Economist Joseph E. Stiglitz knows all too well how globalization can hit remote villages in Africa, the smog-filled cities of China or the rain forests of Brazil.
But when he toured his native Gary, Ind., last week, Stiglitz saw sites that felt far too familiar: a hollowed-out local economy, foreign ownership of the city’s biggest factory, high unemployment and few prospects for growth.
“Much of the problems facing Gary are the same problems facing less-developed countries,” said Stiglitz, who won a Nobel Prize in 2001 for work that demonstrated how inequalities of access to information create economic winners and losers.
For a generation, Gary has symbolized what can go wrong with a city. Although U.S. Steel Corp.’s landmark Gary Works steel mill is still active, many nearby mills either have cut back severely or been shuttered. Most of the storefronts on Broadway, once a bustling commercial hub for northern Indiana, are boarded up. Within a five-minute walk from downtown, derelict cars litter the front lawns of abandoned homes.
Stiglitz had been away from Gary for many years until 2004, when then-Mayor Scott King awarded him a key to the city.
Stiglitz returned again last week, on a break from promoting his latest book about globalization, to assess how global economic forces have hit Gary–for both good and ill.
In the book, “Making Globalization Work,” Stiglitz takes a more nuanced view of the modern world of trade than he did in his anti-globalization rant, “Globalization and Its Discontents.” Drawing from the successes in China and India, with a tip of the hat to South Korea, he argues that even poor and relatively powerless countries can benefit from globalization if they get the right mix of government intervention, free-market power and fair trade treaties.
Globalization isn’t a one-dimensional factor for Gary, either.
True, steel mills have shut down because U.S. steelmakers often can’t compete against heavily subsidized foreign competitors. But one of the Gary area’s biggest employers, Inland Steel, now is owned by the world’s largest steel company, Luxembourg-based Arcelor Mittal. The mill is thriving, and Mittal announced this summer a $10 million investment that will help turn a facility in nearby East Chicago into a global center for steel research.
“You get both sides of globalization–the lost jobs and the saved jobs,” Stiglitz said.
Born at Gary’s Methodist Hospital in 1943, Stiglitz grew up amid a boom in the city’s 100-year history. The city was named after U.S. Steel Chairman Elbert H. Gary, who established it as a planned community. The mills brought a mix of Irish, Polish, Slavic, Italian and Jewish families.
“Gary was the quintessential melting pot. At school, we learned how you bring diverse people together and make them Americans,” Stiglitz said.
In Stiglitz’s family, there was a keen awareness of the need for fair play in the marketplace, too. When, as class valedictorian of Horace Mann High School, Stiglitz spoke of the need for “individual responsibility,” his uncle complained bitterly.
Although his uncle was a successful real estate investor and entrepreneur, he believed strongly in labor rights and a role for government. “He thought `personal responsibility’ was code for anti-social responsibility,” Stiglitz recalled.
It was during Stiglitz’s boyhood that Gary’s mills provided the steel that fueled the explosion of construction following World War II.
“The night used to be lit up orange sometimes. That’s when the mills were working,” Stiglitz said. “If you didn’t see that orange, times weren’t so great.”
It’s been decades since prosperity lit the skies for Gary. Since 1980, the population dropped almost 20 percent, to 102,746 as of the 2000 census. Median household income is $27,195, just 63 percent of the national average. Crime and depopulation are but two characteristics Gary shares with less-developed countries.
In his new book, Stiglitz lays out a plan for making globalization work for less-developed countries, not just for trade giants like the U.S., Europe, Japan and China. He promotes changes in the way intellectual property is protected, economic incentives for protecting the environment, debt forgiveness and protection against new monopolies. He wants less-developed countries to be adequately compensated for their natural resources and encouraged to develop their own technologies.
Such reforms would take years to have an effect, and face serious political obstacles. In that, too, there’s a parallel with Stiglitz’s hometown. There’s no quick fix for Gary, either.
During a stop in the former Gary State Bank building, where Stiglitz’s insurance-salesman father kept his office, banker Kevin J. Carr spoke enthusiastically about the growth of a commuter culture in Gary. “That South Shore train is just packed with people” commuting to Chicago, he said.
Gary itself may not benefit much, though. Although the gambling boats in and around Gary make the area one of the country’s largest gambling spots, little of that money makes its way to Gary. Merrillville, just 9 miles south, has become the region’s retail hub, discouraging investment in Gary. There’s a sense of victimization, too. In much the same way that native populations complain about colonial opportunism, the people in Gary gripe about Donald Trump.
Trump brought the Miss USA beauty pageant to Gary. But its stay was cut short after two years, as the pageant never delivered on Trump’s promise to heavily promote Gary as a convention destination. The contestants put on a fashion show in Merrillville, played volleyball in Hammond, and shopped in Chicago, but barely showed their faces in Gary.
For Stiglitz, a Columbia University professor and former chief economist for the World Bank, the complaints about outside investors are eerily similar to what he hears elsewhere. “Much of what people say about the problems facing Gary are the same problems developing countries have when facing globalization,” he said. “They have these people who are not part of the community. They don’t identify with the community. They don’t invest back in the community.”
Still, Gary has small pockets of promise. One street away from Broadway, a new housing development is sprouting, replacing vacant shops that have been torn down. The city’s minor league baseball team is drawing well.
There are a few neighborhoods that seem stable and prosperous. In one of them sits the house where Stiglitz grew up, a brick, three-bedroom bungalow at 254 Arthur St.
As a child, Stiglitz had a small garden in the back yard, and his watermelon vines typically produced only one melon.
“I always wondered, given the polluted air, what my watermelon had breathed into it,” he said.
While Gary’s mills no doubt had their own impact on air quality, the young Stiglitz worried most about the air pollution from Standard Oil’s refinery at nearby Whiting, Ind. That refinery, slated to be expanded, has also been globalized; it’s now operated by British Petroleum.
The man who bought the house from Stiglitz’s parents, Darius Wright, still lives in Stiglitz’s former house. All the homes on the street are neatly kept–“better than when we lived here,” Stiglitz said. Wright, a retired steel-mill mechanic, attributed the prosperous look to the married couples who live in 14 of the 18 homes on the street.
But on McKinley Street, two streets over, many of the lawns are overgrown and the homes need painting, in part because only three of those homes have married couples in them, Wright said. Men have moved away by the dozens, Wright said, because the steel-mill jobs have dried up.
Young people don’t stay in Gary, either. “We don’t have any young folks,” Wright told Stiglitz. “My kids left. Everybody leaves and they don’t want to come back.”
Stiglitz compares the flight to what happens in poor countries. Men must leave home in order to find work. They come back sporadically, if at all. The brightest young people are drawn away for education, often to the U.S. They don’t come back either.
The loss of the younger generation is just one of the challenges Gary shares with poor countries as they try to get their economies going. Not enough money. No momentum. No unique resources that might attract new investment.
“Poor countries can’t make the investments in knowledge and technology that are necessary to compete on the global landscape. That keeps them poor, so they can’t invest,” said Stiglitz. ” There’s a sense in which you can say Gary is in that kind of a trap. No single firm can come in and change that. It would take a big push.”
dgreising@tribune.com
`Making Globalization Work’
Author: Joseph E. Stiglitz
Synopsis: A look at how global economic institutions, including the World Bank and International Monetary Fund, multinational corporations and first-world governments have shaped globalization for their own gain, at the expense of most of the planet’s population and the environment.
Publisher: W.W. Norton & Co.
Details: 292 pages, $26.95
