Why global markets have
failed to reduce inequality
Nobel laureate
Eric Maskin explains
By Jon Fernquest 
The
American economist Eric Maskin was the recipient of the 2007 Nobel Prize in
economics for his groundbreaking work in game
theory and
"mechanism
design." Dr. Maskin gave a series of talks and lectures last month in Bangkok and Cambodia on the subject of "Why global markets have failed to reduce inequality" sponsored by the International Peace Foundation (See webpage).
The International Peace Foundation is an NGO based in Vienna that sponsors lecture tours by Nobel Prize laureates.
In today's article Bangkok Post reporter Parista Yuthamanop interviews Dr. Maskin about the topic of his lecture tour.
"Mechanism design" is a field of study that can help sort out the byzantine complexities of telecommunications policy. This makes it potentially useful in Thailand's longstanding 3G and telecommunications impasse (See paper on the famous FCC spectrum auction designs in the US).
Also, if you are interested in game theory, there is a wonderful course on this subject downloadable for free from Yale (See webpage via @openculture).
Today's article begins after the vocabulary:
Eric Maskin - Nobel
prize winning economist specializing in game theory and "mechanism
design" (See Wikipedia)
Nobel Prize in economics - the highest award for achievement in economics that started in 1969 (See Wikipedia)
a recipient of Y - a person who has received Y
groundbreaking - doing something for the first time
game theory - the mathematical study of strategy in games (See Wikipedia)
mechanism design, reverse game theory - designing games or auctions "whose rules can influence others to act the way he would like," can be used to create policy to give people the right incentives to achieve policy goals (See Wikipedia)
sort out - make something complex easy for people to understand and control
byzantine - very complex and difficult to understand
complexities - having many different parts related to each other in difficult to understand ways สิ่งที่ซับซ้อน, ประกอบด้วยส่วนต่างๆที่จุกจิก
telecommunications - communications by mobile phone and old-style fixed line phone
policy - ideas and plans used by government to make decisions in politics, economic, social policy, etc...นโยบาย
potentially useful - could be useful (don't know yet)
impasse - some problem or issue that cannot be solved and prevents your project from going forward and making progress
FCC (Federal Communications Commission) - the US government agency in charge of radio and TV broadcasting (See Wikipedia)
spectrum - the radio waves in the air that carry radio and TV broadcasts (See Wikipedia)
FCC spectrum auction - a famous application of mechanism design to a practical problem, deciding which companies get spectrum in the US (See paper and PhD dissertation with critical evaluation)
inequality - a situation or condition where people are not equal (here: big differences between the incomes of people in a country)
sponsored by... - paid for by...
International Peace Foundation - (Read about the organisation)
NGO (Non-Governmental Organization) - any non-profit, voluntary citizens' group which is organized on a local, national or international level, perform a variety of service and humanitarian functions, bring citizen concerns to Governments, advocate and monitor policies and encourage political participation through provision of information. Some are organized around specific issues, such as human rights, environment or health (Source: ngo.org also see Wikipedia)
based in X - place X is where their headquarters is (where they do, supervise or manage their work from)
lecture tour - a series of talks on a topic at universities, schools and other public and private places
Nobel Prize laureates - people who have won a Nobel prize
Nobel Prize in economics - the highest award for achievement in economics that started in 1969 (See Wikipedia)
a recipient of Y - a person who has received Y
groundbreaking - doing something for the first time
game theory - the mathematical study of strategy in games (See Wikipedia)
mechanism design, reverse game theory - designing games or auctions "whose rules can influence others to act the way he would like," can be used to create policy to give people the right incentives to achieve policy goals (See Wikipedia)
sort out - make something complex easy for people to understand and control
byzantine - very complex and difficult to understand
complexities - having many different parts related to each other in difficult to understand ways สิ่งที่ซับซ้อน, ประกอบด้วยส่วนต่างๆที่จุกจิก
telecommunications - communications by mobile phone and old-style fixed line phone
policy - ideas and plans used by government to make decisions in politics, economic, social policy, etc...นโยบาย
potentially useful - could be useful (don't know yet)
impasse - some problem or issue that cannot be solved and prevents your project from going forward and making progress
FCC (Federal Communications Commission) - the US government agency in charge of radio and TV broadcasting (See Wikipedia)
spectrum - the radio waves in the air that carry radio and TV broadcasts (See Wikipedia)
FCC spectrum auction - a famous application of mechanism design to a practical problem, deciding which companies get spectrum in the US (See paper and PhD dissertation with critical evaluation)
inequality - a situation or condition where people are not equal (here: big differences between the incomes of people in a country)
sponsored by... - paid for by...
International Peace Foundation - (Read about the organisation)
NGO (Non-Governmental Organization) - any non-profit, voluntary citizens' group which is organized on a local, national or international level, perform a variety of service and humanitarian functions, bring citizen concerns to Governments, advocate and monitor policies and encourage political participation through provision of information. Some are organized around specific issues, such as human rights, environment or health (Source: ngo.org also see Wikipedia)
based in X - place X is where their headquarters is (where they do, supervise or manage their work from)
lecture tour - a series of talks on a topic at universities, schools and other public and private places
Nobel Prize laureates - people who have won a Nobel prize
Economics
TRADE
Income disparities fruit of free trade
2/02/2010 at 12:00 AMParista Yuthamanop
The closer link between trade and production has enabled businesses worldwide to make goods more cheaply and thrive. But many people agree that rising income inequality has been one of the pitfalls
Eric Maskin, an American economist who won the 2007 Nobel Prize in economics, observed that countries in Latin America and Asia have witnessed increasing inequality since they liberalised international trade.
trade - activity of
buying and selling goods between companies and countries
free trade - when goods can be sold between countries with few trade barriers
trade barriers, barriers to trade - laws, regulations and practices that prevent goods coming in from other countries (See Wikipedia)
X fruit of Y - Y caused X, X was the result of Y happening
disparities - big differences between two things
income disparities - big differences income (between two social groups)
link - to connect เชื่อมs
X enabled Y - X happened and this made it possible for Y to happen
thrive - do well economically, have high profits and high incomes
X witnessed Y - condition, situation or event Y happened in X (or X saw Y happen)
liberalise - make free
liberalised international trade - make trade between different countries "free" by reducing tariffs, quotas and other trade barriers
tariffs - taxes on goods imported into a country
quotas - limits on imports of a good from a country
free trade - when goods can be sold between countries with few trade barriers
trade barriers, barriers to trade - laws, regulations and practices that prevent goods coming in from other countries (See Wikipedia)
X fruit of Y - Y caused X, X was the result of Y happening
disparities - big differences between two things
income disparities - big differences income (between two social groups)
link - to connect เชื่อมs
X enabled Y - X happened and this made it possible for Y to happen
thrive - do well economically, have high profits and high incomes
X witnessed Y - condition, situation or event Y happened in X (or X saw Y happen)
liberalise - make free
liberalised international trade - make trade between different countries "free" by reducing tariffs, quotas and other trade barriers
tariffs - taxes on goods imported into a country
quotas - limits on imports of a good from a country
Mexico, for example, quadrupled its international trade five years after it signed a free trade pact with the US in 1975. But wages of high-skilled workers increased by 13% while those of low-skilled workers declined by 14.
Prof Maskin said that the "comparative advantage" theory has failed to explain the widening income gaps that occur after trade barriers are removed. The theory hypothesised that once trade and services were liberalised, production bases would relocate based on the distinguishing factors for production in each country.
quadrupled - increased
to a level four times greater (example: from 10 to 40)
pact - agreement
free trade pact - an agreement between countries to make the flow of goods between the countries easier (by eliminating trade barriers)
advantage - a condition giving a greater chance of success ความได้เปรียบ
comparative advantage - the idea that a country's economy is most efficiently employed in activities in which they perform relatively better than in others (See Wikipedia)
efficient - while working and doing a task wasting the smallest amount of time, energ and resources
theory - one or more ideas that explain how or why something happens สมมติฐาน
widening income gaps - when the rich become richer and the poor become poorer
relocate - to move someone or something to another place โยกย้ายประชาชนออกจากบริเวณ
pact - agreement
free trade pact - an agreement between countries to make the flow of goods between the countries easier (by eliminating trade barriers)
advantage - a condition giving a greater chance of success ความได้เปรียบ
comparative advantage - the idea that a country's economy is most efficiently employed in activities in which they perform relatively better than in others (See Wikipedia)
efficient - while working and doing a task wasting the smallest amount of time, energ and resources
theory - one or more ideas that explain how or why something happens สมมติฐาน
widening income gaps - when the rich become richer and the poor become poorer
relocate - to move someone or something to another place โยกย้ายประชาชนออกจากบริเวณ
In the case of Mexico and the US, the theory would lead to a scenario in which Mexico would shift to low-skilled production and import high-skilled production of goods from the US. The US would do the opposite
Ultimately, Mexico could see a decline in wages of high-skilled workers because there is less demand. It would have witnessed an increase in wages of low-skilled workers because there is more demand.
scenario
- a description of possible actions or events in the future
shift - to transfer; to move from one place to another เคลื่อนย้าย
import - to buy or bring in products from another country นำเข้า
demand - the need and desire of consumers to buy goods in an economy
shift - to transfer; to move from one place to another เคลื่อนย้าย
import - to buy or bring in products from another country นำเข้า
demand - the need and desire of consumers to buy goods in an economy
International trade and the production of goods has deepened over the past 25 years, owing to significant decreases in communications costs and the production of goods across borders. One premise is that such developments will help to reduce poverty.
China and India have grown spectacularly over the past 20 years and their successes have been highly related to the fact that they opened up their economies.
international
trade has deepened - international trade has increased (and
includes more goods and sectors of the economy)
significant - important สำคัญ
premise - an assumption, something you suppose is true and use to develop an argument
poverty - the condition of being extremely poor ความจน
grown spectacularly - increased by a very large and surprising amount
opened up their economies - reduced trade barriers and let more foreign goods come into their country
significant - important สำคัญ
premise - an assumption, something you suppose is true and use to develop an argument
poverty - the condition of being extremely poor ความจน
grown spectacularly - increased by a very large and surprising amount
opened up their economies - reduced trade barriers and let more foreign goods come into their country
It doesn't work that way in recent globalisation," Prof Maskin said recently in Bangkok in a forum held by International Peace Foundation. "And it makes people wonder perhaps if globalisation is not such a good idea after all.
Even though inequality has increased, so has average prosperity. So globalisation is not an all-out failure.
forum
- a place where people can express their ideas and opinions
การประชุมแสดงความคิดเห็น
prosperity - the state of being successful and having a lot of money ความเจริญรุ่งเรือง, ความมั่งคั่ง
globalisation - an ongoing process by which regional economies, societies, and cultures have become integrated through a globe-spanning network of communication and trade (See Wikipedia)
not such a good idea after all - they tried the idea and learned that it was a bad idea
an all-out failure - a complete failure
prosperity - the state of being successful and having a lot of money ความเจริญรุ่งเรือง, ความมั่งคั่ง
globalisation - an ongoing process by which regional economies, societies, and cultures have become integrated through a globe-spanning network of communication and trade (See Wikipedia)
not such a good idea after all - they tried the idea and learned that it was a bad idea
an all-out failure - a complete failure
He proposed a new theory which focuses on the fact that the rise in cross-border production would affect workers at various skill levels in each country. The new theory is based on a premise that the wealth of a country depends on its workforce's skill level
Cross-border production changes the distribution of labour skills among trade partner countries as more competition in the labour market will force workers to improve their capacity, he said
border
- the official line separating two areas, regions or countries เขตแดน
อาณาเขต
cross-border production - when part of the production of a good purchased in a country has taken place in another country
wealth - a large amount of จำนวนมาก มหาศาล
workforce - all the workers in a company or whole economy
level - the amount of something ปริมาณ
distribution of labour skills - how labour skills are spread out over different countries and different regions within a country
trade partner countries - the other countries that your country trades with (buys goods from and sells goods to)
improve - to make better ทำให้ดีขึ้น
capacity - the amount of something that can be produced ความสามารถในการ (ผลิต)
cross-border production - when part of the production of a good purchased in a country has taken place in another country
wealth - a large amount of จำนวนมาก มหาศาล
workforce - all the workers in a company or whole economy
level - the amount of something ปริมาณ
distribution of labour skills - how labour skills are spread out over different countries and different regions within a country
trade partner countries - the other countries that your country trades with (buys goods from and sells goods to)
improve - to make better ทำให้ดีขึ้น
capacity - the amount of something that can be produced ความสามารถในการ (ผลิต)
But it turns out that not all workers could match the higher skills and lift their capacity because those at the lowest end will be left to fend for themselves.
As a result of the rise in cross-border production, workers with the lowest skills will see their wages decrease, while workers with higher skills will see their pay packages get bigger. The situation today is far different from that in the pre-globalised world, he said.
We need to make an investment in the low-skilled labour of the world so they too can benefit from globalisation.
left to fend for themselves -
people or society is not helping them and has left them to take care of themselves
pay packages, compensation - both the money and benefits such as health insurance that the employees of a company receive for their work
benefit - to get help or an advantage from something ผลประโยชน์
pay packages, compensation - both the money and benefits such as health insurance that the employees of a company receive for their work
benefit - to get help or an advantage from something ผลประโยชน์
(Source: Income disparities fruit of free trade, 2/02/2010, Parista Yuthamanop, link)
