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Pagrotsky: We should not exaggerate the homogeneity of Sweden. We are also a more and more heterogeneous society. But if American economists, politicians ought to look around to see how other countries have fared and they have met the same global environment as America has met, then there might be some things to pick up. And we have been subject, not to the same, but to more intense competitive pressures from new emerging economies. We have not only China, Vietnam, India as new competitors compared to what was there 15 or 20 years ago. We also have, next door, Poland, Baltic Republics, Russia with a highly educated workforce, with very, very low wages, perhaps 10% of the wages paid in my country, and they’re also one hour away from us. So we have faced more intense globalization than the American economy and facing more or less the same pressures. We have increased employment, increased [real] wages also for blue-collar workers. We’ve maintained strong support for open borders and we have been able to develop our society. Whereas in the United States, people are afraid of foreign competition, [real] wages have declined, employment has not risen very much. And I think to blame technological change and globalization in the United States cannot be true if the same elements have led to a completely different outcome in a country like mine. But my country is a small, open economy with a very high level of education and a sophisticated social model. I do not say that what we do can be transformed into a new American model in 10 minutes, but please have a look and see what there is to pick up of inspiration from a model that isn’t very different, but has stood the test of globalization much better than the American model.

Question: Where will globalization take us in 10 years?

Pagrostky: We continue to intensify. It will affect more areas. It will include more countries, and in each country, it will include more and more sectors. And together with technological change, which I believe is an underestimated force behind the changes we have seen and we are seeing, together they will continue to transform our countries and the global economy. Globalization to me means not only financial markets, not only trade in products like cars, it also means culture, news, perception of the world, and all kinds of other things. Maybe we should call it under the label that the world is shrinking, borders mean less. The internet means that we can communicate. More and more people speak a language where they can communicate with people in other parts of the planet. All these things together work to shrink distances and that is a much, much larger, much, much wider concept, and only interest rates, shares and physical goods moving around.

 

Leif Pagrotsky on Globaliza...

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