The Welfare State and Government Responses to Economic Openness

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The Welfare State and Government Responses to Economic Openness I. Introduction Economic openness is the phenomenon in which individual economies from all over the world become increasingly connected and interdependent through greater liberalization of trade and the vast movement of goods, services, and capital across borders. With the rise of globalization, positive effects have resulted from economic openness. The widespread benefits of globalization have resulted in global economic growth, prosperity, and have increased the overall standard of living in the world. However, globalization has also been blamed as being the principal culprit for numerous global problems including poverty, wealth disparity, and environmental degradation. The debate over globalization has resulted in a zero-sum game between the pursuit of economic openness and the maintenance of the welfare state. This paper will argue that a conflict does exists between globalization and the welfare state; however, governments still possess critical policy tools in which they are able to minimize the negative effects of economic openness. Through the examination of welfare state and the compromise of embedded liberalism, this paper will show the challenges a government must face in attempts to protect its citizens from globalization. II. The Zero-Sum Game and the Challenges of Globalization The relationship between the welfare state and globalization is a zero-sum game where gains in one will lead to concessions in another. This divide between the two began with the acceptance of neoliberal economic policies. At the end of the Cold War in 1989, liberal globalization took off in an unprecedented rate through the pursuit of open and free markets, deregulation, ... ... middle of paper ... ...ers and Losers in the Global Economy.” International Organization. 54(2). pp. 361 Freeman, R. (2006). “People Flows in Globalization” Journal of Economic Perspectives. 20(2). pp. 165 Anderson, G. (2003). “The Compromise of Embedded Liberalism, American Trade Remedy Law, and Canadian Softwood Lumber: Can’t We All Just Get Along?” Canadian Foreign Policy. 10(2). pp. 92 Ruggie, J. (1982). “International Regimes, Transactions, and Change: Embedded Liberalism in the Postwar Economic Order.” International Organization. 36(2). pp. 385 Anderson 93-94 Anderson, G. (2008). Lecture by Professor Greg Ander on September 26th, 2008 on the “Compromise of Embedded Liberalism” University of Alberta. Anderson 93 Rodrik 37 Yeates 644 Deacon, B. (2005). “The Governance and Politics of Global Social Policy.” Social Policy & Society. 4(4). pp. 440 Rodrik 35
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