The Butterfly Defect addresses the widening gap between the new systemic risks generated by globalization and their effective management. It shows how the dynamics of turbo-charged globalization has the potential and power to destabilize our societies. Drawing on the latest insights from a wide variety of disciplines, Ian Goldin and Mike Mariathasan provide practical guidance for how governments, businesses, and individuals can better manage globalization and risk. Goldin and Mariathasan demonstrate that systemic risk issues are now endemic everywhere--in supply chains, pandemics, infrastructure, ecology and climate change, economics, and politics. Unless we address these concerns, they will lead to greater protectionism, xenophobia, nationalism, and, inevitably, deglobalization, rising inequality, conflict, and slower growth. The Butterfly Defect shows that mitigating uncertainty and risk in an interconnected world is an essential task for our future.
List of Boxes, Illustrations, and Tables ix Preface xiii Acknowledgments xvii Introduction 1 1 Globalization and Risk in the Twenty-First Century 9 Globalization and Integration 10 Global Connectivity and Complex Systems 13 Globalization and the Changing Nature of Risk 23 Globalization: A Double-Edged Sword 30 The Way Forward 33 2 The Financial Sector 36 with Co-Pierre Georg and Tiffany Vogel The Financial Crisis of 2007/2008 37 Financial Globalization in the Twenty-First Century 39 Complexity and Systemic Risk 54 Global Financial Governance 60 Lessons for the Financial Sector 64 3 Supply Chain Risks 70 Global Supply Chains 72 Supply Chain Risk 79 From Management of Risk to Risk Management 90 Lessons for Supply Chain Management 95 4 Infrastructure Risks 100 Transportation 101 Energy 105 The Internet 112 Lessons for Global Infrastructure 120 5 Ecological Risks 123 The Nature of Environmental Risk 124 Risks from the Environment 129 Risks to the Environment 133 Can Globalization Be Good for the Environment? 138 The Export of Pollution 139 Lessons for Managing Environmental Risk 141 6 Pandemics and Health Risks 144 Pandemic Risk 145 Globalization and Health Risks 147 Case Studies 150 Noninfectious Diseases 159 Global Cooperation and Disease Control 160 Lessons from Pandemic Management 164 7 Inequality and Social Risks 168 Global Integration and Inequality 169 The Channels of Inequality 180 The Risks of Inequality 181 Lessons for Challenging Global Inequalities 195 8 Managing Systemic Risk 198 Moving Forward, Not Backward 200 Confronting a New Challenge? 202 The Need to Reform Global Governance 206 Why Reform Has Been So Sluggish 209 Lessons for Global Policy Reform 212 Managing Systemic Risk 219 Notes 221 References 257 Index 285
