Dani Rodrik is a professor at Harvard University’s Kennedy School of Government and a leading scholar of globalization and economic development. His writings are a compelling combination of interna Full profile
The Nation-State Reborn
CommentsCAMBRIDGE – One of our era’s foundational myths is that globalization has condemned the nation-state to irrelevance. The revolution in transport and communications, we hear, has vaporized borders and shrunk the world. New modes of governance, ranging from transnational networks of regulators to international civil-society organizations to multilateral institutions, are transcending and supplanting national lawmakers. Domestic policymakers, it is said, are largely powerless in the face of global markets.
Illustration by Pedro Molina
CommentsThe global financial crisis has shattered this myth. Who bailed out the banks, pumped in the liquidity, engaged in fiscal stimulus, and provided the safety nets for the unemployed to thwart an escalating catastrophe? Who is re-writing the rules on financial-market supervision and regulation to prevent another occurrence? Who gets the lion’s share of the blame for everything that goes wrong? The answer is always the same: national governments. The G-20, the International Monetary Fund, and the Basel Committee on Banking Supervision have been largely sideshows.
CommentsEven in Europe, where regional institutions are comparatively strong, it is national interest and national policymakers, largely in the person of German Chancellor Angela Merkel, who have dominated policymaking. Had Merkel been less enamored of austerity for Europe’s debt-distressed countries, and had she managed to convince her domestic electorate of the need for a different approach, the eurozone crisis would have played out quite differently.
CommentsYet even as the nation-state survives, its reputation lies in tatters. The intellectual assault on it takes two forms. First, there is the critique by economists who view governments as an impediment to the freer flow of goods, capital, and people around the world. Prevent domestic policymakers from intervening with their regulations and barriers, they say, and global markets will take care of themselves, in the process creating a more integrated and efficient world economy.
CommentsBut who will provide the market’s rules and regulations, if not nation-states? Laissez-faire is a recipe for more financial crises and greater political backlash. Moreover, it would require entrusting economic policy to international technocrats, insulated as they are from the push and pull of politics – a stance that severely circumscribes democracy and political accountability.
CommentsIn short, laissez-faire and international technocracy does not provide a plausible alternative to the nation-state. Indeed, the erosion of the nation-state ultimately does little good for global markets as long as we lack viable mechanisms of global governance.
CommentsSecond, there are cosmopolitan ethicists who decry the artificiality of national borders. As the philosopher Peter Singer has put it, the communications revolution has spawned a “global audience” that creates the basis for a “global ethics.” If we identify ourselves with the nation, our morality remains national. But, if we increasingly associate ourselves with the world at large, our loyalties will expand, too. Similarly, the Nobel laureate economist Amartya Sen speaks of our “multiple identities” – ethnic, religious, national, local, professional, and political – many of which cross national boundaries.
CommentsIt is unclear how much of this is wishful thinking and how much is based on real shifts in identities and attachments. Survey evidence shows that attachment to the nation-state remains quite strong.
CommentsA few years ago, the World Values Survey questioned respondents in scores of countries about their attachments to their local communities, their nations, and to the world at large. Not surprisingly, those who viewed themselves as national citizens greatly outnumbered those who regarded themselves as world citizens. But, strikingly, national identity overshadowed even local identity in the United States, Europe, India, China, and most other regions.
CommentsThe same surveys indicate that younger people, the highly educated, and those who identify themselves as upper class, are more likely to associate themselves with the world. Nevertheless, it is difficult to identify any demographic segment in which attachment to the global community outweighs attachment to the country.
CommentsAs large as the decline in transport and communications costs has been, it has not obliterated geography. Economic, social, and political activity remains clustered on the basis of preferences, needs, and historical trajectories that vary around the globe.
CommentsGeographical distance is as strong a determinant of economic exchange as it was a half-century ago. Even the Internet, it turns out, is not as borderless as it seems: one study found that Americans are much more likely to visit Web sites from countries that are physically close than from countries that are far away, even after controlling for language, income, and many other factors.
CommentsThe trouble is that we are still in the grasp of the myth of the nation-state’s decline. Political leaders plead impotence, intellectuals dream up implausible global-governance schemes, and the losers increasingly blame immigrants or imports. Talk about re-empowering the nation-state and respectable people run for cover, as if one has proposed reviving the plague.
CommentsTo be sure, the geography of attachments and identities is not fixed; indeed, it has changed over the course of history. That means that we should not entirely dismiss the likelihood that a true global consciousness will develop in the future, along with transnational political communities.
CommentsBut today’s challenges cannot be met by institutions that do not (yet) exist. For now, people still must turn for solutions to their national governments, which remain the best hope for collective action. The nation-state may be a relic bequeathed to us by the French Revolution, but it is all that we have .
There is a growing gap between social need and the public resources available to spend on it. Photograph: Oli Scarff/Getty Images
In the midst of great wealth, we are creating a forgotten Britain. Our society's tectonic plates are shifting, and the consequences for the most disadvantaged will be profound.
Firstly, we face a growing gap between social need in this country and the public resources available to spend on it. We should not kid ourselves that the era of austerity will be limited to the current parliament. In the short term, the cuts are likely to get worse not better. In the long term, our ageing population means the demand on a range of social services is set to outstrip supply.
Secondly, the cuts are being implemented in the context of a growing democratic deficit. The government is devolving power to a local level, but greater power is not being accompanied by greater accountability. Local media is weak, only a third of us vote in local elections, and quangos such as the Audit Commission that once interrogated local decisions have been pared back or abolished.
Thirdly, our society is one in which the "haves" live increasingly parallel lives to those of the "have nots". The cabinet stands accused of being divorced from normal people, but the truth is that the fractures run deeper. Too many businesses are cut off from the hard reality in their own backyards. And across the board, charity leaders talk of public attitudes hardening, with greater suspicion of anyone who relies on public-funded support, be they disabled, mentally ill or unlucky enough to be raised as a child in a "feckless" family. As one charity CEO put it, we are becoming a less civilised society.
The result is that the worsening plight of swaths of our society flies under the national radar. The homeless, victims of domestic violence, those with mental health problems, the elderly and alone, children in broken homes – the support for these people looks likely to be eroded over the next decade, without the nation they are part of appearing to notice or care.
How do we avoid the spectre of a forgotten Britain becoming reality? The political class must rediscover its urgency on public service reform. A brutal logic is at play: if you remove billions from public services but leave them unreformed, the people who rely on them suffer. The government has simply not lived up to its rhetoric here. For all the criticism of its rush to reform the NHS, in too many places what we see is glacial-paced gradualism (see reform of the probation service or social care). The people who depend on our public services will pay the price if we combine reduction in resource with a timid adherence to the same old way of doing things.
We must also plug the scrutiny deficit. The government's promised army of "armchair auditors" has not come to pass. Charities could fulfil the role given the right support – for instance, if we had better access to public-sector information. There is a role for businesses in all this, too. All the major parties are now asking how the private sector can be encouraged and supported to play a bigger role in tackling social problems. Over the next decade we need to turn those questions into a step-change in the way businesses engage with communities.
Great fiscal, constitutional and attitudinal changes are unfolding around us. This is not about individual ministers or policies – these shifts are bigger and longer-term than that. As a society we need to respond, with a reformed state, a civil society able to hold the government to account and remind us all that we do not travel alone in this life, and a private sector engaged in the communities around it. Otherwise we are at risk of creating a forgotten Britain whose existence we would come deeply to regret.
Britain's poorest spend a higher proportion of their income on food and utility bills, which have seen the biggest price increases. Photograph: Carl De Souza/AFP/Getty Images
The UK's poorest families are facing the tightest income squeeze of any group due to higher rates of inflation and lower wage boosts, according to new analysis of official figures conducted by the Trades Union Conference (TUC).
The bottom 10% of the country by income are facing effective inflation rates of 4.1% versus just 3.3% for the richest, while official Office for National Statistics (ONS) statistics from 2011 show the wages of the bottom 10% of earners rose just 0.7% compared with increases of 1.6% for the richest.
Taken together, the two measures suggest real wages for low-income families in Britain are falling twice as fast as those of their richer counterparts. In real terms, the bottom 10% of wage earners are 3.4% poorer than they were a year before versus a 1.7% drop for the top 10% year-on-year.
The analysis also suggested real wages had fallen for every income group every month since the coalition came to power in May 2010, with the lowest earners frequently taking the biggest hit.
The figures come as a further blow to the coalition's "all in it together" message after a rocky relaunch through the government's second Queen's speech this week, as the TUC used the data to call for further action to support families.
"People have been getting poorer every month for the last two years as high inflation, tax rises and the dire state of the economy take their toll on family budgets," said the outgoing general secretary, Brendan Barber.
"Over the last year the poorest households have suffered more than anyone else from rising food prices and soaring gas and electricity bills. The chancellor's obsession with raising VAT, along with swingeing cuts to tax credits, has made life even tougher for those on low to medium incomes.
"The government must start taking our living standards crisis seriously and put jobs and decent pay rises at the heart of its economic strategy. Dressing up plans to make it easier for businesses to sack people for no reason as some kind of pro-growth agenda will not help our economy one bit."
Low-income families have typically faced lower inflation than the UK as a whole over the past few years thanks to smaller price rises in food and utility bills versus other rising costs.
The UK's official measure of inflation, the CPI, stands at 3.5% and is calculated by measuring changes in prices of thousands of items from different categories: food, utility bills, recreation and more.
New research by the TUC has re-calculated this figure from 2010 to February 2012 using data showing how each group spends its money. Families in the bottom 10% spend a much higher proportion of their income on food and household costs such as utility bills than the richest 10%, and owing to lower levels of spending do not benefit nearly so much from smaller increases in recreation, clothing, restaurants and other leisure activities caused by the stagnant economy.
According to the ONS figures, food is 4.6% more expensive than a year ago, alcohol and tobacco 8% pricier, and housing and utilities up 6.2%. Only recreation and culture is cheaper than a year ago, with a small 0.6% decrease.
The TUC figures come before new official data on inflation and wages, due to be published next week. The figures will be the first to show the effects of some of the measures announced in George Osborne's March budget, such as increases on alcohol and cigarette duty, which the TUC predicts will affect inflation for low-income families to a greater extent than their wealthier counterparts.
The now-notorious "pasty tax" – which would make hot baked goods sold in supermarkets and bakeries subject to VAT – takes effect in October 2012.
