Wednesday, November 15, 2006

Globalization Pro and Con

A speckled bird! Just like democracy-- or Larry Clayton. Which means lots of creative good and lots of abuse:

Last month in a small gathering of Friends I opined that globalization was a good thing. Quick as a flash came a response: well look at Nicaragua. (Quakers in this area have a special interest in the needs of Nicaraguans.) So I've been thinking about it, and read a few books, especially The Rising Elephant.

1. The case of Nicaragua (where thousands of farmers have lost their farms because of American low corn prices) might better be called economic exploitation. For the last century the Central American republics have been to a great degree benevolent(??) protectorates of the U.S. (We have often changed regimes down there with compunction.)

The taxpayer heavily subsidizes American grain, which has made it possible to undersell grain famers all over the hemisphere. In Europe cows are paid over 2 pounds a day by the government, twice as much as many African farmers. Are cows worth more than humans?

However at Cancun India, China and Brazil "formed a powerful bloc to reshape the world (economic) order", and in 2004 the U.S. rep to the WTO, speaking of farm subsidies, said "Let's quit fooling around; let's eliminate them all". Things are moving (cf Rising Elephant 241-3).

When you compare these abuses to the cases of China and India , a different picture emerges- especially in terms of the reduction of poverty in those, and in quite a few other countries. Starvation in China and India has been reduced tremendously in the past two decades (if not numeircally then definitely as a percent of the populations). China of course is an authoritarian regime, but for 50 years now India has been a secular democracy.

Re wages a leveling is going on: U.S. workers dropping; globalization's foreign workers up. For a great many, perhaps most Americans, imbued with a proud sense of patriotism(?), this is an unalloyed disaster; for lovers of humanity it may be a cheap price to pay for the reduction of poverty and starvation. (My impression is that world poverty and starvation rates have diminished; if anyone knows different, I'd like to hear from them.)

Here is material written last month:

[Re globalization] there's a lot for it and a lot against it.

1. Tom Friedman and Tom Barnett are the two primary exponents whom I've read.

In the late 90's Friedman wrote The Lexus and the Olive Tree, which is all about globalization. After WWII at Bretton Woods world wide commercial agreements were made, after which corporations became more powerful and nations less relevant (1).

Shortly afterward the Cold War started setting forth a system of financial, commercial, political arrangements based on the threat of mutual destruction. After 1990 those arrangements ceased to be dominant. They were replaced by the system called globalization. The monetary system largely depended upon the dollar, the world became flatter (see book): communication, transportation, trade became faster and cheaper. Trade rules were developed through the IMF and the World Bank, and then through various treaties like NAFTA and CAFTA with comparable arrangements in a uniting Europe.

Through all this corporations increasingly held sway: the market came to transcend nationalism in many ways. Today most nations are largely subservient to the "rule sets" of globalization, all, that is, who belong to the core(2). The gap had not experienced these processes; it still had primitive communication, transportation, and trade. It was made up to a large degree of failed states where the rule of law was relatively minimal.

That's certainly the downside, unless you're a hard nosed ideological capitalist.

"Globalization is the extension of an economy around the world.... This expression of globalization is used by capitalists to get the best results all over the world, particularly with the fewest rules. This is a predatory culture... it means the freedom for money to go where the workers have the fewest rights." (Global Squeeze, by Richard C. Longworth, p. 183). He was quoting a union president in France.

1 Witness this from p. 374 of Lexus and Olive Tree: statement to Tom of an IBM employee: "We're not an American company. We're IBM U.S., IBM Canada, IBM Australia, IBM China. One of many multinational corporations.

2 Barnett divided the world into the core (of 'advanced' nations living more or less under the rule sets of globalism) and the gap (the poorer, more primitive and more politically unstable third of the population).


I_Wonder said...

Larry, Barnett's book arrived yesterday. It should prove to be interesting reading.

forrest said...

Although there are good recent descriptions of how "we" are really affecting the world economically, I don't know of a better way to sort this stuff out than to read Galbraith. Lots of him.

He came to the subject from agricultural economics, where orthodox notions--of supply and demand producing a price acceptable to everyone--break down under the uncertainties of farming. Bad years: good prices for a few farmers with good crops; everyone else in trouble--Good years: everyone has a good crop but it isn't worth anything.

So his stance was basically critical, and this is valuable in a subject that's normally treated as sacred dogma. He wrote well; he was clear, intelligent and often funny, which was a grave disadvantage professionally but makes it much more likely that you'll finish one of his books and want more.

Free trade, like any economic system I know of, favors some people and disadvantages others. It particularly favors large, already established organizations that can buy goods (and people!) where they are cheapest, without having to sell all that competitively. Low prices ensue until the smaller producers are forced out of the market, whereupon the survivors will unofficially agree on a price that suits them better, while their customers can probably not afford to travel to India for a cheaper product.

From a standpoint of use of resources... for us to be buying garlic from China (as we are) is an absurd waste of shipping fuel and equipment. It also encourages industrial-scale agriculture, the kind of farming that makes heavy use of pesticides and fossil fuels, doesn't offer (legal) employment for many, damages the land while producing less per acre than competent small-scale, labor-intensive organic farming can do.

So while I say globalization "favors" some people, I seriously doubt that it benefits anyone as much as we imagine, given the many hidden costs and the fact that we do have common interests as members of one endangered species in a fragile environment.

Larry said...

Glad you're following me here, Paul. That book was an eyeopener to me.

Now I'm just as dumbfounded by Rising Elephant (Ashutosh Sheshabalaya). This Indian seems perfectly sure that India will pass us in the next few years. I feel like Rip Van Winkle.

Thanks for the insightful comment, Forrest. I take it that as a Quaker you feel much about globalization as you do about war. I look forward to exploring Galbraith.

IMO globalization is a better and more complex affair than any of us have been able to imagine. We all have our personal feelings.

Mine lean toward "the greatest good for the greatest number". I see China and India emerging from centuries of exploitation and taking a place of equality (or more) with the Western world. And in that I rejoice.