Jenson71
04-11-2007, 08:17 PM
This guy has something positive to say. That's pretty refreshing, in my opinion.
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How Globalization Conquers Poverty
By Johan Norberg
In 1870, Sweden was poorer than Congo is today. People lived twenty years shorter than they do in developing countries today, and infant mortality was twice as high as in the average developing country. My forefathers were literally starving.
But reforms for liberalization at home and free trade abroad changed all of this. A trade agreement with England and France in 1865 made it possible for Swedes to specialize. We couldn’t produce food well, but we could produce steel and timber, and sell it abroad. For the money we made, we could buy food.
In 1870, the industrial revolution began in Sweden. New companies exported to countries across the world, and production grew rapidly. The competition forced our companies to become more efficient, and old industries were closed so that we could meet new demands, such as better clothes, sanitation, health care and education.
By 1950 — when the Swedish welfare state was no more than a glint in the social democrat’s eye — the Swedish economy had quadrupled. Infant mortality had been reduced by 85 per cent and life expectancy had increased by a miraculous 25 years. We were on our way to abolishing poverty. We had globalized.
Even more interesting is that Sweden grew at a much faster rate than the developed countries it traded with. The wages in Sweden grew from 33 per cent of the average wage in the US in 1870 to 56 per cent in the early 1900s, even though American wages soared at the same time.
This shouldn’t surprise anyone. Economic models predict that poor countries should have higher growth rates than affluent ones. They have more latent resources to harness, and they can benefit from the existence of wealthier nations to which they export goods and from which they import capital and more advanced technology, whereas affluent countries have already captured many of those gains.
It’s a clear-cut case. Except for one small problem. This relationship does not exist.
Most poor countries grow more slowly than the industrialized countries. The reason is simple: most developing countries cannot make use of these international opportunities. And the two most significant reasons for this are man-made: domestic and external obstacles. Domestic barriers such as a lack of the rule of law, a stable climate for investment, and the protection of property rights. External barriers such as rich country protectionism in goods of particular importance to the third world — textiles and agriculture — that (according to UNCTAD) deprives developing countries of nearly $700 billion in export income a year – almost 14 times more than they receive in foreign aid.
But when we look at the poor countries with good institutions, and which are open to trade, we see that they are making rapid progress, much faster than the wealthy countries. A classic study by Jeffrey Sachs and Andrew Warner of 117 countries in the 1970s and 1980s showed that open-developing countries had an annual growth rate of 4.5 percent, compared with 0.7 per cent in closed-developing countries and 2.3 percent in open industrialized countries. A recent World Bank report concluded that 24 developing countries with a total population of 3 billion are integrating into the global economy more quickly than ever. Their growth per capita has also increased from 1 per cent in the 1960s to 5 per cent in the 1990s (compared to a rich country growth of 1.9 per cent). At the present rate, the average citizen in these developing countries will see her income doubled in less than 15 years.
This points to the conclusion that globalization, the increase in international trade, communications and investments, is the most efficient means in history of extending international opportunity. The anti-globalists are correct when they claim that large parts of the world are left out, especially Sub-Saharan Africa. But that also happens to be the least liberal part of the world, with the most controls and regulations, and the weakest tradition of property rights. When anti-globalists blame globalization for African misery, it rings just as bizarre as the North Korean officials who once explained to a visiting Mongolian politician that the average North Korean is unhappy and miserable because he is sad about American imperialism.
On the whole, official statistics from governments, the UN and the World Bank all point in the direction that mankind has never before seen such a dramatic improvement of the human condition as we’ve seen in the last three decades. We have heard the opposite view repeated so many times, that we take it for granted, without examining the evidence.
During the last 30 years, chronic hunger and the extent of child labour in the developing countries have been cut in half. In the last half century, life expectancy has gone up from 46 to 64 years and infant mortality has been reduced from 18 to 8 per cent. These indicators are much better in the developing world today than they were in the richest countries a hundred years ago.
In a generation, the average income in developing countries has doubled. As the United Nations Development Programme has observed, in the last 50 years global poverty has declined more than in the 500 years before that. The number of absolute poor — people with less than $1/day — has according to the World Bank been reduced by 200 million in the last two decades, even though world population grew by about 1.5 billion during the same time.
Even those encouraging findings, however, probably overestimate world poverty, because the World Bank uses survey data as the basis for its assessments. This data is notoriously unreliable. It suggests that South Korean is richer than the Swedes and British, for example, and that Ethiopia is richer than India.
Furthermore, surveys capture less and less of an individual’s income. The average poor person at exactly the same level of poverty in surveys in 1987 and 1998 had in reality seen her income increase by 17 per cent. Former World Bank economist Surjit S Bhalla recently published his own calculations supplementing survey results with national accounts data (in the book Imagine There’s No Country, Institute for International Economics, 2002). Bhalla found that UN’s goal of lowering world poverty to below 15 percent by 2015 has already been achieved and surpassed. Absolute poverty had actually fallen from a level of 44 percent in 1980 to 13 percent in 2000.
Bhalla also shows that the GDP per capita of the developing countries taken as a whole (not as individual countries) grew by 3.1 percent 1980-2000, compared to the industrialized world’s 1.6 percent. These countries are now repeating the Swedish experience from the late 19th century, only faster. From 1780, it took England almost 60 years to double its wealth. A hundred years later, Sweden did it in about 40 years, and another century later it took South Korea just a bit more than 10 years.
The world has never been a better place to live in than it is today. Poverty has never been this low, and living standards so high. And the era of globalization has created the setting for an even faster growth of opportunities and wealth creation.
Hold on to your hat.
http://www.cato.org/special/symposium/essays/norberg.html
Jenson71
04-11-2007, 08:51 PM
I don't know much about globalization, and so in this short research I've done, I found this article...Gives the other side of the coin:
The Threat of Globalization
By Edward S. Herman
New Politics
vol. 7, no. 2 (new series), whole no. 26
Winter 1999
Globalization is both an active process of corporate expansion across borders and a structure of cross-border facilities and economic linkages that has been steadily growing and changing as the process gathers steam. Like its conceptual partner "free trade," globalization is also an ideology, whose function is to reduce any resistance to the process by making it seem both highly beneficent and unstoppable.
And as with free trade, while globalization may sometimes yield economic benefits, both the process and economic-political regime it is helping bring about threaten progressive ends, and should be recognized as such and fought at every level. Admittedly this is a formidable task, as the economic and political power of its beneficiaries, and its momentum, are great and contesting it seems an almost utopian undertaking. But globalization has its vulnerabilities, and attacking it intellectually, at the local level of plant abandonments and moves, as well as at the national political level can help build understanding and support for a larger oppositional movement.
Globalization as Ideology
Globalization is just one of an array of concepts and arguing points that have been mobilized to advance the corporate agenda. Others have been deregulation and getting government off our backs, balancing the budget, cutting back entitlements (non-corporate), and free trade.
Like free trade, globalization has an aura of virtue. Just as "freedom" must be good, so globalization hints at internationalism and solidarity between countries, as opposed to nationalism and protectionism, which have negative connotations. The possibility that cross-border trade and investment might be economically damaging to the weaker party, or that they might erode democratic controls in both the stronger and weaker countries, is excluded from consideration by mainstream economists and pundits.[fn 1] It is also unthinkable in the mainstream that the contest between free trade and globalization, on the one hand, and "protectionism," on the other, might be reworded as a struggle between "protection"--of transnational corporate (TNC) rights--versus the "freedom" of democratic governments to regulate in the interests of domestic non-corporate constituencies.
As an ideology, globalization connotes not only freedom and internationalism, but, as it helps realize the benefits of free trade, and thus comparative advantage and the division of labor, it also supposedly enhances efficiency and productivity. Because of these virtues, and the alleged inability of governments to halt "progress," globalization is widely perceived as beyond human control, which further weakens resistance.
The Economic Failure of Globalization
As the globalization process has been engineered by corporate elites, and serves their interests, they have successfully conveyed the impression that globalization is not only inevitable but has been a great success. This is fallacious. Even ignoring for the moment its distributional effects, globalization has been marked by substantial declines in rates of output, productivity, and investment growth. Under the new regime of enhanced financial mobility and power, with greater volatility of financial markets and increased risk, real interest rates have risen substantially. The average rate of the G-7 countries (U.S., Britain, France, Italy, Germany, Canada and Japan) has gone from 0.4 percent, 1971- 82, to 4.6 percent, 1983-94.[fn 2] This has discouraged long term investment in new plant and equipment and stimulated spending on the re-equipment of old facilities along with a large volume of essentially financial transactions--mergers, buybacks of stock, financial maneuvers, and speculative activities. This may help explain why overall productivity growth [fn 3] in the countries that are members of the OECD fell from 3.3%, 1960-73 to 0.8%, 1973- 95, or by some 75 percent. Gross fixed investment fell from 6.1%, 1959-1970, to roughly 3.1% thereafter, or by half. OECD country annual rates of growth of real GDP fell from 4.8%, 1959-1970 to 2.8%, 1971-94, or by 42 percent.
But the elites have done well despite the slackened productivity growth. Because globalization has helped keep wages down, while increasing real interest rates, the upper 5 percent of households have been able to skim off a large fraction of the reduced productivity gains, thereby permitting elite incomes and stock market values to rise rapidly. But it was a different story for the global majority. Income inequality rose markedly both within and between countries. In the United States, despite a 35 percent increase in productivity between 1973 and 1995, the median real wage rate was lower in the latter year. Inequality rose to levels of 70 years earlier, and underemployment, job insecurity, benefit loss, and worker speedup under "lean" production systems all increased. [fn 4 Insecurity is functional. As Alan Greenspan complacently explained to Congress in 1997, wage rates were stagnant in this country because worker insecurity was high. [fn 5] That this high insecurity level reduced the well-being of the affected workers did not bother Greenspan, or Congress and the mainstream media.
The gap in incomes between the 20 percent of the world's population in the richest and poorest countries has grown from 30 to 1 in 1960 to 82 to 1 in 1995, and Third World conditions have in many respects worsened. Per capita incomes have fallen in more than 70 countries over the past 20 years; some 3 billion people--half the world's population, live on under two dollars a day; and 800 million suffer from malnutrition. [fn 6] In the Third World unemployment and underemployment are rampant, massive poverty exists side-by-side with growing elite affluence, and 75 million people a year or more seeking asylum or employment in the North, as Third World governments allow virtually unrestricted capital flight and seek no options but to attract foreign investment. [fn 7]
The new global order has also been characterized by increased financial volatility, and from the Third World debt crisis of the early 1980s to the Mexican breakdown of 1994-95 to the current Asian debacle, financial crises have become more and more threatening. With increasing privatization and deregulation, the discrepancy between the power of unregulated financial forces and that of governments and regulatory bodies increases and the potential for a global breakdown steadily enlarges.
Only an elite perspective permits this record to be regarded as an economic success.
Globalization as an Attack on Democracy
The globalization of recent decades was never a democratic choice by the peoples of the world--the process has been business driven, by business strategies and tactics, for business ends. Governments have helped, by incremental policy actions, and by larger actions that were often taken in secret, without national debate and discussion of where the entire process was taking the community. In the case of some major actions advancing the globalization process, like passing the North American Free Trade Agreement (NAFTA) or joining the European Monetary Union (EMU), publics have been subjected to massive propaganda campaigns by the interested business-media elites. In the United States, public opinion polls showed the general public against NAFTA even after incessant propaganda, but the mass media supported it, [fn 8] and it was passed. In Europe as well, polls have shown persistent majorities opposed to the introduction of the Euro, but a powerful elite supports it, so that it moves forward.
This undemocratic process, carried out within a democratic facade, is consistent with the distribution of benefits and costs of globalization, and the fact that globalization has been a tool serving elite interests. Globalization has also steadily weakened democracy, partly as a result of unplanned effects, but also because the containment of labor costs and scaling down of the welfare state has required the business minority to establish firm control of the state and remove its capacity to respond to the demands of the majority. The mix of deliberate and unplanned elements in globalization's antidemocratic thrust can be seen in each aspect of the attack process.
The assault on labor. One of the main objectives of TNC movement abroad has been to tap cheaper labor sources. Labor is often cheapest, and least prone to cause employer problems, in authoritarian states that curb unions and enter into virtual joint venture arrangements with foreign capital, as in Suharto's Indonesia and PRI's Mexico. Capital moves to such friendly investment climes in an arbitrage process, shifting resources from the more expensive to the less costly locale, in a process that penalizes and thereby weakens democracy.
The actual shift of capital abroad, and the use of the external option to drive hard bargains at home, has weakened labor. Labor has also been weakened by deliberate government policies of tight money and restrictive budget policies to contain inflation, at the expense of high unemployment. These policies, and the incessant focus on labor market "flexibility" as the solution to the unemployment problem, reflect a corporate and antilabor policy agenda, fully institutionalized. There have even been more open and direct attacks on organized labor--both Reagan and Thatcher engaged in union busting, and the latter was quite explicit in her aim to weaken labor as a political force. [fn 9] Democracy, according to pluralistic theory, is said to rest on the existence of intermediate groups, like labor organizations, that can bargain and work on behalf of an otherwise atomized population. The deliberate weakening of such groups is thus an attack on democracy.
The ideological campaign. In the United States, Britain, Canada, and other countries the business community has also mounted a sustained ideological campaign to make their preferred policies part of common understanding. These campaigns have proceeded in parallel with globalization and have been remarkably similar, reflecting the global flow of ideology and overlapping sources of funding. The favored neoliberal ideology pushes the idea that the market can do it all, that government is a burden and threat, and that deregulation and privatization are inherently good and inevitable. It presses an extreme individualism and the value of "personal responsibility," which is highly advantageous to corporate power, leaving bargaining between large firms and isolated individuals. Collective and community values, the threat of externalities and ecological damage from unconstrained business growth, free market instability--all are shunted aside in this ideological system. This ideological campaign has been highly successful, because vast sums of business money fed to intellectuals and think-tanks, and business domination of the mass media, has allowed their views to prevail. Heritage Foundation leader Edwin Feulner has described the strategy of his corporate- funded and globally linked thinktank as analogous to Procter & Gamble's in selling soap--saturate the market with messages that overwhelm any that are less well funded. [fn 10] But this is a corruption of democracy; it is a bought market of ideas, not a free market of ideas.
Capturing or immobilizing governments. The business community has also mounted a powerful effort to dominate governments--either by capture or by limiting their ability to serve ordinary citizens. Globalization has contributed to this effort, partly by the arbitraging process mentioned earlier, which favors authoritarian rule. Apart from this, by enlarging business profits and weakening labor it has shifted the balance of power further toward business, so that political parties have been even more decisively influenced by business money in elections. In the United States, it is notorious that Mr. Clinton has sought and received enormous sums from business and serves their interests almost exclusively, with only token efforts on behalf of the major nonbusiness constituencies of the Democratic Party. The globalizing corporate media have added their growing strength to the advance of neoliberal ideology and opposition to any vestiges of social democracy, making social democratic policies difficult to implement. The Murdoch effect on British elections, and the current Murdoch-Blair connection illustrates the point.[fn 11]
Another well-known and important antidemocratic force is the power of global financial markets to limit political options. Social democratic policies make for an unfavorable investment climate. Businesses will therefore respond to politicians and acts serving ordinary citizens with threatened or actual exit. Financial market effects on exchange and interest rates can be extremely rapid and damaging to the economy. Spokespersons for the new global economy actually brag about the ability of capital to penalize "unsound" policies, and the fact that money capital now rules.[fn 12]
These business efforts, aided and validated by the IMF and by media support, regularly cause social democrats to retreat to policies acceptable to the rulers. Thus, in country after country social democratic parties have accepted neoliberalism, despite the contrary preferences of great majorities of their voting constituencies.[fn 13] But this means that nominal democracy is no longer able to serve ordinary citizens, making elections meaningless and democracy empty of substance. This helps explain why half or more of eligible U.S. voters no longer participate in national elections.
Supra-national limits on democracy--the New (TNC) Protectionism. Not satisfied with this level of political control, the business community has pushed for international agreements, and policy actions by the IMF and World Bank, that further encroach on the ability of democratic polities to act on behalf of their constituencies.
These agreements and the demands of the international financial institutions invariably call for precisely the policies desired by the TNC community. The EMU conditions give primacy to budget constraints and inflation control, in accord with the neoliberal and corporate agenda. GATT, the WTO, and the NAFTA agreement also give top priority to corporate investor and intellectual property rights, to which all other considerations must give way. In the early 1980s, the IMF and World Bank took advantage of the Third World debt crisis and used their leverage with numerous distressed Third World borrowers to force their acceptance of Structural Adjustment Programs. These forced the borrowing countries to agree to give first priority to external debt repayment, private as well as government; it compelled them to adapt austerity programs of tight money and budget cutbacks focusing heavily on social expenditures affecting the poor and ordinary citizens; it forced a stress on exports, which help generate foreign exchange to allow debt repayment and that more closely integrate the borrower's economy into the global system; and it stressed privatization, allegedly in the interest of efficiency, but serving both to help balance the budget without tax increases and to provide openings for TNC investment in the troubled economy. The IMF is doing the same in Asia today.
A second characteristic of the new agreements and IMF-World Bank actions is their denial of democratic rights to non-corporate citizens and elected governments. These are subordinated to the rights of corporate investors, the superior class of global citizens with priority over all others and beneficiaries of the New TNC Protectionism. In the NAFTA agreement, governments are denied in advance the right to take on new functions; any not asserted now are left to the private sector and to the superior class of citizens. In these agreements, also, and even more aggressively in the Multilateral Agreement on Investment now under consideration, the global TNCs have no responsibilities and none can be imposed on them. They can fire people, abandon communities, fatally damage the environment, push local companies out of business, and purvey cultural trash at their full discretion. They can or will be able to sue governments, and disagreements are to be settled by unelected panels outside the control of democratic governments.
A third characteristic of the new agreements and IMF-World Bank actions is that they rest not only on neoliberal theory but on a false reading of recent experience and economic history. As noted earlier, globalization so far has been a productivity failure, a social disaster, and a threat to stability. The claim of its proponents that free trade is the route to economic growth is also confuted by longer historic experience: no country, past or present, has taken off into sustained economic growth and moved from economic backwardness to modernity without large-scale government protection and subsidization of infant industries and other modes of insulation from domination by powerful outsiders. This includes Great Britain, the United States, Japan, Germany, South Korea and Taiwan, all highly protectionist in the earlier takeoff phases of their growth process.[fn 14] The governments and institutions bargaining on behalf of the TNCs today, through the IMF, World Bank, WTO and NAFTA, have been able to remove these modes of protection from less developed countries. This threatens them with extensive takeovers from abroad, thoroughgoing integration into foreign economic systems as "branch plant economies," preservation in a state of dependence and underdevelopment, and most particularly, an inability to protect their majorities from the ravages of neoliberal top-down development priorities.
Concluding Note
In sum, we are in the midst of an antidemocratic counterrevolution in which globalization and its imperatives are being used to weaken popular and elected authority in favor of a system of domination by super-citizens, the TNCs. This process sows the seeds of its own destruction, as it serves a small global minority, damages the majority, breeds financial instability, and exacerbates the environmental crisis. Its destructive tendencies are likely to produce an explosion if the process is not contained and democracy is not rehabilitated.
Halting this antidemocratic juggernaut will be difficult, not only because of the power of its beneficiaries, but also because it operates within the framework of nominally democratic structures and musters plausible arguments. But these arguments are self- serving and wrong, and should be vigorously contested. An agenda should be advanced that serves ordinary citizens rather than the TNCs and financial institutions. Negatively, this agenda will include strenuous opposition to all supranational arrangements that take power out of the hands of democratic governments to serve some alleged economic need. Positively, the agenda requires support for the imposition of serious limits and responsibilities on TNCs, including capital controls and other deterrents to financial speculation. Pursuit of this agenda is going to require a combination of understanding and effective organization of the large majority who are the victims of globalization.
http://www.globalpolicy.org/globaliz/define/hermantk.htm
Jenson71
04-11-2007, 08:54 PM
Here's one that gives both sides:
Globalization: Good or Bad?
by Lewis Williamon
Guardian
October 31, 2002
It is clear that globalization has failed to rid the world of poverty. Rather than being an unstoppable force for development, globalization now seems more like an economic temptress, promising riches to everyone but only delivering to the few. Although global average per capita income rose strongly throughout the 20th century, the income gap between rich and poor countries has been widening for many decades. Globalization has not worked.
The reason globalization has not worked is because there has not been enough of it. If countries, including the rich industrialised ones, got rid of all their protectionist measures, everyone would benefit from the resulting increase in international trade: it's simple economics. If unnecessary government regulation can be eliminated, and investors and corporations can act freely, the result will be an overall increase in prosperity as the "invisible hand" of the market does its work.
Tell that to countries that have followed this route. I doubt many people in Argentina would agree. Many developing countries have done exactly what free market evangelists such as the International Monetary Fund told them to and have failed to see the benefits. The truth is that no industrialised society developed through such policies. American businesses were protected from foreign competition in the 19th century, as were companies in more recent "success stories" such as South Korea. Faith in the free market contradicts history and statistical evidence.
You're looking at the wrong statistics. In most cases, low-income countries are the ones that have not been able to integrate with the global economy as quickly as others, partly because of their chosen policies and partly because of factors outside their control. The plain truth is that no country, least of all the poorest, can afford to remain isolated from the world economy.
Even if this were true, what about the other unwanted effects of globalization? The power of corporations and the global financial markets adversely affect the sovereignty of countries by limiting governments' ability to determine tax and exchange rate policies as well as their ability to impose regulations on companies' behaviour. Countries are now involved in a "race to the bottom" to attract and retain investment; multinational corporations are taking advantage of this to employ sweatshop labour and then skim off huge profits while paying very little tax.
First, governments' sovereignty has not been compromised. The power of the biggest corporations is nothing compared with that of government. Can a company raise taxes or an army? No. Second, nations are not involved in a "race to the bottom". Figures last year showed that governments around the world are on average collecting slightly more taxes in real terms than they were 10 years earlier. And the argument that workers in poorer countries are being exploited is hard to support. They are clearly better off working for multinationals. If they weren't, they wouldn't work for them. In fact research shows that wages paid by foreign firms to workers in poorer countries are about double the local manufacturing wage.
But what about these so-called multilateral organisations like the IMF, World Bank and World Trade Organisation? I don't remember electing them, so what gives them the right to say how countries run their own affairs? Isn't it obvious that these organisations only serve the interests of the US and to a lesser extent the other rich countries? Their only role is to peddle the neoliberal orthodoxy - the Washington consensus - that only impoverishes the poorest nations and maximises the profits of multinationals.
It is only through organisations such as these that the less developed countries have a chance to improve their situations. The IMF is there to bail out countries that get into financial difficulties. Governments go to the IMF because the alternative is much worse. If the IMF and its sister organisation, the World Bank, were shut down, the flow of resources to developing countries would diminish, leaving the developing world even worse off. The WTO is a different kind of organisation and is run on a one-country-one-vote basis with no regard for the economic power of each nation; every single member has a veto. In addition, no country can be compelled to obey a WTO rule that it opposed in the first place.
http://www.globalpolicy.org/globaliz/define/1031debate.htm
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