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Globalization - A different perspective

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  #1 Old 07-11-2005 Default Globalization - A different perspective

First of all, I apologize as I don't have the links to the articles as I got them from a magazine.

Ah, Globalization. I've had many arguments with people over this. I, for one, am not afraid to say that I am pro-globalization. I think that it is overwhelmingly good, though certainly not completely good.

This argument of mine here ties in pretty closely with anti-poverty movements. I don't agree with the Live8 concert movement thing though I agree with the G8 meeting to attempt to combat poverty. Awareness can only go so far.

I only partially agree with social welfare. I think that social welfare should only be given to those who cannot work. Even if I were to give social welfare to people, I would give sufficient money to them to get their act together to start looking for a job.

I don't agree with donating money (food and clothes are a different matter, but only for a while) to impoverished nations. I agree with using the money to create economic growth and improve the current economic sectors in those countries so the people can get jobs and thus raise their standard of living.

I am a supporter of free trade and globalization. These two articles, by Paul Krugman, say what I cannot in terms of articulacy. Paul Krugman is :-

Article 1. Originally published in The New York Times, 4.22.01


SYNOPSIS: Anti-globalization protestors want to turn the world into a nasty place. There is an old European saying: anyone who is not a socialist before he is 30 has no heart; anyone who is still a socialist after he is 30 has no head. Suitably updated, this applies perfectly to the movement against globalization ? the movement that made its big splash in Seattle back in 1999 and is doing its best to disrupt the Summit of the Americas in Quebec City this weekend.
The facts of globalization are not always pretty. If you buy a product made in a third-world country, it was produced by workers who are paid incredibly little by Western standards and probably work under awful conditions. Anyone who is not bothered by those facts, at least some of the time, has no heart.

But that doesn't mean the demonstrators are right. On the contrary: anyone who thinks that the answer to world poverty is simple outrage against global trade has no head ? or chooses not to use it. The anti-globalization movement already has a remarkable track record of hurting the very people and causes it claims to champion.

The most spectacular example was last year's election. You might say that because people with no heads indulged their idealism by voting for Ralph Nader, people with no hearts are running the world's most powerful nation.

Even when political action doesn't backfire, when the movement gets what it wants, the effects are often startlingly malign. For example, could anything be worse than having children work in sweatshops? Alas, yes. In 1993, child workers in Bangladesh were found to be producing clothing for Wal-Mart, and Senator Tom Harkin proposed legislation banning imports from countries employing underage workers. The direct result was that Bangladeshi textile factories stopped employing children. But did the children go back to school? Did they return to happy homes? Not according to Oxfam, which found that the displaced child workers ended up in even worse jobs, or on the streets ? and that a significant number were forced into prostitution.
The point is that third-world countries aren't poor because their export workers earn low wages; it's the other way around. Because the countries are poor, even what look to us like bad jobs at bad wages are almost always much better than the alternatives: millions of Mexicans are migrating to the north of the country to take the low-wage export jobs that outrage opponents of Nafta. And those jobs wouldn't exist if the wages were much higher: the same factors that make poor countries poor ? low productivity, bad infrastructure, general social disorganization ? mean that such countries can compete on world markets only if they pay wages much lower than those paid in the West.

Of course, opponents of globalization have heard this argument, and they have answers. At a conference last week I heard paeans to the superiority of traditional rural lifestyles over modern, urban life ? a claim that not only flies in the face of the clear fact that many peasants flee to urban jobs as soon as they can, but that (it seems to me) has a disagreeable element of cultural condescension, especially given the overwhelming preponderance of white faces in the crowds of demonstrators. (Would you want to live in a pre-industrial village?) I also heard claims that rural poverty in the third world is mainly the fault of multinational corporations ? which is just plain wrong, but is a convenient belief if you want to think of globalization as an unmitigated evil.

The most sophisticated answer was that the movement doesn't want to stop exports ? it just wants better working conditions and higher wages.

But it's not a serious position. Third-world countries desperately need their export industries ? they cannot retreat to an imaginary rural Arcadia. They can't have those export industries unless they are allowed to sell goods produced under conditions that Westerners find appalling, by workers who receive very low wages. And that's a fact the anti- globalization activists refuse to accept. So who are the bad guys? The activists are getting the images they wanted from Quebec City: leaders sitting inside their fortified enclosure, with thousands of police protecting them from the outraged masses outside. But images can deceive. Many of the people inside that chain-link fence are sincerely trying to help the world's poor. And the people outside the fence, whatever their intentions, are doing their best to make the poor even poorer.

__________________________________________________ _________________

Article 2.


Bogus arguments against the World Trade Organization.

SYNOPSIS: One of the first blasts against arrogant WTO protestors. Attacks them for imposing counter-culture values and Economic ignorance.

If a picture is worth a thousand words, a two-page spread in the New York Times, featuring more than a dozen pictures, can speak volumes. And sure enough, the lavish Nov. 15 advertisement by the Turning Point Project, a coalition of activists opposed to globalization in general and the World Trade Organization in particular, said more than any merely verbal exposition about what really motivates those activists could. Indeed, it revealed quite a bit more than its sponsors intended.

The occasion for the ad was the upcoming WTO "ministerial" taking place in Seattle in a few days. The WTO has become to leftist mythology what the United Nations is to the militia movement: the center of a global conspiracy against all that is good and decent. According to the myth, the "ultra-secretive" WTO has become a sort of super-governmental body that forces nations to bow to the wishes of multinational corporations. It destroys local cultures, the headline on the ad read "Global Monoculture"; it despoils the environment; and it rides roughshod over democracy, forcing governments to remove laws that conflict with its sinister purposes.

Like most successful urban legends, this one is based on a sliver of truth. The gradual global progress toward free trade that began in the 1930s, when Franklin Roosevelt introduced the Trade Agreements Program, has always depended on international negotiations: I'll reduce my tariffs if you reduce yours. But there has always been the problem of governments that give with one hand and take away with the other, that dutifully remove tariffs and then use other excuses to keep imports out. (Certainement, there is free trade within the European Union, but those British cows, they are not safe.) To make agreements work there has to be some kind of quasi-judicial process that determines when ostensibly domestic measures are de facto a reimposition of trade barriers and hence a violation of treaty. Under the pre-WTO system, the General Agreement on Tariffs and Trade, this process was slow and cumbersome. It has now become swifter and more decisive. Inevitably, some of its decisions can be challenged: Was the U.S. ban on dolphin-unsafe tuna really a trade barrier in disguise? But the much-feared power of the WTO to overrule local laws is strictly limited to enforcement of the spirit of existing agreements. It cannot in any important way force countries that are skeptical about the benefits of globalization to open themselves further to foreign trade and investment. If most countries nonetheless are eager or at least willing to participate in globalization, it is because they are convinced that it is in their own interests.

And by and large they are right. The raw fact is that every successful example of economic development this past century--every case of a poor nation that worked its way up to a more or less decent, or at least dramatically better, standard of living--has taken place via globalization; that is, by producing for the world market rather than trying for self-sufficiency. Many of the workers who do that production for the global market are very badly paid by First World standards. But to claim that they have been impoverished by globalization, you have to carefully ignore comparisons across time and space--namely, you have to forget that those workers were even poorer before the new exporting jobs became available and ignore the fact that those who do not have access to the global market are far worse off than those who do. (See my old Slate piece "In Praise of Cheap Labor.") The financial crisis of 1997-99 temporarily gave those who claim that globalization is bad for workers everywhere a bit of ammunition, but the crisis did not go on forever, and anyway the solution to future crises surely involves some policing of short-term capital movements rather than a retreat from globalization as a whole. Even the Malaysians continue to welcome long-term foreign investors and place their faith on manufactured exports.

What about the environment? Certainly some forests have been cut down to feed global markets. But nations that are heedless of the environment are quite capable of doing immense damage without the help of multinational corporations--just ask the Eastern Europeans. For what it is worth, the most conspicuous examples of environmental pillage in the Third World today have nothing to do with the WTO. The forest fires that envelop Southeast Asia in an annual smoke cloud are set by land-hungry locals; the subsidized destruction of Amazonian rain forests began as part of a Brazilian strategy of inward-looking development. On the whole, integration of the world economy, which puts national actions under international scrutiny, is probably on balance a force toward better, not worse, environmental policies.

But anyway, these are side issues, because what that advertisement makes clear--clearer, I suspect, than its sponsors intended--is that the opposition to globalization actually has very little to do with wages or the environment. After all, leaving aside a photo of tree stumps and another of an outfall pipe, here are the horrors of globalization the Turning Point Project chose to illustrate:

A highway interchange, a parking lot filled with cars, a traffic jam, suburban tract housing, an apartment building with numerous satellite dishes, an office with many computer screens, office workers on a busy street, high-rise office buildings, a "factory farm" with many chickens, a supermarket aisle, a McDonald's arch.

Each picture was accompanied by a caption asking, "Is this Los Angeles or Cairo?" "Is this India or London?" etc.

What is so horrible about these scenes? Here's what the ad says, "A few decades ago, it was still possible to leave home and go somewhere else: The architecture was different, the landscape was different, the language, dress, and values were different. That was a time when we could speak of cultural diversity. But with economic globalization, diversity is fast disappearing."
You can't argue with that; lives there the tourist with soul so dead that he does not wish that he could visit rural France, or Mexico City, or for that matter Kansas City the way they were, rather than the way they are? But the world is not run for the edification of tourists. It is or should be run for the benefit of ordinary people in their daily lives. And that is where the indignation of the Turning Point people starts to seem rather strange.

For surely the most striking thing about the horrors of globalization illustrated in those photos is that for most of the world's people they represent aspirations, things they wish they had, rather than ominous threats. Traffic jams and ugly interchanges are annoying, but most people would gladly accept that annoyance in exchange for the freedom that comes with owning a car (and more to the point, being wealthy enough to afford one). Tract housing and apartment buildings may be ugly, but they are paradise compared with village huts or urban shanties. Wearing a suit and working at a computer in an office tower are, believe it or not, preferable to backbreaking work in a rice paddy. And nobody forces you to eat at McDonald's.

Now, of course what is good for the individual is not always good if everyone else does it too. Having a big house with a garden is nice, but seeing the countryside covered by suburban sprawl is not, and we might all be better off if we could all agree (or be convinced by tax incentives) to take up a bit less space. The same goes for cultural choices: Boston residents who indulge their taste for Canadian divas do undermine the prospects of local singer-songwriters and might be collectively better off if local radio stations had some kind of cultural content rule. But there is a very fine line between such arguments for collective action and supercilious paternalism, especially when cultural matters are concerned; are we warning societies about unintended consequences or are we simply disagreeing with individual tastes?

And it is very clear from the advertisement in the Times that the Turning Point Project--and the whole movement it represents--are on the supercilious side of that line. Although they talk of freedom and democracy, their key demand is that individuals be prevented from getting what they want--that governments be free, nay encouraged, to deny individuals the right to drive cars, work in offices, eat cheeseburgers, and watch satellite TV. Why? Presumably because people will really be happier if they retain their traditional "language, dress, and values." Thus, Spaniards would be happier if they still dressed in black and let narrow-minded priests run their lives, and residents of the American South would be happier if planters still sipped mint juleps, wore white suits, and accepted traditional deference from sharecroppers ... instead of living in this "dreary" modern world in which Madrid is just like Paris and Atlanta is just like New York.

Well, somehow I suspect that the residents of Madrid and Atlanta, while they may regret some loss of tradition, prefer modernity. And you know what? I think the rest of the world has the right to make the same choice.
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  #2 Old 07-11-2005 Default Re: Globalization - A different perspective

Originally Posted by nick_khaw
I don't agree with donating money (food and clothes are a different matter, but only for a while) to impoverished nations. I agree with using the money to create economic growth and improve the current economic sectors in those countries so the people can get jobs and thus raise their standard of living.
If a man asks for a fish, give him a fishing rod (not sure if I got it right, but the meaning is there).

However, I think the main challenge of globalisation is to make governments and countries free from corruption. Corruption ruins everything and even if the country is a developed nation, the gap between the rich and the poor is so big. These problems are more serious to me than others. To create a world free from corruption and to minimise the gap between the poor and the rich are the main challenges in this new millennium, IMHO.
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  #3 Old 07-11-2005 Default

The description of anti-globalisation activists definitely reminded me of the environmental activist character Ted Bradley in Michael Crichton's latest book State of Fear.

I guess the major problem with these 'misguided' people is they are just plain ignorant and only have a shallow understanding of issues related to globalisation and they only see the evil side of globalisation but fail to grasp the potential benefits of globalisation. Sure, the salary paid by multinational companies to their Third World factory workers is outrageous when compared to the wages paid in the West, but they did not see that when compared locally, the wages would be extremely generous compared with that the workers would get if they continue with their rural jobs.

khor_albert mentioned about 'poor governence' in diplomatic parlance as a challenge in globalisation. That is true, but there are also other factors equally influential in delaying the promotion of a globalised trade market. Take the EU farming subsidy for example. The stall tactics by the EU in defending their farming industry subsidies in the WTO is definitely not helping in long term for all. The stance taken by some of the developed countries in protecting their self interests must change for the betterment of the developing nations.
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  #4 Old 08-11-2005 Default

I have a question about free trade:
It seems that many rich countries involving in negociations to lower their trade barriers have an attitute of not lowering mine unless you lower yours. The argument for this are sometimes analogized as nuclear missles: Their are not good for everyone but we must have it to defend ourself and we can only let it go unless everyone else lets it go. They talk about artificially lowering competition of a certain industry (trade barriers) to protect it from other competition. But as said earlier, sauf certain industries (like defence), protecting certain industries hurts the economy in the big picture and long term. Of course you will have hardship like job loss or certain things, but it will be a gain because industries that are not productive enough will be replaced by more productive industries, thus enriching a nation. Others advocate a unilateral approach in lowering or abolishing our trade barriers. Their argument is that why have we make sure everyone stops hurting themselves before we stop hurting ourselves? We lower our trade barriers, even if others don't lower theirs. Our country will profit in a growth in productivity even if others country maintain their trade barrier. Or will the effect of unfair trade condition for our companies outweight the gains in productivity from competition? Do you guys think that a multilateral approach or a unilateral approach is a better idea?
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  #5 Old 08-11-2005 Default

are we talking about free trade? or fair trade?

just want to underline that free trade is not equal to fair trade.

Free trade --> no trade barriers at all...

Fair trade --> guarantees fair price and ethical trading...(no slave labor, no child labor, safe workplace and so on...)

will post more on Globalization later on...
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  #6 Old 08-11-2005 Default

Free trade.

I personally don't think fair trade is possible.
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  #7 Old 08-11-2005 Default

I'm not exactly heartless. Hypothetically for a 1 dollar wallet (for example), the people who actually sew the wallet together get 5 cents.

If we were to implement fair trade, they might get more money. BUT, where will they get the money? If they were to get more money from their govt, that's no longer considered part of the trade. However, if along the trade route, they were to get money form somewhere, either the price will go up or somebody else loses out. If the price goes up, demand for it goes down. And therefore, over a long run, ppl won't ask for the wallets anymore and they'll be out of a job. Therefore, the alternative of the 5 cents is no money. They are getting as much as they can get as it is, fair or unfair.

As for child labor and slave labor, ppl might need the jobs to survive. They may not have another choice. Globalization gives them this opportunity. Read the first article I posted. And basic economic theory proves that international trade WITHOUT barriers is better than international trade with tariffs and quotas and stuff.

As for fair price, we can't decide what is fair. The most fair price is the one determined by supply and demand. And the way to get the most fair price isn't 'fair trade' but 'free trade'.

Multilateral would be the preferable choice to me because if it were to be unilateral, the country who went unilateral might most likely lose out. And if so, this would then force them back into having barriers.
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  #8 Old 08-11-2005 Default

Actually, if everybody (like the EU for instance) do away with subsidy, then maybe fair trade is possible?

I might have a different interpretation for fair trade, but I believe fair trade is only possible if advanced nations stop subsidizing their inefficient industry and let others with real competitive advantage do it instead.
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  #9 Old 08-11-2005 Default

Clearly, I think we all agree that a multilateral approach is the best one. What if, for example, the EU refuses to lower their farming subsidize: Is US better off abolising theirs unilateraly? A priori, it seems that the answer is no, but I hear that some economist actually supports doing it.
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  #10 Old 08-11-2005 Default Re: Globalization - A different perspective

Originally Posted by nick_khaw
I don't agree with donating money (food and clothes are a different matter, but only for a while) to impoverished nations. I agree with using the money to create economic growth and improve the current economic sectors in those countries so the people can get jobs and thus raise their standard of living.
just something to think about. i read a paper once that argued that giving food to poor nations is actually detrimental to their economy. most third world nations rely heavily on an agricultural economy and thus this gracious act actually feeds a vicious cycle that makes them poorer and poorer.
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