We start this four-part survey with an overview on globalization. This is prefaced with the caveat that the reader-only view this article as a starting point and a not entirely satisfactory one at that. Seek out more literature and opinions from both sides of the debate.
Globalization is a hugely broad subject. The common usage of the word “globalization” refers to the recent, as in past two decades or so, tendency of multinational corporations to extend operations past traditional domestic and near-international markets to more foreign and often recently opened markets. Everyone knows of the shift of IT jobs to India and manufacturing to China, but what is often missed is the reciprocal. India and China represent over a third of the world’s population, and this share will only grow as negative population growth rates take hold in many developed countries in the coming decades. These two countries, then, represent the greatest market ever seen, and with new jobs come rising incomes and subsequently increased spending power. Though this side of the equation doesn’t get near as much publicity in the media as the issue of outsourcing (to be addressed more in-depth on Thursday), much of the debate in academic and political circles focuses on these third-world citizens. Because the situation brought about by rapid globalization is so foreign and far-reaching, there are many questions posed and issues addressed. For example, should companies be allowed to close domestic plants and shift them to China for one-tenth the wage costs? How concerned should we be with their wages and labor conditions?
But the issues go even beyond the immediate business concerns. China is one of the world’s foremost polluters. According to the World Health Organization, 18 of the top 20 most polluted cities are in China. Most of this is due to the burning of coal for power, and because China’s energy needs are growing exponentially, more coal plants are being built. In addition to this will be the pollution from the growing prevalence of personal automobiles as Chinese consumers can start to afford them.
Several grassroots movements in India are concerned that the influx of “Western” capitalist ideology and its emphasis on making money first and foremost is breaking down the traditional family-centered social structure, with untold societal consequences in the future.
As raw materials, especially energy, become more valuable and perhaps more scarce, some fear that new conflicts will erupt over the availability of such resources as water, oil, farmland, commercial fishing grounds and mineral deposits. Witness the belligerence of Russia in the past few years; every time European leaders (rightly) criticized the increasing authoritarianism of Vladimir Putin’s regime, he not-so-subtly reminded them how dependent they were on Russian gas by cutting off supplies for a few hours or days.
These are but a few concerns of skeptics and proponents alike, yet with careful argumentation and an honest presentation to the public about harms and benefits, governments can go a long way to convincing their populations that globalization not only has momentum but is also favorable to all.
At the same time we address these concerns, we must be careful to not stray too far in one direction. On the one hand is an overzealous protection from globalization, the so-called “Law of Unintended Consequences.” Consider this example from The Economist: “Suppose that in the remorseless search for profit, multinationals pay sweatshop wages to their workers in developing countries. Regulation forcing them to pay higher wages is demanded. The biggest western firms concede there might be merit in the idea. But justice and efficiency require a level playing-field. The NGO’s, the reformed multinationals and enlightened rich-country governments propose tough rules on third-world factory wages, backed up by trade barriers to keep out imports from countries that do not comply. Shoppers in the West pay more-but willingly, because they know it is in a good cause. The NGO’s declare another victory. The companies, having shafted their third-world competition and protected their domestic markets, count their bigger profits (higher wage costs notwithstanding). And the third-world workers displaced from locally owned factories explain to their children why the West’s new deal for the victims of capitalism requires them to starve.”
On the other side of the coin is a reckless all-out pursuit of profit and the bottom line. Markets do not always produce good for everyone, and in fact the policies of large companies can end up hurting themselves, their market and unfortunate citizens. This process of globalization must therefore be tempered by a liberal pragmatism steeped in moderation. Liberalism is not the endorsement of complete laissez-faire. Liberals are cognizant that the forces of economics will undervalue the supply of many positive public goods, such as a clean environment. If no significant negative externalities exist, companies will pollute as much as is convenient. At points like these a liberal philosophy will demand a government intervention to protect these causes, and rightly so.
In the end equation then, globalization holds the possibility of great benefits but also of great harms. The harms can be negated by a sensible dialogue between citizens, governments and companies, while the benefits can be harnessed to help solve for many of the world’s most troublesome problems.
About the writer:
John is a first-year accounting, international studies and Chinese triple major. He can be reached at [email protected].
