The word globalization had not been coined, but John Maynard Keynes sounded an alarm about its consequences that still resonates today:

Few now remember Keynes’ prescient advocacy of local self-determination and policy experimentation; but the tension between global integration and national sovereignty has become a staple of the conventional wisdom, endorsed by scholars and diffused by the media.

For well-known reasons, a reduction of impediments to international flows of goods and factors of production – commonly termed globalization – may enhance allocative efficiency both globally and within national economies, and the associated competition among nation states may contribute to governmental accountability. However, globalization is also thought to raise the economic costs of programs by the nation state to redistribute income to the poor and to provide economic security for their populations. Among the reasons is the fact that the more internationally mobile factors of production – capital and professional labor – tend to be owned by the rich, and a nation-specific tax on a mobile factor induces national-output-reducing relocations of these factors. Similar reasoning demonstrates the high cost of attempting to alter the relative prices of factors of production, for example, by raising the wage relative to the return to capital through trade union bargaining. Even Pareto-improving insurance-based policies are compromised, as cross-border mobility of citizens allows the lucky to escape the tax costs of supporting the unlucky, thereby reintroducing the problem of adverse selection plaguing private insurance, which (mandatory) public insurance was thought to avoid (Sinn 1997).