Saturday, May 15, 2010

Can democracy, globalization and the nation state co-exist?

Dani Rodrik has an interesting piece in Project Syndacate, that can be found here. He argues that there is a trilemma involving globalization. Three good things are democracy, globalization, and nation-states. Rodrik says that we can have only two out of the three. He uses the Greek situation to elaborate. For globalization to work, either Greece has to give up democracy so the government doesn't provide the social programs the people want or Greece has to give up independence and follow the lead exactly of the bigger EU countries, Germany in particular.

Rodrik raises some interesting points, including a comparison to the US experience of the federal government wresting power away from the states. But Greece can have globalization and its nation state if it hadn't joined the euro zone. Increasing globalization does not require movement to a single currency. Certainly there is a reduction in sovereignty when nations join international groups or free trade areas, but it is a voluntary reduction and limited to certain areas.

Rodrik may prove to be correct. As yet, I am not convinced.