Gruber says ‘spatial inequality’ could be a negative effect of globalization

While most observers acknowledge that free trade is a force for long-term economic gain, Lloyd Gruber’s research shows that globalization also has political consequences––some of them potentially negative––that have been neglected, he claims, by economists and political scientists alike. His recent book, Ruling the World: Power Politics and the Rise of Supranational Institutions, offers a cautionary analysis of globalization.

Now, after a year of research while on sabbatical at the Brookings Institution in Washington, D.C., Gruber, Associate Professor in the Irving B. Harris Graduate School of Public Policy Studies, has turned his attention to the domestic side of the story––the relationship between globalization and internal political relations, and the little noticed but important impact of changes in the political geography of inequality.

“We don’t know as much as we probably ought to about how openness affects the performance of domestic political institutions,” Gruber said. “For example, do open societies have a harder time governing and reconciling differences among different societal groups?”

Gruber noted that international economists have long studied the impact of globalization on economic performance, but he says this is not the whole picture. “In trying to assess whether the forces of globalization are a good thing, we have to look at the political side, too. Irrespective of the economic benefits, there may be desirable or undesirable political consequences,” Gruber said.

Gruber explained that political scientists are basically in two camps when it comes to globalization. One body of opinion argues that openness leads to prosperity. As a result, political tensions are ameliorated because greater wealth lowers the political stakes and it becomes much easier to compromise with opponents. In contrast to this optimistic view, others argue that globalization inevitably leads to domestic inequality––though all boats may be lifted by a rising tide, some are always lifted higher than others, resulting in greater wealth, but also increased inequality.

Gruber is sympathetic to a pessimistic view, though he thinks it is too simplistic. “Economic inequality need not lead to political conflict,” he said. “Sometimes it will and sometimes it won’t.”

Gruber’s research suggests that the political geography of inequality is a particularly important variable. “You can have a society that is polarized among rich and poor, but if rich and poor are living together––intermingled spatially––there will be strong pressures for political representatives to move toward the center, toward the moderate center and away from the extremes,” he explained.

“In cosmopolitan cities, people from different ethnic groups all live together and those cities are not typically cauldrons of political violence. The problems tend to come when the inequality has a spatial element, the rich in enclaves in the suburbs and the poor clustered in the inner cities,” he said. “With situations like that, political representatives of these groups are much less interested in finding common ground. Instead, their focus is on speaking to their own, homogeneous constituencies.”

Gruber has concluded that spatial inequality is thus particularly problematic for securing domestic political harmony. The relative simplicity of protected markets, in which suppliers and customers are all within a country’s borders, creates strong pressures to conglomerate business activities. Almost overnight, globalization changes everything; suppliers and customers are international so there is much less point to clustering business activities. “We are seeing this happen in Mexico,” Gruber said.

“If you are wealthy, you can now live in enclaves virtually anywhere in the country and you don’t have to live near poor people in Mexico City or other congested urban centers. The pattern worries me, and it’s a development that badly needs to be studied.”