Globalization

CAFTA: Is this democracy?

Tuesday, August 2nd, 2005

Check out a few links about CAFTA: 1 2 3 4 5.

Disgusting. My take? Globalization in its most ruthless form is going to be seen in the next few years in each of the countries affected by CAFTA. Then there’s going to be a long track record of failure for the theories of globalization, from NAFTA and Mexico, to WTO effects on Jamaica, to CAFTA in Central America and Dominican Republic. And then what are we all going to say? We’re still supporting these theories on “faith”? Or will we wake up and smell the coffee, and realize that “globalization,” the way it is sold now by politicians and even theoreticians, is nothing more than “handing public capital over to corporations, basically for free”.

Or, perhaps more pointedly: restoring the world order of imperial powers and their subjugated colonies.

My only fear is that by the time we realize this, globalization will have so evolved that the “imperial powers” won’t be rich governments, but rich transnationals, and the subjugated colonies won’t be third-world countries, but all countries and all people who don’t have major stakes in the ruling corporations.

Xenophobia and Politics: Is Protectionism Racism?

Saturday, July 23rd, 2005

I recently found myself digging through a trash can. Why? Well, in it was a discarded Forbes Magazine, with an article visible with the same title as this post. It was written by Steven Landsburg, a professor of Economics at University of Rochester, who is, to put it lightly, criminally insane.

The ideas put forth in this article are quite strange, in the worst kind of way. You can read the entire thing at Forbes.com. His basic premise? That encouraging companies to hire American workers over foreign ones is racism. He points out that our government ranks…

…are infested with protectionist fellow travelers who would discriminate on the basis of national origin no less virulently than David Duke or any other overt racist would discriminate on the basis of skin color. But if racism is morally repugnant-and it is-then so is xenophobia, and for exactly the same reasons.

Apparently Landsburg is received his PhD from University of Chicago in 1979. So, the first question I asked myself was, “Is Landsburg a member of the Chicago School of Economics?” and some quick Googling reviewing his books made it clear that he is. Well, this already answered many of my questions.

For those out of the know, the Chicago school embodies what is known as Neoclassical Economic Theory, in which the idea of a laissez-faire economy is placed in the highest regard. The Chicago school’s theories were based on ultra-mathematical economic modelling and a general rejection of Keynesian economic ideas which took hold in public policies around the world and are still seen as the major reason we haven’t seen another major global recession since the Great Depression. However, economists like Landsburg reject these ideas, opting instead for a neoliberal, neoclassical economic order in which globalization reigns supreme and government power to protect its citizens is quite reduced.

For some examples of Landsburg’s other works, feel free to read his economic explanations of why the minimum wage isn’t necessary and why convicted computer crackers should be executed instead of murderers.

That latter article in particular will let you know what I meant by calling Landsburg “criminally insane.”

Interestingly enough, Landsburg’s viewpoint on protectionism is so patently false, that I even found myself agreeing with Pat Buchanan, of all people, who wrote a stunningly potent and elegant paragraph pointing out the major fallacy in Landsburg’s interpretation of “racism” and “xenophobia”:

To be more concerned about the well-being of one’s fellow Americans is not “xenophobia,” which means a fear or hatred or foreigners. It is patriotism, which entails a special love for one’s own country and countrymen, not a hatred of any other country or people. Preferring Americans no more means hating other peoples than preferring one’s family means hating all other families. An icy indifference as to whether one’s countrymen are winning—be it in a competition for jobs or Olympic medals—is moral treason and the mark of a dead soul.

Why do I think Landsburg’s view is so deranged? Because it fails to see the world for what it is: a whole bunch of groups of people trying to work together to better their collective lot in life. The reason a South American worker shouldn’t have an equal shot at an American employer’s jobs is that South America needs to have its own sustainable businesses. If we allow corporations to hop around the globe, picking the cheapest labor markets with the best political advantages, then we will never see progress. A factory built in South America is worth nothing if it is torn down 5 years later when that factory owner moves shop to China. What did the South American workers gain? Skills, you say? Nope, not if the jobs involve unskilled labor, as in 99% of these cases. Money? Sure, but I guarantee you the little pay they received doesn’t give them enough money to become a real estate developer, as the President of Nike once hilariously suggested. Chances are most of it was spent on making ends meet. But who did gain? Well, the American corporation gained. Its shareholders gained. On the short term, the American consumer gains (though even he will be a victim of globalization’s corporate capital fluidity in the end).

Landsburg writes, “if it’s okay to enrich ourselves by denying foreigners the right to earn a living, why not enrich ourselves by invading peaceful countries and seizing their assets?” Here you can see the major philosophical reason Landsburg’s piece doesn’t hold up. He says protectionism is “denying foreigners the right to earn a living,” but I don’t believe that’s what protectionism is at all.

It is not as if American corporations go to places like Mexico because they are attracted to the skills of the laborers. They go there because it’s cheaper, and let’s not forget that. They go there because the Mexican government won’t restrict them as much when it comes to things like pollution, workers’ rights, and, perhaps most importantly, minimum wage. These are all economic costs of being a business in the United States. But the reason these limitations on business were instituted was because the government is supposed to protect a person’s basic human rights before considering a corporation’s rights. It’s true that from an economic point of view, it would be very efficient and profitable for me to find 10 unemployed Mexican immigrants and let them to work for me for $0.10 a day in unairconditioned rooms, with quotas of 400 units per worker per day, making some product I can sell for a huge profit. But there’s a minor problem: it’s not legal for me to do so. If you think the fact that it would benefit the consumers of my product (in terms of the low price I can sell it for) is worth more than protecting the human rights of those 10 Mexicans I hired, then maybe you can start talking to me about globalization, since that’s just what corporations do if they move to Mexico and open a factory with poor worker conditions and wages that one can barely even live off. If you fail to see that moral connection, you’re failing to see a lot.

So there are really only two choices if you think globalization is inevitable: bring third world country’s laws onto the same level as ours (in terms of minimum wage, pollution, etc.) in which case there truthfully won’t be much of a compelling interest for corporations to move to those countries anyway, or strip away laws that protect laborers across the globe so that even in the United States, laws like minimum wage no longer exist.

Landsburg clearly believes in this second vision of globalization, the one that one can easily label “the race to the bottom.” In this global order, corporations hop around the globe finding the cheapest labor markets and best consumer markets, in a big cycle where the only group that continually prospers is the rich shareholders.

I believe in the third option: reject the vision of globalization entirely. Focus on the local, and in countries where local conditions are desperate, focus energies on political programs which allow laborers to band together to form their own local markets and local economies. Open schools and libraries, not factories. Stop performing economic terrorism on places like Jamaica, where we destroy local markets by forcing our (often lower-quality, but cheaper) exported goods upon them. Track down corporations that run sweatshop factories across the globe and punish them as if those sweatshop factories were in the USA, forcing them to figure out how to profit using humane labor. Encourage trade, but only on fair terms.

Does that really seem like racism?

On the economic “benefits” of globalization

Tuesday, October 12th, 2004

I don’t normally watch The West Wing, but I watched a couple of episodes last night with Olivia. One of them had as a subplot the concern that a tech company was moving 17,000 programmer jobs to India, and a union organization wanted answers from the administration. The initial tone of the episode seems to speak to the concern of the workers, but the “ending moral” is that you can’t please everyone, and that globalization is ultimately “bad in the short-term but good in the long-term.”

I’m not sure if that’s the viewpoint of Aaron Sorkin, or if he simply wanted that viewpoint to show up in his show. But by hearing people talk about globalization so casually, I came to a very vivid realization. When people say, “Yes, 17,000 jobs are lost here, but it’s still good for our economy,” we don’t even realize what that person means when he or she says, “our economy.” Everyone has this different concept of the economy, and what exactly it is. For example, if I were to ask a bunch of people, even bunch of economists, what the economy is, would I get the same answer from each of them? Probably not.

Now, if we go down to the individual level, asking one of those programmers whose jobs was offshored what his economy is like, he would probably respond that his economy is quite shitty. And if we went to a community like Silicon Valley, from where the jobs were offshored, most people would say that the people of Silicon Valley are experiencing a rough economy.

But who is actually benefiting from the offshored jobs? Some people say “the corporation benefits,” but that too is an abstraction. The corporation was comprised of those 17,000 jobs (and others), so how could it possibly benefit if those jobs are gone? Definitely it doesn’t seem the corporation benefited from the relocation of 17,000 skilled workers. Do other workers benefit from the relocation of those workers? Probably not, as it creates team fragmentation, lowers morale, etc. So who benefits? Who?

Shareholders.

When people say “the economy gets better in the long-term,” what they mean is that shares of stock for shareholders goes up over time, and the stock market, as a whole, goes up. And shareholders are nothing more then the a privileged class, an elite, of America. So why do we let our economic future (the economic future of the workers) be decided by their wants and needs of the already-privileged shareholders? Why should I accept that 17,000 American jobs lost is worth the 2% increase in share price? And why do we implicitly accept this in our use of language surrounding the “national economy”?

Project Outsourced on Lou Dobbs

Tuesday, June 1st, 2004

Came across a website called Project Outsourced the other day. A group of documentary filmmakers are attempting to cover outsourcing from every angle. Interesting clip on the front page relating to Lou Dobbs, although almost everyone in that clip (including an NYU Economics professor) is so unbelievably wrong about Lou Dobbs that it hurts me to hear supposedly intelligently people speaking such garbage…