Welfare systems need to be adjusted in many ways if they are to be financially sustainable, but they provide a strong basis for protecting people who lose out as a result of globalisation. Indeed, history shows that making globalisation sustainable has often depended on strengthening the welfare state.
Direct support to the industry has been breathtaking, with some industrialized countries committing a remarkable 25 per cent of GDP to support their financial sectors. In effect, there was wartime spending on peacetime calamity. The G-7 commitments of last October temporarily eliminated counterparty risk for major institutions. When this support was combined with an intense flight to quality, large financial institutions benefited disproportionately.