Last January 11, 2017, 2007 Nobel Laureate in Economics Professor Eric Maskin was conferred by DLSU the honorary doctorate in Economic Sciences. Following the conferment was a lecture delivered by Maskin at the Teresa Yuchengco Auditorium, entitled “Why global markets have failed to reduce inequality.” The conferment and lecture were organized under the partnership of DLSU with the International Peace Foundation (IPF).
Maskin is known to have laid the foundations of mechanism design theory, a theory which allows economists to assess ways by which markets and institutions efficiently allocate goods and services despite an information gap between buyers and sellers. He was awarded the Nobel Prize mainly for his work on implementation theory, which suggests means for achieving certain social and economic goals.
As an alternative theory to British Economist David Ricardo’s theory of comparative advantage, Maskin, together with fellow Harvard professor and economist Michael Kremer, theorized a different approach under the premise that production processes of various industries in the world have already become globalized.
Maskin suggests that while average income has been rising due to more trade and global production, inequality across countries has been rising as well. According to him, this has been a necessary side effect of economic growth. For instance, while the income of a particular segment increases, another decreases, further causing the inequality between different segments.
Furthermore, Maskin explains that the average income of a certain segment decreases due to lower demand for their skills, while the income increases for those who have increasing demands for their skills. His alternative theory identified four classes of workers, differentiated by their level of skill ranging from high (A and B) to low (C and D).
The demand for these types of workers and the subsequent income they receive is dependent on the role they play in the globalized production process, whether that is of a managerial or subordinate nature. Those of the former type typically earn higher wages than the latter and tend to be found in rich economies. This difference in average income is what concerns Maskin the most, considering the degree of inequality it entails.
However, this does not mean that globalization should be stopped. Maskin suggested raising the skill levels of low-skilled workers through job trainings so they can better match with higher-skilled workers. This can be a challenge, however, because companies will not be willing to pay for the trainings of these low-skilled workers. In that case, Maskin proposed that other parties like governments, foundations, or non-government organizations should step in.
During the open forum, it was discussed that a lack of investment in human capital is one of the major reasons on why there is growing inequality. As what Maskin delivered in his lecture, the low-skilled workers tend to get left behind due to a lower demand for their skills. Hence, job trainings are one of the viable solutions that will enable them to become globally competitive. Lastly, Maskin also agrees that removing trade barriers and having a proper allocation of resources will further help reduce inequality.
Partnership with the IPF
The IPF was established exclusively for non-profit purposes, particularly on supporting educational institutions with research programs on conflict prevention, strategies, peace activities, and understanding social exchanges between people, cultures, and traditions. Since its formation in 1989, the IPF has initiated over 1,000 programs and events worldwide.
Moreover, this is not the first time that a Nobel Laureate has visited DLSU for a conferment of an honorary doctorate or delivery of a lecture. In 2007, the IPF’s project entitled “Bridges: Dialogues Towards a Culture of Peace” was extended to the Philippines. The project’s aim is to “facilitate and strengthen dialogue and communication between societies in Southeast Asia.” Since then, the Bridges project has collaborated with Nobel Laureates and local universities to establish long-term relationships and even joint research programs.
Throughout 2007 to 2016, several other Nobel Laureates have visited DLSU, such as 1981 Nobel Laureate for Medicine Professor Torsten Wiesel, 1983 Nobel Laureate for Peace Lech Walesa, 1996 Nobel Laureate for Peace Professor Jose Ramos-Horta, 1999 Nobel Laureate for Economics Professor Robert Mundell, 2004 Nobel Laureate for Physics Professor David Gross, 2009 Nobel Laureate for Chemistry Professor Ada Yonath, 2010 Nobel Laureate for Chemistry Richard Heck, and 2010 Nobel Laureate for Literature Mario Vargas Llosa.
Among the Nobel Laureates, Richard Heck was formerly an adjunct professor in the DLSU Chemistry Department until he passed away in 2015.