Friday, September 14, 2007

Hooray for Globalization!

If you read the preceding blog entry, where I declare my enthusiasm for , it will come as no surprise to you when this entry sings the praises of capitalism. Here I am trying to tackle, one by one, the whole array of topics about which I find myself at odds with my (mainly leftist) friends.

The term has many obscure meanings, including the notion that cultures and tastes diffuse and blend together all around the world. But mostly it refers to the spread of technology through international trade, and that is what I particularly favor. To me, it’s amazing that my friends deplore this economic aspect of globalization. If you believe in economic development and in raising the socio-economic floor, so that the poorest people can experience improved standards of living, it logically follows that you’ll rejoice in current globalizing trends.

But not everyone shares my point of view. Indeed, it is widely assumed that globalization is impoverishing, rather than enriching, the world’s underprivileged classes. And of course there are events that can be adduced to prove the point – especially when we take account of the socially irresponsible effects of many large corporations. Not only the poor, but also the environment, is jeopardized. The main writer pointing out these flaws is , whose new book I have not yet read.

But I have read, just today, ’s book, . He doesn’t sing the praises of globalization, exactly, because he doesn’t believe in historical determinism. Technology is just technology. Nothing says that it can’t be misused. He reports being despondent at times because his daughters are leaving home for their own adult lives at a time when the world is far more dangerous than when they were born. Friedman knows that.

And yet, I find his book immensely encouraging. He doesn’t really believe that the world is flat, but only that it is flattening in a thousand different ways and places. By “flat” he means that it is becoming possible for people living in backwater regions of the world to interact with the rest of humankind instead of being left behind.

I’ve been making pages for the October issue of Peace Magazine today, and we have a story that illustrates this “flattening” effect: the “” movement. For about $100 apiece, it will soon be possible to distribute children anywhere on the planet. These little machines are almost indestructible, can be taken home for the parents to try, can access the Internet if the school sets up its own server, and can run on the basis of energy provided by pulling a string. These children will surely live in a flatter world than the one where you and I grew up.

Friedman enjoys the inventiveness of businesspersons who work out efficiencies in the new economy — which is not made up of material objects so much as and know-how. So the first section of his book tells the stories of the ten most recent forces that have been flattening the world. They include India’s shift from its sluggish socialist model to a competitive capitalist one under the prodding of President , who had been finance minister when he began opening India’s economy. The country only had #1 billion in foreign currency at the time, but now has $118 billion. Much of the change has come from the outsourcing of the telecommunications and computer industry around .

The second flattener was the , which arose along with Netscape. All kinds of new protocols enabled the multiple computer systems to interact smoothly and efficiently with each other: FTP, HTTP, HTML, SSL, SMTP, POP, and TCPAP. They enable us to standardize e-mail messages and web-based transactions.

Next came “work-flow software” that enables all kinds of documents, in all kinds of formats, to be translatable. “That is, your sales department had to be able to send not just email messages but also documents to your billing department and spreadsheets to your supplier’s inventory department. And your supplier’s inventory department had to be seamlessly connected to its supplier’s supplier, which was a factory in China.” Making this kind of software obviously boosted economic efficiency.

Fourth, Friedman names and as a great contribution to humankind. You don’t have to mail in a cheque or money-order anymore. And this system helps individuals, not just big companies, when they buy and sell on-line.

I won’t go on listing these innovations, but you get the drift. The world is becoming an interdependent system in which geographical location is almost irrelevant for many transactions. Why would anyone oppose this globalization trend?

Friedman answers that question speculatively, pointing out (p. 548) that the affluent people in the West lost touch with the true aspirations of the world’s poor. The anti-globalization movement emerged as attacks on the WTO and the G-8 meetings, becoming violent in Seattle and Genoa. (See photo.) A second factor was the

“rear-guard push by the Old Left — socialists, anarchists, and Trotskyites — in alliance with protectionist trade unions. Their strategy was to piggy-back on rising concerns about globalization to bring back some form of socialism, even though these ideas had been rejected as bankrupt by the very people in the former Soviet Empire and China who had lived under them longest.... These Old Left forces wanted to spark a debate about whether we globalize. ... The fourth force driving the movement, which was particularly strong in Europe and in the Islamic world, was anti-Americanism.”

There was a fifth force in the movement that Friedman actually respected; they were a coalition of constructive groups such as environmentalists, trade activists, and NGOs who were trying to focus the debate on how we globalize. By 2001, they were drowned out by the “whether we globalize” part of the movement. The serious part of the movement no longer wanted to be associated with the anarchists and therefore began to withdraw. Friedman says they have left a huge political vacuum waiting to be filled. “There is a real role today for a movement that could advance the agenda of how we globalize – not whether we globalize.”

Just today on TV, I also heard an announcement that the number of children dying around the world is the lowest in history. There can be no more meaningful measure of economic success than the declining rates of in the world. What does globalization have to do with it?

In June 2003, the was carried out worldwide. Its findings support the conclusion that globalization helps reduce poverty and inequality. As , Director of Development Policy at the World Bank, notes, there has been a significant decrease in the number of extremely poor persons on earth since 1980. Moreover, the views of globalization are far more positive in low-income countries than in rich ones. The fast-growing economies are those in developing countries that are intensively seeking to integrate with the world economy.

To be sure, there are many problems, but the poor people who were polled did not attribute their problems to economic integration. When asked whether “growing global trade and business ties are bad or good for my country” the replies were as follows:

US and Western Europe
Very good 28%
Bad 27%

Developing Asia
Very good 37%
Bad 9%

Sub-Saharan Africa
Very good 56%
Bad 10%

Moreover, in Sub-Saharan Africa 75% of households thought that multinational corporations had a positive influence on their country, compared to only 54% in rich countries. Views of the effects of the WTO, the World Bank, and IMF on their country were nearly as positive in Africa (72%). What they do resent is the opposite: being excluded from economic opportunities, as for example by agricultural protectionism in the rich countries.

Other studies by the World Bank confirm these results. Globalizing developing countries are growing faster than rich ones. David Dollar reports that the more globalized countries have seen an acceleration of the per capita growth rate,

“reaching a population-weighted average of 5% annually in the 1990s. By contrast, rich countries grew at 2%, and the rest of the developing world, at –1%. Over 3 billion people are included, for Bangladesh, China, India, Brazil, and Mexico are part of this category.

“The anti-globalization movement often claims that integration leads to growing inequality within countries, with no benefits going to the poor. Generally, this is not true. There are certainly some countries in which inequality has risen, like China and the US, but there is no worldwide trend. Most important, in the developing countries that are growing well as a result of integration and other reforms, rapid growth translates into rapid poverty reduction. The total number of extreme poor (living on less than $1 per day measured at purchasing power parity) increased throughout history up to about 1980. Since 1980 that number declined by 200 million, while world population increased by 1.8 billion. The progress is heartening, but there are still 1.2 billion people living in poverty.”

I wonder: Do these facts make any difference whatever to my friends? I doubt it. But I will keep arguing the case whenever I get a chance. The moral failure that I fear most is the temptation to go along with others'opinions just to avoid offending anyone.



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