Time
for a Change #24
Doing Globalism Right
What is Globalization?
Globalization is Cultural, Economic and Political. Cultural globalization is occurring most
rapidly. Economic globalization is
next. Most of our major challenges stem
from political globalization spreading too slowly to prevent many abuses
resulting from political globalization. Doing globalization right consists in large
part of creating democratic global institutions with the authority and
resources to control economic globalization, including the impact of
commercialism upon global and local cultures.
Cultural globalization refers to the spread of cultures through
communication and transportation. People
throughout most of the world glimpse other cultures and are choosing adopting
those aspects which appeal to them. Some
aspects such as popular culture are spreading widely, especially among young
people. Networks of people across many
societies are forming around interest in specific cultural aspects. Cultural globalization is enhancing freedoms
and opportunities for much of the world’s population. One downside is that many local cultural
aspects are threatened. Another is that
commercialization is influencing many people to adopt unhealthy and unethical behaviors.
Economic globalization refers to the increase in multinational economic enterprises and the multinational investment and trade which they conduct. With the present inadequacy of global political regulation, these enterprises have the power to subvert national democratic regulation of their impacts upon their economies, local competitors, labor, consumers and environment. To understand the threat, Read Jeff Faux, The Global Class War.
The major block to democratic global political democracy comes from the vested interests within powerful countries (including particularly our United States) consisting of both (1) our multinational enterprises with the ability to corrupt our democratic institutions and (2) our producers and consumers who benefit in the short run from the exploitation of populations in other countries.
Economic globalization cannot be stopped and can be hugely beneficial, but only if done right, which means done within global democratic regulation. Understanding the harm caused by unregulated economic globalization quickly takes us into highly technical and complex economic and political theory and fact. The following is an attempt to greatly simplify this at the cost of obscuring much important detail. For a better understanding, read especially Joseph E. Stiglitz, Making Globalization Work and other globalization books on our reading list. Many other relevant books are listed at the end of this commentary.
Undemocratic Economic
Globalization
Our most powerful global
organizations include our United Nations, World Trade Organization,
International Monetary Fund (IMF), World Bank and lesser organizations. In the United Nations, only the Security
Council has the power to act. Yet it is
controlled by 5 nations having a veto power that were victors in World War II:
Our United States,
These global organizations set the rules for economic globalization, based not on what is good for the whole world, especially our poorer nations which they don’t represent. Instead, they set the rules according to the political interests of the wealthy and powerful countries which dominate them. Even worse, these political interests often don’t represent the best public interests of their countries, but only of wealthy and powerful private interests within these countries – for example, corporate producers wanting to subsidize, protect and export their products. Thus private industries and enterprises within wealthy powerful countries set the rules for economic globalization. No wonder that economic globalization is harming many of the people that it should be helping.
Unfair Trade
We hear most about
trade. Multilateral agreements such as
NAFTA and our World Trade Organization (dominated by business interests) have opened
up markets in less developed countries to subsidized imports from more
developed ones, while the latter have kept their barriers to imports from the
former. In addition to facing unfair
competition from subsidized foreign products, producers in less developed
countries lack capital and the physical and social infrastructure necessary for
efficient production. One example has
been the bankrupting of corn producers in
Patent Protections
We also hear a lot about patent protection. Makers of software, pharmaceuticals and other products seek extensive patent protection and enforcement to maintain their high monopoly prices. Microsoft says its vision is a computer on every desk, yet its monopoly pricing slows that result. Pharmaceuticals, which have often patented medicines developed by publicly paid scientists, or natives in less developed countries, seek monopoly pricing which poor sick people can’t afford. Only under heavy public pressure have they lowered their prices.
Overwhelming Debt
Bankers have long made fortunes making short term loans to foreign governments, often headed by dictators, without due diligence concerning the spending of the proceeds or the risk that the government can’t repay the loans. Instead of spending the money on sound investments, the money has been wasted on lavish consumption by government cronies or sent outside the country to private accounts.
Then when, the borrowing becomes unsustainable, often due to interest rates increases beyond the control of the borrowing countries, the bankers get the International Monetary Fund to act as a collection agency. The borrowing country is forced to export food and other products needed by its members and divert government money from health, education and social services to pay back its loans.
Destabilizing Capital Flows
Countries have also been pressured to open their country to
foreign investment. Speculators rush in
to invest, but when investments turn bad, they quickly withdraw. As economic depression occurs, the IMF
pressures the country to reduce its spending which further increases the
depression. Countries such as
Resource Rich Countries
Oddly enough, the ownership of natural resources, such as
oil and minerals has harmed many countries.
Foreign multinational corporations have through their sophistication and
bribery have been able to purchase these resources much cheaper than is fair. Many of the proceeds have gone to a few
corrupt individuals instead of to the public.
In addition, the influx of money has raised currency rates such that
other industries have been unable to export.
As with
Worker Exploitation and Environmental Destruction
Foreign companies
threaten to move to another country if a government attempts to institute
worker and environmental protections or taxes.
During the cold war, they have even gotten their governments to
intervene militarily on the pretext of removing communists, as the United Fruit
Country did in
Proponents of the NAFTA and other trading agreements
promised that they would contain enforceable regulations to protect workers and
the environment. No such regulations
resulted. In
Corruption
We often hear that corruption is the major barrier to development. Corruption is a serious problem, although
some corruption is simply a tax imposed by the underpaid official helping
you. But corruption in the less
developed world is nowhere near as costly as American corruption. Remember that the major instigators of
corruption in both
Reforming Economic Globalization
Reforms must include: democratization and empowerment of our global political organizations. Just as corporations doing business across state lines should be chartered nationally, corporations doing business across national boundaries should be chartered internationally. Their charters should include limitations backed by serious penalties upon many of their actions noted above. Local governments should also become more Democratic, with government actions at all levels becoming transparent.
Trade agreements should be reciprocal such that wealthy countries also drop their subsidies, excessive patent guarantees, and import barriers. Both corporate charters and trade agreements should specify broad stakeholder governance with enforced regulations to protect owners, workers, consumers, competitors, communities and the environment.
Special funds and institutions should be established to assist developing countries. These should include banks to (1) reserve funds from resource rich countries used for physical and social infrastructure development, (2) venture capital and (3) small entrepreneurial loans. Research should be funded concerning health, education and other challenges which disproportionately affect the poor. The Bill and Melinda Gates Foundation is a fine example of private efforts.
Our
Most of us have little foreign experience or understanding. We generally fail to understand how our activities affect foreigners, or their reactions to us. In spite of the enormous international power of our government, we ask our elected officials to only consider our short term interests. We first need to better understand our impacts. We need to realize that our long term interest lies in contributing to the development of other countries and peoples. We need to ask our leaders to enact policies to do this.
To resolve our foreign problems, reform must begin at home. We should make our government more democratic, and more transparent, greatly reducing the corruption of our public officials. We should charter nationally our corporations which operate in more than one state. The charters should have a bill of rights and responsibilities different than what we provide for people, who are much less powerful.
We should elect leaders who will lead the world in democratizing and empowering our global institutions and in dealing with global environmental problems. Such a leader would be remembered in history as were Washington, Lincoln and the 2 Roosevelt’s, who met the massive challenges of their days. We may end up paying slightly more for our imported commodities and manufactured goods. We will pay less for our foods that are no longer subsidized and protected by import quotas. As we become a champion for the world, we may find our homeland security and defense costs decline. We will benefit from unleashing the now encumbered creativity and productivity of 85% of the world.
Perhaps most important, we may protect ourselves from the enormous risk posed by our tremendous trade imbalance and foreign indebtedness. The threat that foreigners will quit financing our trade and government deficits is greater than the threat that of increasing Medicare costs which is greater than the threat that Social Security will be unable to pay its recipients. The latter issue receives all of the attention due to the money to be made administering private accounts, but the former issues are much more serious.
If foreigners worry about financing our increasing debt, we will have to raise interest rates to attract their money, thus slowing our economy. With a slower economy, we will consume less of both our domestic goods and services and foreign ones. Our imports will drop, but not enough to restore our trade balance until our economy is wrecked.
To reduce our foreign debt, we must:
· Invest to expand production and exports without protecting ourselves from imports.
· Replace employer provided benefits which harm their competitiveness with cost-controlled Medicare for all and other social insurance.
· Restore our fair progressive taxes to increase our federal revenues to historic levels.
· Tax consumption instead of work to save more and spend less.
· Create a simplified system of add-on savings credits to social security which serve to provide pensions and mitigate risks.
· And much more.
Globalization is here to stay. It poses enormous threats to everyone, including Americans. Doing it right requires liberal reforms. As our crises increase, we will be forced to make liberal reforms. If we don’t, we will experience a wreck as grave as our great depression of the 1930’s. Hopefully, we will obtain the political power to initiate these reforms in 2008. We need to be prepared with an understanding of the challenges and appropriate reforms.
Further Study
This commentary is vastly over-simplified. To learn more, read at least a few of the following books, many of which have been best sellers, especially those marked with an *.
Tom Athanasiou, Divided Planet, The Ecology of Rich and Poor
Jeff Faux, The
Global Class War
Thomas L. Friedman, The World is Flat, A Brief History of the Twenty-first Century*
William Greider, One
World, Ready or Not, The Manic Logic of Global Capitalism*
International Forum on Globalization, Alternatives to Economic Globalization, A
Better World is Possible
David C. Korten, The
Post-Corporate World, Life After Capitalism
David Korten, When
Corporations Rule the World*
David Korten, The
Great Turning, From Empire to Earth Community
Kishore Mahbubani,
Beyond the Age of Innocence, Rebuilding Trust Between
Jerry Mander and Edward Goldsmith (eds.), The Case Against the Global Economy and for a Turn to
the Local
Kenichi Ohmae, The
Borderless World, Power and Strategy in the Interlinked Economy*
Kenichi Ohmae, The
End of the Nation State, How Capital, Corporations, Consumers and Communication
are Reshaping Global Markets
John Perkins,
Confessions of an Economic Hit Man
Bruce Rich, Mortgaging
the Earth, the World Bank, Environmental Impoverishment, and the Crisis of
Development
George Soros, The
Crisis of Global Capitalism
George Soros, On
Globalization*
Joseph E. Stiglitz, Globalism and Its Discontents*
Joseph E. Stiglitz, The Roaring Nineties
Joseph
E. Stiglitz, Making Globalism Work*