Downsizing an Economist: Globalization and How to Help the Poor

Four liberal economists got together on a lovely island in southern Germany Saturday last weekend and came up with the following: that globalization and technology have widened the gap between the rich and the poor around the world, and that governments should try to help those at the bottom. Actually, globalization's not the problem, it's the solution.

The Wall Street Journal quotes extensively from Robert M. Solow, a senior economist 45 years ago for JFK, who identifies three chief offenders for global inequality:

Globalization, he said, has dramatically increased the world's supply of low-skilled labor, damping wages for such workers in developed countries. Rapid technological change also has boosted demand for high-skilled workers, whose wages have risen as demand exceeded supply. In addition, labor unions have lost ground and workers' wages have suffered as wealthy countries have shifted to service industries from manufacturing.

Solow's Nobel Prize notwithstanding, these sound like three good catalysts for resolving global inequality. While globalization may be making dinosaurs out of low-skilled workers in developed countries, it's drastically improving the lives of those in the Third World. And while technology is certainly rewarding high-skilled workers, it's also improving productivity, fostering innovation, and helping industries' bottom lines—which leads to greater efficiency and economic activity.

So it seems that, liberal credentials aside, Solow still has an economist's heart. He isn't concerned so much for the world's poor as for the First World's "poor." His solution? "It's hard to know what to do about it, other than to accept it and repair it, rather than try to prevent it," he said. As the Journal notes, "repair" in Solow's lexicon means higher taxes on the wealthy.

Yes, take money from those who are doing the most to lift the world from poverty. That's an ingenious way to help the truly poor.