Global Trilemma

by Shihang

An interesting perspective on the Greek crisis which argues that this latest incident again demonstrates the incompatibility of economic globalisation, democracy and the nation state.

In our modern context, taking democracy as a constant, this argument suggests we cannot have increasingly open markets for goods, labour  etc. without ceding some economic authority to a central power (EU for instance).

This is linked to Martin Wolf’s piece on capital inflows, which touches upon the same idea:

However, as Brad DeLong suggests, perhaps there is no real need for a trade-off if governments are conscientious in managing the twin ideals of economic globalisation and national sovereignty. In Singapore, we do seem to have both economic integration and national sovereignty, although some may argue that 1. the two are insulated from each other by careful government controls (banded exchange rates), and 2. Singapore’s government does not experience much internal political pressure, which allows it to think in the longer term without facing an impatient electorate.