##sions. but what road can lead us to such a promising goal? there is the populist “ solution ” : nationalist protectionism, which might even go as far as promoting autarky. i do not wish to spend much time on this, as i deem this a short - sighted, incomplete proposal that claims to shield people from economic and societal change – without admitting that this is impossible even within a walled nation. a more realistic, and quite prominent idea is to compensate those who lose out from international trade. 7 the welfare state does in considerable part already achieve just that. yet the welfare state has been somewhat in retreat, as countries have attempted to strengthen their international competitiveness by lowering social costs. so there is probably some room for improvement. but this will not be enough, as it does not provide a solution to the “ race to the bottom ” problem ; nor does it even the tilted influence of global institutions and international firms. to understand what options we do have, i find a simple, yet powerful analysis very helpful : the impossibility theorem for the global economy. dani rodrik, the harvard professor, whose work in international political economy has gained a great deal of attention, argues that when we set the framework for global economic integration, it is impossible to have all three tenets of the current globalisation order at the same time : we cannot have ( a ) full, global market liberalisation, ( b ) national sovereignty and ( c ) democracy. 8 in other words, this globalisation trilemma forces us to choose two of these three tenets and give one up. it can be any two, but it is impossible to have them all. so, if we look for a solution in our current globalisation debate, we have to decide which two central tenets we value more than the third. while this sounds overly simplistic, i think dani rodrik has a valid point. think about it. if we continue to deepen global market liberalisation and harmonisation, then the ability of countries and their sovereign people to choose their own policies becomes less and less. we could give up democracy, so that an autocratic ruler or a technocratic government could decree that everyone has to accept full market liberalisation or the globally harmonised rules that the government has negotiated. or – if we cherish democracy and want to keep the global market – we could surrender national sovereignty to a global democracy, so that a global government and parliament would correct globalisation

diversity. to make the case, i will apply this approach to three current policy challenges : the regulation of global trade, the regulation of global finance, and the future relationship between the uk and the eu. 2. has globalisation gone too far? globalisation is good – for almost everyone. this was the mainstream judgement for a long time. but the wind has changed. more than a year after the “ leave ” vote and a new usadministration taking office, the discontent with globalisation seems to be almost everywhere. do brexit and the new us trade policy threaten to reduce overall economic welfare as they turn back globalisation? or has globalisation gone too far? has it created wealth for a few, while creating many losers among the broader population? well, globalisation is both good and bad. on the one hand, global economic integration has contributed to greater prosperity in many countries. the reduction of tariffs on trade – one 1 / 7 bis central bankers'speeches particular example being the general agreement on tariffs and trade or gatt for short – has increased overall economic welfare. the division of labour on a global scale has opened many channels of rising prosperity – from economies of scale and comparative advantages to global technological transfer. 1 and for the last 40 years the public debate has focused on these gains. then came brexit and growing populist support around the world. this development is a reminder that globalisation has a darker side ; that global economic integration of the last 40 years has contributed to two significant problems. first, importing and exporting lead to sectoral change and redistribution, which produces both winners and losers in a society. even though globalisation is less important than technological change for redistribution, we knew for quite some time that international trade creates winners and losers within a society. 2 there is considerable evidence that international trade pushes some people in import - competing industries out of jobs or reduces their wages. 3 examples of what this does to societies are to be seen in the american rust - belt and northern england. there is also evidence that it heightens political polarisation. 4 now, a society may want to protect globalisation ’ s losers against the negative repercussions of this redistribution, or at least compensate them. 5 but, this may be difficult – because of the second problem of globalisation : global regulatory harmonisation weakens the ability of states to sustain welfare standards and regulations that are above global minimum standards – the result can be what is referred to