, just as we professors like tenure, I'm not in favor of it particularly, but that's because I would expect to find a better job if I got lost the current ones. It's not entirely disinterested advice, but tenure is something which all professors want, most of them. Similarly, Wall Street wants more and more profits to be made through opening up of financial markets, and the Treasury went along with it, and Joe gave a particularly stark version. So I call it the Treasury Wall Street complex. If you look at it in sociological terms, the same people are going back and forth continuously. You can find on the boards of many of the Wall Street firms the people who just came out with the previous administration, or who are headed there. And this is Wright Mills Power Elites. Now, Eisenhower talked to the military industrial complex, Wright Mills, who was a professor of sociology, and then Eisenhower, as you know, was president of Columbia for a while, and Wright Mills talked about the Power Elite. In the networking sense, and I've talked to the Wall Street industrial complex, which is now pretty widely used in sociology and political science to do this. So I'm also at Columbia now, since 1980. So we are now known as the Columbia Trio, which is probably the next best to being the Spice Girls or the Beatles. But it certainly gives to my neoliberal tendencies a nice radical cost, you see, and it confuses everybody. So that financial crisis, short-term capital flows, was purely a result of a cynical manipulation of the system in various sorts of ways and there are books to be written on that, where we imprudently pushed for this and then precipitated the crisis. That's a very different order of globalization. And the task of people like me who want to push for freer trade is immensely complicated because the common person doesn't distinguish between one type of globalization and another. The thing that the East Asian financial crisis came about, that devastated people back into very low levels of poverty. The 1994 Peso crisis in Mexico led to a decline of real wages in a very big way. Nothing to do with NAFTA, zero. Actually, NAFTA helped us bring money, in fact, prompted us, as the US government, to go and help out during that crisis. If we didn't have a NAFTA and greater political commitment to that area, it would have been more difficult, I think, to get the thing through Congress. So if anything, NAFTA, which was trade-oriented, the North American Free Trade Area, that was really a moderating, had a moderating effect. The real problem with real wage decline has to do with the financial crisis. So I'm not going to defend financial crisis and financial flows. I'm not on any boards of Wall Street firms and so on, and I don't consult with the Treasury. So I have tenure, and I can be independent. As I write in that book, which Svetlana mentioned, a professor's primary obligation is to be a public nuisance. That's the only way he or she can produce public good, because nobody else can tell the truth, because they might lose their jobs. So they would have to be heroic, and I'm not a hero. So I think that, now you take immigration, which is another important thing, because I think many of us who believe in human rights and so on would recognize that the freedom to emigrate emigrate are important things we would want to, they're even more important than freedom to trade in my judgment, and the ability of people to get out of countries which they don't approve of is extremely important, but the ability to get into countries that they do approve of is strictly regulated. Now you can't apply the same economic philosophical principles, because you simply can't, sociologically, politically, et cetera, say, look, I'm for abolishing all border barriers. Politically and sociologically it's very difficult to argue that, communitarian, all sorts of arguments, different philosophical principles can be invoked. So economically, politically, you have asymmetries between all these types of globalization, and there are different ways of dealing with them. So I think part of the burden we bear on trade, which is what I'm going to come to short, is because as Joseph, that was what I was supposed to be doing, so I'll oblige him. And that's where we have greater burden to bear. And so the first thing to have a reason debate and a reason solution to the governance of this great phenomenon of globalization is to first begin to differentiate. And that's what economists typically do. One of my Oxford teachers said that economists reach agreement by sharpening differences, meaning you're using a different model from me. As soon as I understand that, I know why you're coming to a different conclusion. Or you may be having the same model, same sort of ideal type to look at reality, but you may be using different parameters, different estimated or imagined parameters. So you come out with a different answer. And so economists reach agreement by sharpening differences and politicians by obfuscating them. They just cover it up with language. Probably an example you saw last night on television. So that is the, I feel as a public policy intellectual that really if we tell people, look, let's not mix up things and write. Let's take each one at a time and say, look, what is it that's wrong? So I do not believe in Congo financial capitalism, unregulated free flows, that's dangerous. And it's almost calculated to bring crisis. But I do believe in free trade, but again with appropriate governance, appropriate institutional structures because that too, you cannot be left totally to itself, but in a very different sense. Okay, so now I can go from the streets as it were, where the kids are very excited and worried, to the genuine worries. Which by genuine worries, I again, don't mean that they are necessarily well taken once you analyze them. But let me just mention some of the ones which have come up in our own discussions. One is that the poverty in poor countries is because of globalization. Now, I would say, yes, if you mean financial crisis can really hurt your poor in a very dramatic way. I not merely concede that, but I claim that. Okay, that's not the issue. Is freeing of the trade is the prosperity that it's in my judgment brings about. Is that really a cause of poverty? Does prosperity or wealth creation go inversely with eliminating or elimination of poverty? That's an issue because many people believe it. And I think Dr. Cobb was kind of citing some people who were of that view. The other is income distribution has worsened, particularly in our part of the world. And the rich countries, rather than the poor countries. So there the problem again is, many fold, are incomes at the top increasing because of globalization without their being shared by others. And two, more directly, is poverty actually increasing? Forget about inequality. Because to some extent, inequality is a construct of the statisticians and economists. I mean, if your source is income doubles or is wealth triples from one billion to three billion, I mean, what do I care? I mean, it doesn't mean anything to anybody, really. So if I then measure the income inequality, certainly like if sources income has gone up on Park Avenue in Manhattan in New York by another billion. Of course, the top 5% in Manhattan will be by obviously getting more and the top and the bottom 5% will be getting less, but so what? It has no sociological, political significance in my view in itself. And in fact, if some people who are at the bottom heard about it, they might think, oh gosh, it's like the lottery ticket has gone up, right? I mean, the lottery prize, which is a lottery ticket. So if your mobility in the system, you may even think this is a superb thing. You may not be resentful, envious, or upset with it. You might celebrate it saying, golly, it's possible to make so much money in this great society. So everything depends on the nature of your society, the way people react. And I'm worried more about the consequences of such wealth. Like what are they doing with it? If they're spending it on York's conspicuous consumption, that could create problems like the Mercedes-Benz's in Russia and the traffic there. But if they're spending like Bill Gates on giving $30 billion for AIDS, I'm glad he gets it. He's made so much wealth because the consequence of that is that you're really doing something for the poor in Africa where the real poverty is. If it was divided, if that $30 billion was earned by all of us in this room, the multitudes, we might just buy another car, each one of us, or another television set, or go to a movie through the year, or buy opera tickets, and nothing would be done for the poor. So wealth in itself, or inequality, is something which is a very complicated phenomenon. The cause of it is interesting from an analytical point of view. I don't think it has much to do with globalization. It has to do with the growth of financial sector, growth of IT, and so on and so forth, which to some extent the growth of markets enables you to do that, but it's the consequences of that which really interests me rather than the causes of it because we do have quite a remarkably different situation today with the kinds of fortunes that are being made. So again, income distribution, is it really worsening? I first say it's not a particularly interesting question. It's against poverty. And two, is it still due to globalization? If you happen to be perverse enough to be interested in it, right, or you're an economist and then you are perverse and you're interested in it, then go ahead and analyze it, but in that case I don't think globalization will, of the trading system for instance, will have much to do with it. And I'll argue that in a moment. And the third question, of course, which worries people quite naturally, many environmental and cultural groups, is that culture tends to be overwhelmed by trade. Now, we Americans are very different in that regard because we are a country of immigrants and we absorb culture all the time. And so we never, I was in Berkeley one year and you go out onto Telegraph Avenue and first you've got to get past the Hare Krishna groups and then you get onto the Telegraph Avenue and then there's Indian music one week and there's Chinese acupuncture the next one. I mean, there's continuous turnover of different traditions and New York is not so bad, but it's New York is still full of vibrancy. So we are not exclusivist in terms of absorbing foreign influences because we're a country of immigrants and that gives us a very special outlook on culture we don't feel threatened by. And two, on the export side, once all this different influences go through the sausage machine in our country, then they emerge as the culture we export. And in my view, it's our high, we have to distinguish between high culture and low culture. It's the fact that we are pushing and the high culture, women's rise, students rise, children's rise, everybody's rise. I mean that is continuously threatening other people, other feudal traditional societies and by God it's good it is because that's what I would like to see diffused. So much of the anti-Americanism which comes out and therefore anti-globalization is simply a reaction to the fact that we are the cutting edge of what I call high culture. But then there are people also right in this thing about McDonald's and so on. So what does it really matter? I mean, McDonald's can go everywhere but Monsieur Beauvais of France has picked on that and he's fused culture and agriculture. He wants agricultural protectionism. He doesn't want the French agriculture to contract and he's got hold of the cultural argument saying McDonald's is an invasion of our space and my only answer to that is that McDonald's gets adapted everywhere. Since we are in a Swedish college basically and I have Mrs. Zulman following me, there's a story which is told of a Swedish grandfather who came to visit his granddaughter and I'll make it Barnard in college in New York which is the sister college of Columbia and he was telling her, yo, yo, they even have McDonald's here. So, you know, he thought it was something Swedish. So, I think, except for a few vacos, nobody really is worried about the low culture diffusion. It goes all over the place. But because we are in that, but I think we on the whole, since we are at the cutting edge of exporting our ideas and we do not feel any threat because of immigration being out defining sense of identity, we take in everything without any sense of threat. I think whenever anybody else raises cultural questions, our first reaction is to say, that's Richard Feller must be a protectionist or something pushing some special interest. So, we have never been able to understand these phenomena like on the hormone fed beef, for example, to give you an idea. I mean, this is where we have produced the hormone fed beef. I suppose it's okay, I must be eating it off and on. I'm more worried about cholesterol than about the hormones, actually, since I have a heart problem. So, that I think, you go to England, get into cabs, every cab driver says, we shouldn't have this, they're worried sick about it. Now, our culture is basically, takes technological change much more than many other countries. You're a pill-popping culture. If you come from outside, you see that. I mean, I still worry about taking something. Is it good? Do I need it? But here, people pop pills. And then, this is a land of viagra and of silicon implants. As one wit put it, I think in Wall Street Journal or somewhere, we are turning into a nation of artificially enhanced women being chased by artificially aroused men. So, our cultural attitude is that of, how do we use technology? And the service of our own pursuit of pleasure, whatever we want to pursue. And that's not the way. There was a New Yorker cartoon, which I'm very fond of, where instead of being afraid of what are called franken foods, genetically modified foods, that cartoon conveys exactly the average reaction of many people in this country who therefore don't feel threatened by it. And there's a chap in a restaurant and he calls the waitress and there's a plate of broccoli in front of him and he says, take this broccoli away. It doesn't taste any good. Get it genetically modified. Now, that is our attitude. How do we use technology rather than it is a minefield and we have to sort of tread around it and really be aware of it? So, I think that is creating, again, problems vis-a-vis other cultures. So, there are issues which are cultural and I think we fail to understand that. We fail to understand why Europeans, for instance, and the Koreans worry about their cinema and how Hollywood, which is a lobby which Joe forgot to mention, Mr. Valenti plays for Hollywood in a very big way and so we are continuously opening up, you know, two-hour cinemas far in Marcus. And of course, as you know, Hollywood contributes a lot of packed money to certainly my party, the Democratic Party, probably some, I don't know how wealthy Charlton Heston is, but whatever he has, he must be giving to the other side. But certainly we play for our cronies because that's what they are, Spielberg, Barbara Streisand, et cetera, our president's cronies, but they're rewarded not like in Spice-o-Harto by creating monopolies for them or giving them special buck sheets just for their movies. You could play it for Hollywood and you open up foreign markets so we just steamroller everything, you know, and say, you've got to open up. You can't possibly have quotas and so on and so forth. We refuse to understand that other countries are worried about their cinema, about their culture because we don't feel threatened. Therefore, why should they feel threatened? And I think there again, I'm going to come back to it because if we have to recognize it, and free traders have, you know, if you read my textbook, God forbid, there's a whole chapter on what are called non-economic, meaning not just bread and butter objectives which societies have, and how do you reconcile as far as possible free trade with those pursuit of object? It's not denying that there are such objectives or that the validity or the legitimacy of such objectives, but can we somehow rescue free trade, which is a silver force for social good in my opinion, and make it go with other ways of addressing these concerns? So instead of having quotas on Spielberg's movies or foreign movies on European television, could we just subsidize French cinema and let them compete, let consumers have choice? Let Spielberg compete with Renoir, who's actually then assisted and doesn't have to, or if you remember your green card movie, Gérard D'Apardieu, I mean, it would be nice if he was employed there and didn't have to marry Andy McDowell in order to get the green card to work here. So I think it's that kind of, there are alternative instruments which are actually more efficient compared to having quotas and trade restrictions which could then help you preserve your culture, not always, but they can and still have free trade. So those are the kinds of issues which I want to get into a tiny bit more. I just raise your hand, Svetlana, anytime I go overboard. After Joe took two hours, I think I feel that a license on my part is entirely called for, particularly since he wants equity between developing and developed countries. But do stop me, please, because I can, you know, professors go on forever until further notice. So culture and trade, very important issue in my judgment. It is terrible. I didn't mention Dr. Cobb's indigenous community. I mean, that's another issue where I'm a little more complacent, but if I forget, you can ask later. And finally, the big, one big issue today is trade and the environment. There was a nice poster outside where we were just saying trade kills environmental law. And by that, I think that was aimed at the World Trade Organization, which I'll come to later, because that's the institutional structure with its own rules, which can then affect environmental law and regulations. But I'm talking right now about just trade. Let's assume there was no GATT, no WTO, nothing, no Larry Summers to bother, Joe Stiglitz and so on and so forth. We can still stay with it, right? And just so that there is a phenomenon and integration that's going on and does that kill the environment. But here, I think economic theory does help you again think about it a little more systematically because when you have, and I'll go back to Dr. Cobbus, I mean, I'm paying you the tribute of responding to some of your concerns because I think they were very well put. He said, let me talk of growth because I believe trade does help growth. So I'll make that transition to growth and say, he said, if growth affects the environment, and we must look at net economic welfare. Another way of putting it is, there's a draw on the principles which we have in the theory of international trade policy, which is that if you are growing or liberalizing trade, which will amount to more apparent growth, actual estimated growth, that would still immiserize you, as I said in an article in 1956, the first one I ever wrote, which has given me the reputation of being a radical in Sorbonne, I gather. So this is why I've never visited it to disabuse them. That's because when you have a market failure, the investment, the growth, may actually be taking you in the wrong direction because the markets, if they're not functioning and if prices in the markets which guide our decisions for allocation of resources and therefore for growth, if they are not functioning correctly, they're not providing the socially correct signals, then you can be harming yourself, which is an extreme example, although growth might be actually less than you think, and when it's substantially less, it may even be, get you into what we call negative growth, highly infelicitous phrase, it just means hurting yourself. So that's what I call immiserizing growth, and that is another way to put it is that okay, in that case, fix that market failure, fix that failure, and then you can get back to growth and free trade. Namely, if you have a pollution problem in the environment, have a polluter pay principle. The fact is, don't let people just spew all kinds of carcinogens into the air or into the waters. Governments then have to come in and create those markets, which means, so we as citizens work through our governments, because that's not necessarily our enemy, like in the libertarian literature. I mean, we work through governments because we couldn't have a big gigantic meeting of millions of people and take that action, so we have to be worked through our votes in government, through the agency of government, which then institutes the market which was missing, namely one like a tradable permit. So if I am doing some harm to the environment, then I have to pay for it, because otherwise, your lungs will get affected and so on and so forth, like with acid rain or ozone layer may completely imperil the human race and so on, so that is, so the answer to this, some of these concerns like trade and the environment is that you need additional policy instruments. Once you fix those failures, created the markets which are missing is another way to put it, then we can get back to reducing the government interventions which are actually harmful like tariffs and trade barriers. And I was telling Dr. Cobb yesterday that in a way, you see the marriage of views between free trade and environmentalists can occur. As soon as you realize that we trade economists come from trade naturally and thinking about it and we usually see governmental intervention as that of responding to special interests, protectionist interests of one kind or another and then putting up all kinds of tariff barriers and trade barriers of the kind Stiglis was describing. So we think of the government as actually an instrument which creates the market failure, which creates the distortions, which are going to be hurting, screwing up growth and its efficacy and the prosperity. Environmentalists come from a different tradition. They're looking at areas where there are no markets. People are just spewing things out, right? And harming the environment and the missing markets. So they see government intervention as a way in which you create markets. So the whole mindset, I'm talking the psychological mindset of the free traders is that governments are basically doing bad things in their own area and we've got to fight that and bring it down. And the environmentalists think of governments as doing good things which are required. And once you marry those two thoughts, eliminate the bad intervention of the trade side and create the good intervention on the environmental side and you're bliss, right? Under any church, right? So it's the, another way of putting it is that if you have two targets, you need two instruments or as our forefathers and foremothers used to put it in every language and every culture that I've investigated, you cannot kill two birds with one stone. So if you go and try and fix the environment by going for protection, you're likely to reduce world income, your own income, and you're not going to be doing very much for environment anyway because that's not an instrument appropriately designed to do anything. So when I wrote a report, when I was economic policy advisor, I helped write it, I shouldn't take all the credit, we had precisely this discussion just to tell our environmentalist friends that look, this is a way to do it and also to point out that if supposing if you have environmental failure, that doesn't mean that somehow protection will do the job for you, that protection will be better than free trade. You just don't know. So we produce too, because when something is not working on one side of your household, it doesn't mean that what was really the correct policy if everything was working properly should be done in this area either. So, but it doesn't mean, there's nothing real, this was second best theory in economics policy and you can rank order, trade and protection depending on the parameters of the case. So you had to go case by case by case and we produce two examples like agriculture and one of the agriculture, we showed that if you moved away through trade liberalization away from the European agriculture which was heavily pesticide intensive, artificially protected and that as a result of trade liberalization went to developing countries, first it would produce more income on the farm which many of us would like on the distribution side to it would also be economically more efficient because these countries are better naturally endowed with ways of producing agricultural output so it would produce more income also not just better distributed income and it would be a desirable shift. So total income for the world also would rise. At the same time, environmentally it would be better because the use of pesticides per unit output of agriculture would fall because the European agriculture is terribly pesticide intensive because it's artificially supported by high prices and high inputs. So here was a case where liberalizing trade was good for both environment and for trade. So a knee jerk reaction which many of my environmental friends used to have I've been in many debates with them with Teddy Goldsmith who was the leading British environmentalist and we had a big debate in the Cambridge Union on this and then in Prospect magazine and I said look you can't say anything for sure you will have to go case by case and that's usually not a very sensible way to do it why not go for a proper environmental policy and push for that. So push for a world environment facility push for more agreements on pollution and let free trade then take its course because that's also going to go slow it's not going to go that fast anyway. So you know have the two March in Unison so appropriate governance would mean that you have to then have two sets of bodies and two sets of policies so that which hand go hand in hand and are moving forward and that would take care of some of your concerns you see in turn. So that is the on the trade killing the environment so that's very elementary principles of economic policy which I've been writing about and some others for the last 40 years or so how to handle this and the same thing with culture if I apply the same principle have free trade in cinema but have subsidies. Mr. Lamy was mentioned today and I'm one of the people who thinks he was dissimulating when he said that he wanted a special deal for all trade barriers against the developing countries would go down that would be the Daven the French do it don't believe them but he's been talking about Mr. Lamy he's a trade commissioner for you he's been saying agriculture is multifunctional meaning people like greenery people like a way of life et cetera et cetera. Now this is true at one level I mean agriculture is a way of life so Masha Bovay has a point when he says we would like greenery we don't want to turn into American style you know towns with just gas stations and Burger Kings and whatever and no agriculture in certain areas that's a cultural preference okay but then if you take multifunctionality many people suspect that he's simply raising this matter and saying I don't want to do anything to agricultural protection and being a smart Frenchman he's just using this argument the way to counter that is to say okay we open up other policy instruments if you want greenery we subsidize greenery as such but not output of agricultural goods you can just have grass right you can have enclosures with lots of you know all sorts of ways in which we're subsidizing that but we open it up to free trade so the output is then allocated to the poor countries so we again open up another policy instrument and then expose his trickery for what it is that multifunctionality doesn't mean you should not liberalize trade so there are very elementary principles which can be as I said told in folk tale terms there's always in economics the two birds and two stones this is the correct way to look at it one more example on child labor all of us worry about child labor if we are at all decent but you have something like 200 million children that work in the developing countries Senator Harkin who is a good not just a good hearted man a great hearted man you know great liberal in the Senate he introduced a child deterrence bill child labor deterrence bill as a result of which that meant that you countries could not export goods to us which were using child labor the effect of that was that in Bangladesh the mothers used to bring their children to work in the textile factory in the 19th century style you know just be around in the family and bring tea and do little chores and so on we're fired big you know immediately and then Oxfam found you know in a study which is much cited but I must confess I've never seen it I hope it exists but it's been cited in Oxfam hasn't denied it's everywhere and it's pointed out that the female children wound up in prostitution because the families were poor and wanted and needed the income so my argument there again is that if you say that we're going to use only trade sanctions and trade treaties and trade institutions like WTO to eliminate the trade in child labor that is not an appropriate instrument to get at this problem you have to get down to the NGOs the civil society that's so many of them in the developing countries work with the governments which have come around to wanting to accelerate the process of reduction of child poverty or child labor and we have programs at the international labor organization like there's a very good program on the international program for the eradication of child labor where funds are used with NGOs and so on and doing all the heavy lifting making sure the children once they're taken out of work then get into schools instead of into things like prostitution of their girl children or worse occupations that the parents don't keel over and die because their impoverishment will miss the income of these children and so on so that's a lot of heavy lifting of the kind the people are genuinely interested in poverty will do but when you simply say look I'm just going to use trade to do this what happens is a result many developing countries have now come to the view well people are just out for trade sanctions they think when we talk about child labor it's because many of the unions which are involved in that not the moral lobbies are simply worried about competition they just want to raise the cost of production and they're you putting a moral face on what is truly a competitiveness argument because they feel threatened on the textiles front because that's rapidly moving out to developing countries particularly now that we are about to dismantle the multi-fiber agreement and remove the quotas so whether it's true or false in terms of what the unions really feel that's how it appears and so we devalue the moral agenda and there's not a single country in the among the developing countries that I've visited or whose representatives I've talked to who doesn't believe you're a bunch of hypocrites pretending we are really against child labor and all we want to do is to protect unite and our own highly protected industry in the United States so we are devaluing a moral agenda by going the trade route it's a bit like you know I mean in the trade context everybody works on trade and competition you know and getting an advantage in doing it as Stiglitz was reminding us and so it's a to try and bring in moral agendas there as things you push it's a bit like you know going to a poker party and asking expecting them to break into singing madrigals or something I mean they just know they're good busy telling dirty jokes and drinking hard whiskey at poker games so this is just not the right place and to you undermine the trade agenda also which I think is important because what happens typically Seattle broke up partly because many developing countries wouldn't play they thought this was all all of these agendas were against you know were really a ways of trying to create problems with the developing country exports and the president was indebted to the unions like you know vice president Gore is and he said unless you deal with this issue in you know by putting in a WTO we can't have another negotiation that was one of the sticking points so we slow down and he lost fast track renewal also because of that so you're slowing down trade liberalization you're slowing you're devaluing your moral agenda what you need is two instruments not put everything on to the trade treaties but go ahead and develop as an alternative agency which in fact was designed to advance these kinds of social agendas about workers rights children's child labor etc why not use that and beef it up so people often say I'll always no teeth because there's no trade sanctions so again we get back to this basic problem of American mentality that every every every knee jerk reaction is we must use straight sanctions it just doesn't work people's backs are put up in many cases because which government is perfect enough to say thou art bad and I'm virtuous of course our government will do that uh... and so will the one I come from back home I think in my book I say uh... once I told the congressman I said I feel perfectly at home coming from India to the United States because I've come from one self-righteous country to another the notion that our virtue is solid in any way it comes very hard to both countries and so I think really what I would like to see is the ILO developing that and when we say that it has no teeth because there's no trade sanctions and I'm a believer in civil society and being able to work with it today and I you know my first reaction was to say let's open the ILO's mouth and put the teeth in after we are super power well I have a better analogy I say God gave us not just teeth but also a tongue and a good tongue lashing can be much more effective as Gandhi emphasized uh... you know in getting British out by nonviolent means uh... then just biting into something which with teeth which are you know already about to fall out so once you have NGOs once you have uh... CNN modern internet possibilities of finding out what people are doing look at what happened in Nike some subcontractor took some women out and put them into the sun because they were chattering rather than working on the assembly line so he did what that Japanese officer does in prison on the river Kauai if you remember to Sir Alec Guinness uh... I mean some version of that immediately you know Nike had to pay because reputation got in the mud that is a much more potent instrument the chamber orchestra from Vienna which for a hundred years had never admitted a woman when it was coming here many of our women's groups picked up a big fuss finally they had to add a cellist who's a woman and then they came that is a very powerful force maybe I'm too influenced by by Gandhi and so on but it seems to me that if you have a moral position and I do believe things like removing child labor as rapidly as you can manage uh... doing a variety of working for decent uh... work conditions for labor etcetera very important moral agendas and it seems to me that if you've got a good moral case you should be able to convince people it takes time but don't tell me that sanctions work better uh... they don't typically you can sign on to a sanction you know uh... meaning you you can say yeah okay I'll do it because uh... the sanction will you enforce it I mean those of us there are many wonderful Christians here when you put these during the inquisition the Jews on the rap did you really convert them I don't think so as soon as the time was ripe they declared their faith again you have to go through the heart convince the these democratic increasingly democratic societies look this is the way you want to think and we've got a work cut out for us but we can do that and that's the other stone and it's a far more powerful stone actually than using trade sanctions so those are I mean on a variety of these things I would say the uh... the worries about poverty I think are not well taken and I don't have time to go into that if you're going to have q and a the income distribution I think is the wrong question to ask the culture I think we have possible different instruments with which we can I think get at most of those questions and maintain free trade similarly for the environment I think we can push for the right mix of solutions and so on and similarly for the labor standards in so instead we have conflicts being sort of breaking out in all these areas uh... and so let me get to the world trade organization more directly now uh... the world trade organization is a new institution okay it replaced the old gas so uh... the old gap was it was called general agreement on tariffs and trade and my student who runs the economics writing for the new york times he Mike Weinstein he said during the last days of the europe around he first he said he had difficulty convincing the editors of the word europe around should be mentioned because they thought it was a latin american dance rather than a round of trade negotiations it brought them around to that and then he wanted to use the word gat and he said what is gat and actually even my spell check uh... when I typed in gat once it wanted me to change it to matt uh... who was a friend of mine and was in the spell check uh... so you know it was somehow a strange animal uh... who was which was not known even to sophisticated audiences like this one and so gat he said can I use it he said no what does it stand for can you uh... oh and then Mike said maybe if I spell it out so the editors uh must be harrell reins I think and uh... said so Mike said okay I'll spell it out general agreement on tariffs and trade so the editors said that makes it worse and that was the end of the matter so the new york times could not bring this up but it was a loose institution it was not a real institution it had come about because the international trade organization which was part of the breton wood structure IMF World Bank and the ITO was not approved by the U.S. Senate which wanted a very minimalist version so this was a fallback option of an agreement so it had no institutional structure but one advantage of it was it was very loose nothing was binding in terms of dispute settlement everything was settled politically if there was a dispute you went to you know people got the elite from these representatives got into cigar smoke field rooms they solved the dispute we american said no this can do we've got to make it legalistic because we believe in laws and predictability and so on now it's become a binding mechanism in the old days nothing was binding it was just an opinion and the country that lost the case could block the decision from being adopted today you'd need consensus to not have something adopted that means it's become like a legal domestic processes and that creates a massive problem because that's where the notion of a big regulatory state and so on you know institution begins to come in and create problems for a variety of people in terms of sovereignty domestic regulations recently environments on they think they're at stake so Ralph Nader for instance is against you know is worried about that aspect not about the he's not worried about free trade as such anymore he's worried about the way the institution is going to work so the WTO is now also a single undertaking again thanks to G1 of Stiglitz namely United States because what it says is that it has to be all or nothing if you want to be part of this trade body which everybody has to be you can't be outside of it because a lot of your market access everything depends on being a member this is why China was trying hard to get in Russia is still not in many some countries still pending because it protects you in certain respects but it is now a single undertaking in the old days there was different codes on subsidies and all sorts of things they were called Tokyo round codes and if fifty countries signed up for them fine they incurred greater obligations and got greater rights visa we want another it was done under GATON but the countries that didn't want to sign on didn't do that so supposing if you want to bring labor standards at U.S. EU etc. agreed Norway in the old rules you could bring them in and then India, Brazil all sorts of countries which don't like it would have stayed out and over time maybe you could diffuse it to these people today you've got to sign on to everything it's all or nothing and that came because of G1 because I used to go to meetings of business groups and so on just to see what those guys were thinking and typically they were saying if India, Brazil etc. don't want to sign on to what we are saying we'll start our own organization and to hell with those guys they'll be just left out in the cold so there was a kind of hubris and a Cartesian utopian approach that you're going to order the whole world for a borderless economy to use Kennedy Omey's phrase and everything was to be put in its place exactly the way we want it and so that has led to and the dispute settlement being binding has made a lot of countries uneasy including many NGOs that are in very uneasy so it's really got to be looked at again in a very big way among the marches at Seattle were in fact mothers on Tuesday I saw them and you know Monday there was a big NGOs meeting and I was part of it from the platform so I had to defend myself by saying I was a one person NGO my wife would have said I was a one person one person NGO disorg rather than org but the everybody was there you know and that's the day there was a you know the bomb threat had delayed the whole opening for about five hours but the next day were all the demonstrations on the streets and so on and then there were a bunch of mothers marching so I that placard button saying WTO red slash and then placard is one of you know one of which was particularly you walk it up and said WTO sucks so I picked a particularly small mother because I wanted to say something provocative to her you know I'm a coward and besides she had a placard and I didn't have one so I went up to her and said madam do you know the WTO was born in 1995 so she looked at me and then I said well that makes it virtually an infant and as you know as a mother infants suck and then I ran away but the point is it is a very young very different institution from anything many of us had realized what it would be so we have to go back to the drawing table and evolve it and there the voice of the what Harveld would have called the parallel politics not anti-politics that's out because the communists were displaced but if you're displaced if it's anti-politics you say parallel politics the voices of people many of whom are doing a careful work as Joe pointed out raising questions those perspectives need to be heard and that is where I think you know we'll have to work with them and it's not a matter of democratic deficit that's too I mean it's a nice phrase but you are represented through your governments and everybody thinks they're not well represented by the government if we start encouraging that notion all governments will become illegitimate and in the end all that it means is the developing country governments will become illegitimate because our illegitimacy will not really have any international sales but other people's illegitimacy will particularly if they are smaller powers so I personally prefer to say every organization must hear these different perspectives because experts are not I mean at that level you know are not fully aware of the perspectives which define them like Ruben who is a good man I'm sure but when he is the US Treasury Secretary where has he come from from Wall Street his entire life was in Goldman Sachs so when he goes ahead and says expanding the financial sector everywhere is a wonderful thing he doesn't even know that it is because his mindset is completely crippled by having been on Wall Street he cannot think beyond that, brilliant as he is certain things just don't occur to him because we are all defined by our experience you know I mean economics to some is like literature is done best or worst from your own experience I mean when you just write about it from the armchair it just doesn't have any any ring to it and so I think the his experience was extremely limited you need a variety of backgrounds and the very responsible people outside of the Street Theatre the Street Theatre is very idealistic kids for the most part and we have to engage in debate arguments and so on so forth and then there are the ones who have the battery of lawyers and experts and so on like Sierra Club etc who are actually much better informed who can provide perspectives which otherwise would be lacking so I think we have to give them a structure and it's already happened with the World Trade Organization because that is what you have formal meetings annual, semi-annual meetings with a number of NGOs going on continuously where they're allowed to provide points of view so you have their voice but you can't give them a vote and this brings me to the last point one which I'll close and that is we already have governments interacting negotiating and so on our own governments have NGOs on them now, thank God you know, environmentalists, even John Sweeney can be seen everywhere this nice jovial self I've seen him at God knows how many meetings always with the US delegation and right here, the right man, meaning President Clinton continuously, so it's been fixed, it's not just Hank Greenberg of AIG and so on, you know, pushing for more financial liberalization etc so we have balanced it out now if we want to go and have another formal vote because most of the NGOs which have clout are based here in the rich countries because they have more money if I give them 25 bucks, that's more than an average NGO will see per month probably from anybody in the developing countries, we've got a million NGOs in India but they're small ones they don't have this kind of financial clout, Sierra Club has more budget than most of the countries, you know, which are players in this game so many of the developing countries feel that if we give them a second vote it will mean a second vote or rather an additional vote it will mean de facto a vote for the rich countries again because our NGOs are based constrained by I mean, it's not a criticism, it's just a fact of life they're constrained by domestic politics when it came to hormone fed beef, it wasn't just culture well, the European NGOs went ballistic on it, on environment none of our NGOs really signed up for it though normally there is solidarity because this is our own industry and you don't want to rock Al Gore because you want the democratic president so, you know, our own choices, our own constraints everything really reflects domestic culture domestic politics, calculation and so on and they couldn't care, I mean, you know there is some bit of cosmopolitanism but it's not, that's not what you should count on that's what people out there say so NGOs are dividing now and I think there's gonna be progress, dynamic progress on this dimension but basically that is one of the problems or take, I mean to, when I send my thousand dollars next week to Ralph Nader I mean to say, look, here is this case which on the fiscal subsidies we have 4.1 billion dollars are given to Boeing, et cetera all our big corporations as a dodge so that they can get an export subsidy of 4.1 billion dollars which the European Union then challenges us just to dodge against the subsidy restrictions this is nothing else but corporate welfare and the standard line including if there's some of the media here is to go along and say the Europeans are making trouble for us well, they're better I mean, because these laws are to be taken seriously it's true because they're responding to the fact that they lost a couple of cases where they're having difficulty like on bananas and hormone-fed beef where we've retaliated with massive straight sanctions just to put pressure on them to accept the findings so they plate it for tat, right but it is a very good thing that this subsidy should be challenged public citizen, et cetera, should be coming they're always against corporate welfare Al Gore says he's against all these firms right, these big firms and his rhetoric is very populist but where are all of them on and I think it's partly because public citizen hasn't really caught up with it it's got its mind on other things and getting Ralph Nader at least into the debate which they haven't succeeded, unfortunately but that is the kind of thing where again, our politics our preoccupations of our own NGOs do make a difference this is something which should be you know, so I could give you countless examples where therefore many NGOs in the developing countries feel that our NGOs don't necessarily speak for them so aside from the NGOs versus corporate and other interests which is the way the public debate on WTO is being formulated partly thanks to our media which never reports on anything of interest to the developing countries it's always in terms of our own politics we are missing this very important strand which is I think creating a massive problem for the World Trade Organization that we really have to give the developing countries also much greater voice than they currently have and to their concerns so the final concern which they have on the World Trade Organization side is that I think while most of them now realize that getting into a trade treaty and having a rule of law is a protection against the kind of shenanigans that G1 might practice or Brussels and EU against the rest of the world we have wielded retaliation threats to get unilateral concessions from a variety of developing countries which was part of the reason why they became great aficionados of the World Trade Organization but now they see that it might actually be changing under the new rules because as Joe pointed out we put in intellectual property protection in 91 I was the first economist to say this doesn't belong to WTO because the main principle underlying a trade organization is what we teach in the classroom that if I liberalize my trade with you in a non-coercive fashion with a voluntary exchange we both tend to be better off compared to what we were in terms of goods and services that we get more prosperity and that's something we concede there are exceptions which I would like to see in terms of again appropriate governance in terms of different institutions working together also which is that I think Joe also mentioned that the euro around created a 2% to 3% loss of income according to many calculations for the African countries well isn't what do we do as a result of that right because the countries that participate in the trade negotiation are likely to gain according to our theory but that doesn't mean the third party which is not actively playing is not going to be heard because we demand for their exports might fall off as a result of what we are doing and then it hurts them they're just innocent bystanders when you have something like that happening for poor countries surely you should be able to trigger immediate assistance from the World Bank and the IMF and from bilateral agencies like USAID so that you cushion the impact of this negotiation on the poor countries instead we get more and more World Bank and other calculations coming out and saying you know is it 2% is it 2.5% or is it 3% none of which is totally credible anyway because if you really saw how that sausage was made you would not want to eat it almost because we make hundreds of assumptions and guesses and so on and you come out with a neat number which everybody thinks is scientific ha ha you know but basically if a lot of studies show that Africa is going to get hurt by way you should get mobilized nothing was done on that front at that time bananas dispute EU and US fight like two big giants you know or elephants and then things get trampled upon so the WTO correctly says you cannot have preferences for the Caribbean countries you have to have a multilateral non-discriminatory trade a good trade principle but the effect of this decision if implemented would be that the small Caribbean nations which are our neighbors and which are not exactly rich that they would suffer a loss of income of about a third of their GNP now that's a terrible loss so they really worked up I would say when you implement something like this or even when you decide on a judgment which is binding of that kind you know and someday you will have to implement it then there must be immediate trigger mechanism by which you compensate and these are a small compensation will go a long way because these while the losses are big for these countries they're very small for the rest of the world to finance so we haven't really thought of institutional structures where we say look trade is good but where trade might harm some people and particularly poor countries we have not really thought through that part of the mechanism but going back to IPP Intellectual Property Protection doesn't meet the defining principle which is that it should be a mutually gainful transaction or negotiation which is what underlies a trade negotiation why? because mainly as Stiglis was pointing out and one could elaborate on it it is basically the user countries which are mainly poor countries who are absorbing technology or using it who are going to have to pay royalties to us to our companies and who pushed for this nonetheless into the WTO we were trying to well so another way of putting it is that this is a rip-off of the developing countries of course we may say look it is you know we invented it therefore it belongs to us yes but then why even have a 20-year pattern protection why not have it infinitely so at some stage we are doing a cost-benefit analysis you know when you want to do it so we're not going purely by the rights approach it's invented by me so it's mine get lost we are saying 20 years is a good idea so then we use sort of utilitarian ethics for that you know which is the best maximum good being done essentially it's a redistributive mechanism we are turning WTO into a royalty collection agency for our pharmaceutical companies and who pushed for it the pharmaceutical companies and a few software companies including Microsoft at the time and they said and Mickey Cantor I mean it started under Carla Hills under President Bush but in Loki and I don't think it had been pushed through but Mickey Cantor I recommend you meet him just to see how interesting the Los Angeles lawyer can be outside even after the Simpson trial because he's a Los Angeles litigator and I've often wondered because you know I mean I've met a lot of jurists who are perfectly good visionary people but the litigators I think it rhymes with alligator and that more or less evokes the the kind of image you would want of these people he pushed hard for our administration for the Gore Clinton administration extracted the maximum 20-year patent formula and shoved it into the the whole thing into the uh... made it a precondition for for the round to be finished and for years I sort of kept talking about it and finally I gave up because we I felt well I mean you know what could you do there was you couldn't really reach the end of the round Washington was talking about and our business lobbies that you know who cares about multilateralism and so on will fix bilateral deals and so on and get our way because if you get a developing country one at a time you're better off because you can use your entire power to extract from them whatever you want and Salinas had to play that game because Salinas had to walk over his own grandmother which he might have done anyway I don't know but the point is we extracted a great deal from Mexico which Mexico would never have given if it was a multilateral negotiation along with the other developing countries we put an IPP all sorts of things there and we managed to get this so we first we Americans unfortunately first breached the principle of what should be in the WTO and we did it purely for our lobbies but later I will say they're corporate lobbies it could have been put somewhere else you know you could have had trade sanctions but we should not have been put into the WTO we corrupted the WTO number one but at the expense of the using countries which are the poor countries right so we built in a transfer payment as against mutual gain next now labor lobbies come and say you did it for capital meaning these corporations now you've got to do things for us for labor so we're worried about competition from abroad so you've got to you know do all sorts of things which sound reasonable as I said you know they have a moral aspect to it in some cases but we have to have fast-track action on child labor right maybe two hundred million children at work forget it immediately the president has to go for a social cause which we're basically out close to our labor and a variety of things so we then the developing countries say look here now this particular additional leg on which WTO stands now is trying to grow other legs our labor union saying our corporations got this therefore we must get it so what you did for capital must be done for labor and then some of the environmental is not all of them because one part of the environment which is a very complex phenomenon and there are lots of legitimate things in the environment that environmentally say what you did for capital has to be done for nature and it goes on so depending on which lobby in our system is effective it gets formulated into these demands and when you look at them I don't have time to look at them in depth they always look like daggers aimed at poor countries and quite legitimately so because they're devised not in the moral context of devising the civil and political rights at the UN or the children the common on the child 94 also in the UN and so on it is being done in the trade context therefore it immediately gets selectively biased in such a way that the defendants are expected to be just the developing countries the poor countries are not the rich countries so what has happened is now is there's a huge north-south divide which you don't read about in the Wall Street Journal or the New York Times or anywhere but it's going to hit the fans pretty soon as they say in New York and this is what we need to address and looking at the WTO so many developing countries now not because they're devils with horns in their head but many of them actually even have like India have more standards more protection for labor than over here but they just think that the WTO is being captured by us by the European powers in addition in a way which turns the WTO into an assault on the weak powers the traditional view was that by getting into a trade body it would be a defense of the weak now and that is true still on trade but on the non-trade issues all these lobbies putting in their two cents worth it is turning into an assault on the weak nations so that's where the real crisis is and I think the NGOs will have to are waking up to that and deciding how to best handle it thank you once again if you have questions for Dr. Baguatti you can write them down and you can give them to the ushers I'd also let you know that we have complimentary coffee and hot cider available outside in John's Corsair and if we could assemble our panelists here we'll get ready and we'll see if we can have a few questions for Dr. Baguatti we're going to try to get the Q&A portion of the program underway promptly here we've slipped a little bit in time as the day has progressed we have a few questions from the audience already available to put to our panel members to Professor Baguatti and do the others on our panel who might choose to comment on them if you have questions to give to the ushers would you do that as promptly as possible and we can continue to funnel those questions up to the front here and have as many of them addressed as we can first question we have for Professor Baguatti globalization causes people to lose the personal connection to the goods they consume for instance I don't know who made my shoes shouldn't we encourage locally produced products to give me a common identity that argument doesn't appeal to me because I'm quite I'm afraid I'm a modern consumer who will take things from wherever they come I mean it's very hard to determine today in modern economy anyway who did what I mean it's like the bionic man or there was six million dollar man and made up of transplants from all sorts of places the Japanese have used this kind of argument to some extent like we have to grow our own rice in order to have agricultural protection it just doesn't sound right if you're wearing a hula hoop or something it's fine but if you're like the Japanese it just you know it seems like a dodge for protectionism but I think there's nostalgia for doing your own thing which you can find actually in the self-sufficient villages and so on of Wakanti as well which Dr. Cobb mentioned I don't think it's a workable thing in today because largely because of the diffusion of ideas and tastes I mean you know if you ask the indigenous communities truly isolated ones and said look I mean if they if they could watch television and see things they would be rushing to take you know get to the town and then to Bombay then to New York then and so on and so forth it is one of these things which I think we have we can't really slow down I would my reaction is to go the route of cultural preservation and so on like the National Trust of Scotland and a lot of us do that you know mark out areas where we want to preserve something from the past and then then have an appropriate you know policy to am I too close? No thank you Oh I'm sort of almost touching my nose So I was just saying that you know you cannot stop the flow of history when the world is collapsed through the communications network and to where people see other things so historically people have always moved from the village to the town to the city to foreign cities and so on and so forth and it's an endless ongoing process and many of us do have these impulses to preserve some heritage some indigenous community perhaps which really badly wants to stay that way and I think we should simply find the monies to do that and the suitable NGOs but if we start ringing our hands about things that are going to vanish it's going to be very hard like I mean in my debate with Teddy Goldsmith he had exactly the same worries and I said look this is virtually in every country in every culture you know men of literature like you know Tani Zaki Japan is a wonderful essay with nostalgia about the vanishing Japan I mean you can you know it's very evocative brings tears to your eyes but what do you do with it I mean you simply can't isolate communities anymore and so all we can do is try and you know see if there's something to preserve if we can agree on that and that is what the things like National Trust or Scotland are and I'm sure we have lots of those things preserving different areas different cultures basically using subsidies and NGOs and our own government subsidies to do it I know little stores are disappearing this part of the anger against Starbucks is precisely that is displacing little coffee shops and borders Amazon borders and what's the other store Bonds and Noble are displaced I mean many bookstores are going out like this lovely store called Shakespeare and today you just have these big chains of course they've got their own life I don't even know why they themselves are under pressure from further technology because they're also likely to go under if amazon.com works and if you go to Bonds and Noble in New York one of them many stores usually they have a cafeteria and it seems to me like it's become a place where you pick up people for a date you don't really go there to buy a book if you want to buy a book you really order it on amazon.com everything is changing continuously and there's nobody even God can't stop it I think have a pair of questions that address the environmental theme they have a slightly different focus to them but I think it will be best to give them both to you at once first one says you said quote if I harm the environment I have to pay for it close quote just following the jab at the libertarian mistrust of government yet there is no force more inefficient in the market than government please expand how government enforcement of I just have to pay for it will affect improvement in the free trade environmental dichotomy and the other question concerning the environment says to truly address environmental problems isn't it better to work with the concerns of local people rather than global environmental NGOs you can have both to answer to the last question I mean there's no magic bullet again if you have a government which is very much in the hawk to to anti-environmental interest and of course it's a bigger battle ahead of you to do that but I would say that in many cases like polluter pay principle in the European Union I think Mrs. Oldman can talk to it there's substantial progress towards being you know towards freezing out people who will not do it and I think it's an evolving situation true you can't do it outright because there are other interests arrayed against that but I think this is exactly where thinking has has evolved and the only problem which I didn't mention was that those tax rates can be different in different countries depending on fundamentals like in Mexico you may have you may want to attach greater priority to getting cleaner water because people don't have these little period bottles and so on so forth and cleaners and filters which you know we have to defend ourselves besides how water is cleaner anyway and sometimes I think my daughter was carrying vodka or gin in that because I just drink Giuliani water and but in Mexico where decentry is a major problem people don't have the funds to do it I would say that is probably something to which you would attach a higher tax rate and maybe a little bit less on cleaner air than we we would so the priorities or sequencing etc can be different this again gets back to what Joe and I were talking about that we you know these are many of these decisions should not be levied by us like you know you must have that tax rate you know you you teach them you educate you interact with them and say look these are things which you need to do and figure out your own tax rates I would not say counterweight if your tax rate is lower that somehow you're a shirker or something because I would expect those tax rates to be different Professor Stiglitz what Jacques just said there's just one other comment I want to make which is to distinguish between some global environmental issues like global warming and local environmental issues which are environmental issues focusing on one community seems to me that particularly for local environmental issues the local groups are the appropriate for them for the global environmental issues like the global environment and greenhouse gases there really is a need for global environmental NGOs and let me just ask pick up one question to ask Jacques about which in his view of the separation in the Montreal Convention which has to do with the ozone gases there was a provision I believe for trade sanctions as a last diction enforcement mechanism it hasn't had to be invoked because there was sufficient consensus behind that agreement and there was compliance without the sanctions but do you feel comfortable with that as a backdrop sanction in an international convention on the environment I think if you were a sufficient majority a sufficient plurality I would feel comfortable as you say it's never come up this is a theoretical issue at the moment but I do think that unless you have real free riders sometimes you're going to have people who don't want to get onto the bus rather than people want to ride along because they don't agree with your diagnosis or if they think the particular allocation of burdens is not fair or equitable like the sort of things you and I had today so one has to be a bit careful about you know what kind of thing we're doing actually the developed countries have been rather sensible on things like Kyoto whether we can get it through the senate is another matter but what we have done is to actually assist the developing countries financially, technologically in those agreements to come on board and so the distribution burden has been rather reasonable this is the sort of thing which is lacking in the WTO decisions because it's just left to you right we don't have like the shrimp turtle let me just take which is the what we call a values related many environmentalists quite naturally get upset that if the United States has a law saying you must use turtle excluding devices teds not Kennedy teds mean turtle excluding devices which are narrow nets with narrow necks and they must be used before your shrimp can be exported and it is motivated by the desire to save the turtles and four countries four poor countries or you know including India brought a case against that and actually the problem with the issue was whether we could unilaterally say that the way you know whether these nets have been used or not can be a decisive factor in whether something can be important when you look at it just in you know without further thinking about it you say why not you know because this is our country and you know we have the same law here why not the same law you know apply to imports well the problem with that is basically and this is you know is that these countries are saying look we will enter into a negotiations on something like this and then arrive at an agreement that wasn't done by the United States they just went and passed the law unilaterally to nothing is built into it by way of assistance to buy the nets or anything like which is what you would have if you had a negotiation after you're doing it for Kyoto and do you know how much it costs to to buy a Ted in Walmart I know Walmart is not very popular but leave that aside it's 50 bucks a piece now I don't know how many fishermen there are I haven't done my homework but you'd probably be for the cost of her not a conference here which is hopefully very spartan but a USAID or a World Bank conference if you drop three of them you would buy the tets give them to these poor countries end up the problem so again it gets back to what I said the litigators problem and even the environmental the better big environmental groups are full of lawyers you know well-heeled lawyers and I don't want to sound terribly anti-lawyer but the notion that you can open up a range of different instruments and really say look are we really interested in a big fight over this or are we really interested in settling it and it is so easily settled and we don't have to do anything like this because we have conceded that principle in the big cases why not use it in the little so I think that goes back to WTO governance again I think if you had more NGOs sort of you know parallel talks and so on our NGOs in India could talk to NGOs here because the you know one very major prize winning environmental prize winning NGO activist in India actually wrote an article just three months ago saying he was going to work as our software that were trying to get Indian government to to adopt tets but he said he would fight to the death the US attempted doing it so you see this is the problem that we come across as I think what did you say bullies or something or hypocritical because our congressman would be walking down the steps of Capitol Hill and screaming their heads off if somebody said look you shouldn't have chickens producing batteries you shouldn't have hogs and pens where they can barely breathe and so on and so forth and we're simply going to stop all exports so we don't like your sweatshops in New York and there are lots of them whole textile exports are going to be stopped all of shrimp exports were stopped from India incidentally only five percent is done without tets so we have done I think we need more goodwill I think there's much more scope for getting the two two groups to go forward together of course there are some residual conflicts are bound to be there but we maximize the number of conflicts unnecessarily so I this is why I work with environmentalists and talk to them because you know it is possible to negotiate better solutions I think like we've done on the MEA multilateral environmental agreements as they're called ozone and boson and so on I think in an effort to try to keep a close to schedule here we should probably plan on taking a break and then we'll reconvene shortly for our final lecture which will be by Mr. Michael Solman