The Foreign Service Journal, April 2007

2006 McKinsey study, America only spends 0.5 percent of annual GDP compared to 0.9 in the U.K., 3.1 per- cent in Germany and 3.7 percent in Denmark. Although there are some programs in place (the most important being unemployment insurance), most Americans are largely on their own when they lose their jobs. The result is a dynamic economic system that imposes heavy costs on individu- als. Because workers face increasing barriers to entry and job transition, the American approach has led to increas- ing inequality. Although the inherent dynamism of the economy will keep some upward mobility available, in- creasing stratification is a threat. Russia and many developing coun- tries, such as those in sub-Saharan Africa, combine the worst features of both systems. They are relatively closed economically and also do little to help their people when their work lives are disrupted. Such societies suffer both from bad economic policy and great personal uncertainty for workers. These worst-case scenarios are also usually marked by extremely high levels of corruption and a depen- dence on informal labor. The final group of countries in- cludes the Netherlands and some of the Nordic countries, such as Den- mark. These countries are generally open to change (save for the Euro- pean Union’s protectionist biases), but generally support people during diffi- cult times. These systems generally reduce dependence by requiring peo- ple to be either working or looking for it. This “flexicurity” approach encour- ages economic openness while sup- porting workers during transitions — and encouraging them to work. The New Globalization Looking at economic policy through the twin lenses of openness and economic security allows us to view globalization in a new light. On one hand, openness respects econom- ic reality. Without these kinds of sound policies, incomes will fall — a development that hurts the poor the hardest. However, we also must consider the social costs created by dynamic 21st-century capitalism. In order to gain support for globalization, we need to help people prepare for the world of work and to cope with the costs of change. Economic openness and targeted support are both critical parts of what is known as the New Globalization. Social support policies should be designed to widen opportunity and aid people with transition in a chang- ing workplace. At the same time, globalized societies need to enhance opportunities for the poor and sup- port their well-being and competitive- ness in the workplace. The following policies could accomplish this. A P R I L 2 0 0 7 / F O R E I G N S E R V I C E J O U R N A L 53