Globalization

Double-header for Friedman

Tuesday, July 24th, 2007

To be honest, I’ve completely ignored the “Thomas Friedman phenomenon” going on in this country. If I had a nickel for every time I saw someone reading The World is Flat on the train…

For some reason, people are in love with globalization and outsourcing as “the great leveler.” I have a different take on this. And precisely because The World is Flat was the most popular book about globalization, I never bothered to read it.

But the other day, someone came over and saw the book in my bookshelf. This person was definitely no fan of globalization. Mind you, I’m no Friedman fan — I only own the book to try to understand what the fuss is about. I haven’t turned a page yet. Yet, this person sat there and stared at this book. And I knew what she was thinking. “Another one of these schmucks? Another cheerleader?”

Well, it’ll take more research and time for me to declare my overall opinion of Friedman.

But today, by pure chance, I encountered two hilarious pieces on Friedman:

One, a cartoon by Tom Tomorrow: M is for Moustache.

Two, a review of The World is Flat by Matt Taibbi of New York Press.

A select excerpt from the review:

On an ideological level, Friedman’s new book is the worst, most boring kind of middlebrow horseshit. If its literary peculiarities could somehow be removed from the equation, The World Is Flat would appear as no more than an unusually long pamphlet replete with the kind of plug-filled, free-trader leg-humping that passes for thought in this country. It is a tale of a man who walks 10 feet in front of his house armed with a late-model Blackberry and comes back home five minutes later to gush to his wife that hospitals now use the internet to outsource the reading of CAT scans. Man flies on planes, observes the wonders of capitalism, says we’re not in Kansas anymore. (He actually says we’re not in Kansas anymore.) That’s the whole plot right there. If the underlying message is all that interests you, read no further, because that’s all there is.

Oh my…

The Divine Right of Capital

Friday, March 30th, 2007

A playful paragraph from the book by Majorie Kelly, which I’ve lately been re-reading:

We might note that while employees in the community are left to the protection of the invisible hand, wealth is protected by the visible hand of government and corporations. But this is something, it is hoped, that will be overlooked.

To help us begin to see it, we might, for a moment, imagine a different arrangement of institutional power. Picture a free market in which labor rights are enthroned in law, and property rights are left to the invisible hand. This would be a world in which we believe employees are the corporation. They are, after all, the ones running the place. Hence only employees could vote for the board of directors, and the purpose of the corporation would be to maximize income for employees. In theory, stockholders would receive income they negotiated through contracts. In practice the corporation would dictate those contracts with little real negotiation and stockholders could accept the terms or go elsewhere, only to find other corporations offering nearly identical and dismal terms.

In this world, stock would be sold in a manner controlled entirely by the corporation, much as wages are set today. Stockholders would appear alone at the company where they would be taken into a room and made an offer. There would be no reliable way to compare current stock price to pass price, the return one person receives to what others receive, or to compare returns from one corporation to another. Wage and benefit data, on the other hand, would be published daily in “The Main Street Journal”, and the movement of the Dow Jones wage index would of course be tracked nightly on the news. But returns to shareholders would be considered proprietary information and would not be given out.

If stockholders tried to improve their negotiating position by organizing into mutual funds, corporations would threaten to cut off payments altogether. The companies would talk about replacing stockholder money with funds from people overseas were willing to accept lower returns.

And, of course, overseas, stockholders would have seen even less power. Although free trade agreements would provide intricate protections for labor and environmental rights, they would offer capital no protections. “What does capital have to do with trade?” pundits might ask. “Trade is about goods and services and the people who create them, it’s not about capital.”

Catching up on the reading list

Friday, March 9th, 2007

Lately, I’ve been very diligent about catching up on my reading.

I have been perpetually delaying a review of Capitalism 3.0 and Dreaming in Code, both of whom deserve it. But I promise one soon. I use Hofstadter’s Rule of Thumb lately for estimating time: however long you think it’s gonna take, double it and add a unit of time. So if you think it’ll take two hours, it’ll really take four days. If you think it’ll take five days, it’ll really take 10 weeks. And so on.

In the meanwhile, I’ve been busy at work — actually working on some cool stuff from a technology standpoint, mainly in the realm of hacking with pieces of the Eclipse Modeling Framework, and its related projects like GMF, RCP, Eclipse Core, etc.

On my commute, I’ve been enjoying reading Making Globalization Work by Stiglitz. Although one of my friends mentioned to me that this book would be quite boring, and for the most part he was right. Not the lofty stuff of Barnes in Capitalism 3.0; but perhaps Stiglitz’s recommendations are much more practical for ways to improve the current system.

The other book I started recently is a long, written interview with John Kenneth Galbraith (much in the style of Socrates) which is entitled, Almost Everyone’s Guide to Economics. What’s amazing is to see Galbraith, this towering (literally) Keynesian economic thinker, speaking in the 70s of the growth of corporate power, the undermining of labor, and the insidious nature of market fundamentalism. And yet, here we are, 30 years later, heeding none of his warnings, and entering into the new “global age” of “The World is Flat”.

Oh yes indeed, I do need to write some reviews very soon.

Finished Dreaming in Code

Friday, February 23rd, 2007

Overall, Dreaming in Code was an interesting book. For programmers who already are obsessed with the classics of software engineering (Mythical Man-Month and friends), you probably won’t learn much new stuff in this book. However, the personal illustrations using OSAF did lead me to some self-evaluation of the work I do. It was also interesting to see the internal workings of an organization which seems to be set up ideally for programmers — a good mission, an open source project, no real deadlines or users in the beginning, design-focused, etc. — and still see it run into the same issues traditional software shops run into.

I’d post a longer review, but I’m headed down to New Orleans today. Will post a longer review when I get back, hopefully also of Capitalism 3.0, whose ideas have been swimming in my head the last few days of commute.  I think they really deserve to be summarized and presented here.

In the meanwhile, I’ve started reading Making Globalization Work by Joseph Stiglitz. This book, in particular, has been a kind of catharsis for most of my armchair ideas in economics, at least so far.  It’s a very strange feeling to read the ex-Chief Economist of the World Bank explaining his own ideas about overcoming the zealousness of “market fundamentalism” prevalent in economic circles, while I, who never studied economics formally, think, “Why would anyone trained in this discipline actually believe that markets are a magic force that work on their own?”  But I guess ideology always trumps rationality.

Finished reading Capitalism 3.0, missed speakers, drank dark beer

Wednesday, January 31st, 2007

I finished reading Capitalism 3.0 a couple of days ago, and it was quite good. I promised a review, so that will be coming shortly. I also noticed that Joseph Stiglitz (ex-Chief Economist for the World Bank) wrote a new book as a follow-up to Globalization and its Discontents which is titled, Making Globalization Work, probably a nice follow-up to Capitalism 3.0.

Today after work I headed to NYU to hear Jimmy Wales give a talk on Wikipedia, but was dismayed to discover that the auditorium was packed and I couldn’t get in.

Then, I noticed that Ralph Nader was at the IFC Theater on 6th Avenue presenting the new documentary made about him called “An Unreasonable Man,” and I was about to go to the 4:55pm showing of that, but tickets sold out for that! Man, what bad luck!

At the end of the day, I ended up meeting Max for drinks at McSorley’s, so that’s not so bad. We talked a bit about Richard Dawkin’s book “The God Delusion,” and whether it’s a good thing that there is a zealous atheist roaming the streets of intellectual-dom.

Two must-reads

Tuesday, December 13th, 2005

One, and this has been floating around the blogosphere I think, but it is essential:

Human Development Trends 2005 at GapMinder.com.

The second is Harold Pinter’s starkly anti-Amerkn Nobel Acceptance Speech, which you can read at the Guardian.

Refreshing: A World Where Labor Rights Trump Property Rights

Wednesday, November 16th, 2005

Check out this excerpt from Majorie Kelley’s “Divine Right of Capital” (was a recommended read in my last outsourcing talk):

When stockholders might try to improve their negotiating position by organizing into mutual funds, corporations would threaten to cut off payments altogether. The companies would threaten to replace stockholder money with funds from overseas, willing to accept lower returns.

Of course overseas stockholders would have less power. For while free trade agreements would provide intricate protections for labor and environmental rights, they would offer capital no protections. “What does capital have to do with trade?” pundits might ask. “Trade is about goods and services and the people who create them, it’s not about capital.”

If stockholders staged protests at the World Labor Organization to suggest changes in this economic order, they would be accused of “tampering with the free market.”

That’s what we’re told today. But we don’t have to buy it. For we can begin to see how the sleight-of-hand of the “free market” serves as an apology for institutional arrangements. The truth is, free market ideology contains two separate assertions, worth unpacking.

First is the assertion that natural processes are self-regulating. Which is valid. We see it in nature, where the renewal of life in spring comes on its own. Where we mate for our own pleasure-and thus help in the rebirth of the world. In like manner, we serve the economic polity best by serving ourselves. The drive to make money gets us out of bed in the morning, and brings us to do our part in holding the world together. Our economic drives are part of the natural order and are trustworthy. We can take comfort in this assertion.

But free market ideology carries a second assertion: that corporate and trade governance structures embody the natural order. And this does not follow logically from the first. For it glosses over institutions of power. To call the stockholder-centered corporate structure “natural” is reminiscent of the ancient claim that the monarchy was the only “natural” way to structure government.

A truly natural free market would free all groups to compete equally, to pursue their own self-interest. Real free markets are not about enshrining the self-interest of one group alone in law. Privilege like that has no place in a market economy. Even an imaginary one.

Corporate obligation to shareholders

Saturday, November 5th, 2005

Here are some interesting viewpoints on corporate obligation to shareholders. One comes from Jeff Darcy and the other two from Mark R. Kleiman.

Before reading this, you should introduce yourself to the nice debate going on in the blogosphere right now on corporate responsibility, sparked by this post.

Here is Jeff’s response.

His [Mark's] approach is reductio ad absurdum, but I think there’s an even more important flaw in Friedman’s reasoning. This flaw is the all too common assumption that “money is everything” and therefore any value not represented in monetary form is irrelevant. In this case, this leads to believing that people invest only based on (direct, short-term) monetary return, but that’s simply not true. When people buy stock, they do so based on a certain assumptions. They assume that certain legal and moral restrictions are applicable to what the company does, and they invest based on that assumption. This is particularly true of “green” or socially-conscious investors, who might be making decisions based as much on a company’s image or reputation for ethical behavior as on their purely financial performance. In a sense one might say that such investors have monetized their morals by making such investments, but that doesn’t mean they’ve given up those morals forever in return for profit. Presenting such an image and then acting in a wholly different manner is a form of fraud, and unconscionable. The same principle applies to every company and investor, though usually to a lesser degree. If the moral justification for what companies do is fulfillment of shareholder expectations, then expectations other than profit must be considered.

There’s an even more fundamental problem that shareholders do not adequately represent the interests of all who are affected by a company’s actions, and that those others deserve consideration too, but that’s probably best left for a future article.

I think what Jeff has to realize, however, is that the issue here is the morality of proximity. People feel moral obligations to things that are close to them, either physically or sentimentally. I feel moral obligations to homeless people I see on the street in front of me, but don’t feel as much of an obligation toward, say, sweatshop workers in Malaysia who are abused by their managers. Despite any of my moral principles, despite what I think and know to be right, I still end up buying clothes and things made by those sweatshop laborers, or I continue to buy products whose production destroys the environment.

Even if I had all the information in the world, say I knew Gap abuses its workers, and so I knew if I bought a Gap shirt I would be supporting a business that abuses workers. But then things get complicated. The shirt is already made. The abuse was already done. My buying the shirt doesn’t actually abuse workers. I am just buying a shirt. I need a shirt, its price is right, I’m buying it.

We can’t expect ethical principles to just come to us by people boycotting industries that subvert them. Imagine if the abolitionists, rather than forming a political party and trying to get slavery outlawed, simply said, “We will convince everyone not to invest in these companies, and to not buy these goods.” Do you think this kind of boycott would have really succeeded? Do you think without the understanding of basic human moral principles that went along with the abolitionist movement, we would have advanced past that dark part of our history?

Slavery exists today. People are indentured servants in other countries, working for outposts of American companies. I agree with both posters that laws cannot be made for every moral principle. But no one has mentioned that we aren’t asking for laws for every moral principle. We’re asking for laws for all the most basic ones that relate to labor, the environment, etc., such as not being abused in the workplace, and not polluting our precious ecosystems.

As a shareholder, I continue to invest in companies who may be doing morally bad things far away from me. Shareholders didn’t cash in their morality, they just don’t know the bad things companies are doing, or, if they do know, they are being done so far away that they simply don’t care.

If it were a company that abused American sweatshop labor, and polluted rivers in small-town USA, then [most] people probably wouldn’t want to support that company with their wallet. But when the labor is in Malaysia and the polluted rivers are in China, we do it because we simply don’t care about those other places as much.

An interesting piece of philosophy was written on this topic by Peter Unger. It’s entitled, “Living High and Letting Die.” Try to find it at your local library.

Mark also posted a response to the debate.

What the Friedman argument is missing, it seems to me, is a realistic idea of what shareholders want with regard to how their companies do their own business, and all sorts of good behavioral evidence shows that to be a lot more complicated than maximal money returns. Friedman is right that corporate leadership is obligated to advance the interests of shareholders, but it is also obligated to discern these interests and discover–I expect–that shareholders want to trade some possible returns for a clear conscience about environmental responsibility, decent treatment of workers, honesty in trade, and the like.

Yes, they would probably trade some of their returns for a clear conscious. But how about we get to the heart of the matter: shouldn’t American companies be held responsible for immoral actions they do outside of the United States? Don’t we need to come to a global understanding of the rights of workers to healthful working conditions, to a work/life balance, to less abuse? Don’t we have to come to a global understanding that harm done to the ecosystem in China does affect all of us, and shouldn’t we try to do something to stop these companies from ruining our Earth?

Shareholders are just in to make a buck off their investment. They’d prefer it be done in a way that leaves their conscious clear, sure. But we can’t expect shareholders to save the day when it comes to enforcing our society’s (that is, this one, global society’s) minimal moral standards. We need to use our power as a democracy to control these authoritarian structures, even as they hop around the globe trying to avoid any confrontation by going to places with the least restrictive set of laws.

Essential articles for midterm intellectual relief

Monday, October 17th, 2005

Blood, Sweat and Tears: Asia’s Poor Build US Bases in Iraq

Still Separate, Still Unequal: America’s Educational Apartheid

Also, got the flyers made up for the screening of American Jobs I’ll be showing at NYU next Tuesday. Hopefully we’ll have a nice debate about outsourcing afterwards. (God knows we need one.)

Can’t wait to finish work so I can go home and watch the latest Bill Maher, which SageTV has graciously recorded for me.

John Ralston Saul on Lou Dobbs: Globalism is Dead?

Thursday, October 6th, 2005

I posted this DivX clip of John Ralston Saul being interviewed on Lou Dobbs. The segment is called, “Globalism is Dead.” You really must watch this, even though it’s a 33MB download (if you’re at NYU, it’ll be a LAN download):

Click here to download the clip.

Also, I realized that this post raises an issue: what is “fair use” in video clips off news programs? Am I violating copyright law posting this clip? I always think about how I wouldn’t hesitate to post a link to an interview written in the NYTimes, or even to post a few paragraphs of such an article on my blog reprinted with a citation. But since this is video, and news networks try to place arbitrary value on their video content, it seems like I’d be violating copyright law.

Anyway, if anyone from CNN & co. is reading this and really wants me to take it down, I will. But I expect a nice explanation of why, legally, I’m obliged to do so, and I will reprint any demand to take down the video on this website.