Depends. Suppose that we have two identical factories-- one in the US and one in Vietnam. You may find that the Vietnamese factory had to build it’s own powerplant because electicity wasn’t reliable enough. The owners might have had to build a road to a nearby village to make sure the workers could get to the factory. They might have to pay higher insurance because of political instability. They might have to pay to hedge against currency fluctuations. Or maybe the local currency isn’t even convertable, and the owners have to engange in some other financial transactions to get their money back. All these things have to be taken into account.
But even still with all those caveats, it is of course still often worthwhile to build your factory in the 3rd world.
The secret of the success of south Korea was foreign aid. In the twenty years following WWII, South Korea got as much foreign aid as the entire continent of Africa. (There was an article on the New Yorker’s finanical page sometime last year that had the numbers.) Taiwan, the other supposed success story of globalization, also got tremendous foreign aid. Of course the West supported those tow countries mainly to prevent the spread of communism, but that doesn’t negate the fact that foreign aid was vital in their success. It paid for infrastructure and supported stable government.
Without big foreign aid, globalization can’t deliver. For instance, Guatemala. In the fifties, Guatemala had a communist government. The CIA toppled it and replaced it with an America-friendly dictatorship. American agriculture companies moved in and gained control of the farming industry, displacing small farms controlled by the Native American population. Guatemalan crops have been sold in America ever since. That was five decades ago. Where’s the globalization miracle in Guatemala? The people there have not become as prosperous as the people of South Korea. Until quite recently, they had no political freedom.
I think the tide is turning against globalization. Look at Indonesia, at Bolivia, at Ecuador, at Venezuela, at Mexico. The people in third-world countries don’t see any benefits from joining global capitalism. They’d rather have control of their own industries.
How much foreign aid does China get? China is benefiting quite well due to globalization-- maybe more than any other country.
Guatamala went thru decades of civil war. Who is going to build factories in a country like that? Political stability is necessary to attract foreign investment.
Both countries received foreign aid. South Korea used its aid to build an infrastructure, invest in factories and education, and improve its trade with the world. South Korea accepted that its people could not be paid 1st world wages with a 3rd world infrastructure, so they allowed ‘sweat shops’ and the free movement of capital in and out of the country, so that Koreans could maximize their comparative advantage.
The Phillippines used the money to avoid having to compete on the global stage, using the money to subsidize local farmers and producers to protect them from competition. Plus, the corruption of the Marcos regime and general political instability acted as a barrier to foreign investment and squandered aid.
Today, South Korea is a thriving industrial economy, and the Phillippines is a basket case.
Free markets, open borders, and allowing capital to move efficiently and freely are the keys to prosperity, both for us and for the 3rd world. Poor countries aren’t poor because they lack resources, or because capitalists are making out like robber barons on the backs of the working class. Poor countries are poor because they have corrupt governments and misguided economic policies, generally of the socialist/communist kind. Africa has a further problem of tribalism and constant warfare which destroys their infrastructure as its build, leading to enduring poverty.
You don’t fix the 3rd world by throwing money at it or protesting sweat shops. You fix it by encouraging good government, stability, and open markets.
If you would care to address this part of my post–
–then perhaps. :dubious:
The idea that Capitalism = Freedom is BS.
It is repeated as a quasi-religious mantra.
South America, South Africa, & the Middle East have all had capitalist systems economically. And brutal tyrannies politically.
Having money does not make you moral, honorable or decent. It doesn’t make a society moral, honorable or decent. The Roman Empire, after all, was rich as hell. And run by utter swine. Capitalism is merely a system for making money.
Yes, it had piss-poor factories that put out shoddy, loww tech goods. The influx of foreign capital was what kick-started that economy in the 80s and has kept it going since. And it needed foreign markets to sell its goods, since few people in China had any money even just a few decades ago. That’s what globalization is-- the free flow of money (capital) and goods without regard to borders.
I don’t think anyone is saying Capitalism = freedom. China right now is capitalist in everything but name, and it’s not free. But, capitalism makes people wealthy, and wealthy people are hard to keep supressed. It encourages people to seek more political freedom, and gives them the means to demand it.
Real capitalism requires that people be free to make decisions about where to work, and how to spend the fruits of their labor. It requires property rights. Therefore, it requires a certain amount of political freedom.
Sure, you can have some restrictions of freedom in a capitalist country, but not in the areas that matter most.
You’re just calling them capitalist because it allows you to smear capitalism. Most of the places you mentioned either have strong state control of industry, or restrict ‘capitalism’ to only a part of the society. South Africa may have been capitalist for whites, but Apartheid prevented blacks from taking part.
Since when does capitalism mean that having money makes you moral? You setting up an awful lot of straw men in these posts.
Capitalism may not make any individual moral, but capitalism itself is a moral way for humans to conduct their affairs, because it treats humans as individuals. The opposite of capitalism, statism, treats people as part of a collective, with only those rights that the state deems ‘fair’, or where rights can be taken away at the whim of a central planner. It’s not only immoral, but it’s inefficient and leads to poverty and an inability to compete on a global scale.
Guatemala did not have a communist government in the 1950s, although Arbenz’s government did have their support after some of the reforms he put through. American ag companies did not move in and gain control of the farming industry after that, they were already there and already controlled the farming industry. They also controlled the telephone and telegraph systems, the railroad and energy sectors. Foreign aid had little to do with Guatemala’s lack of development. It was the constant violence and civil war that plagued Guatemala after that which caused it’s lack of development.
Much like the Amish can ride in trains and busses, so can totalitarian/fascist regimes utilize factories to build stuff.
From what I remember of WWII history, those factories were largely war machines. A lot of good that will do when you’re not at war.
Factories and economic systems are precursors to “honest” and responsible government. It’s up to the people to control their government. [Without getting into a monster esoteric discussion on government, I’ll stop here.]
Nitpick: The economic freedom you describe is not the same thing as political freedom – free speech, voting rights, etc. An important difference is that political freedom is as much collective as individual. E.g., it includes, in principle, the people’s freedom to choose socialism, if they wish.
Look. gitfiddle started this discussion by giving a list of reasons for why the tide of globalization must continue to advance by improving living conditions across the planet. Given such an assertion, it’s reasonable to ask what the results of globalization have been, in countries where it’s been introduced. So what do we see? We see that globalization has brought increased freedom and prosperity to some groups, such as South Koreans and the Chinese middle class. On the other hand, it’s failed for many other groups, such as the Chinese lower class, and Guatemala, Morocco, Bolivia, and many others. The failures outnumber the successes.
You may argue, if you wish, that all of these failures are the fault of corruption, lack of infrastructure, ethnic conflicts, or what have you. But the fact is that globalization has failed to overcome those obstacles. Many thinkers have claimed, as in the OP, that global capitalism would usher in new ways of thought, would make people see the folly of tribalism and the advantages of joining a worldwide market. Many have claimed that the influences of worldwide businesses would reduce corruption and fight unnecessary bureaucracy. They haven’t, or at least not to a great enough extent.
The people of Bolivia are unlikely to care about the great things that happened in South Korea.
How has globalization ‘failed’ the people of Bolivia? From what I can tell, it’s barely had any time to work there at all, and the anti-globalization protests there are more of a political protest than an economic one. The left-wing in bolivia is anti-capitalist, and believes that selling off Bolivian natural gas amounts to ‘selling the country’ to outside interests. Bolivia didn’t elect its first free-trading government until 1993. Saying globalization has failed in Bolivia is like saying it failed South Korea because South Koreans weren’t living first world lifestyles by 1965.
Saying that this represents a failure of globalization is like saying that American capitalism is a failure because there are socialists and Communists in America opposed to it.
There is no question that Latin America is moving back into a socialist/communist direction. That’s not a failure so much as it is a colossal mistake. Trade barriers, nationalization of industry, and rigid economic controls are exactly the wrong prescription for what ails these countries. In fact, what ails these countries is pretty much all of the above.
Globalization and free trade are not panaceas. They won’t fix institutionalized graft and corruption, and they take a long time to work. We’re talking about increasing the GDP growth of a country by a few percentage points a year, perhaps. Nothing that will show dramatically in the lives of all the people in the space of five or ten years, but in 30 or 40 years, a radical difference. And of course open markets cause readjustments and dislocation in existing non-competitive industries. That opens the door to demagogues like Chavez in Venezuela to rally the people around strong leaders and socialist economic policies.
And let’s not forget that the anti-globalization people are the ones on the fringes here. The burden of proof should be on them. The value of free trade is one of the most ‘settled’ issues in economics. You won’t even find Paul Krugman opposing it.
It’s exactly for that reason that I mentioned that it seems to me from reading Sachs, Stiglitz, Sen, that I feel like the mistakes of thinking “lifting all boats” would work is being corrected. As I said, we are not yet, we are still globalizing.
It seems that what your referencing (coming from someone who is not an economist) is a result of the nineties idea of developement, which I believe is being corrected, though the effects will remain for quite some time (or are too far gone, which is part of the question).
I wanted to come back and address this - this is, I believe, one of the most common fallacies on the left - that there’s a fundamental difference between economic freedom and political freedom. There isn’t. Often, to make the point that you can have one without the other, the left will hold up examples of countries that are suppsedly capitalist and yet oppressive. But when you scratch the surface, these countries turn out to be more like oligarchies protected by government.
If you have true economic freedom - the freedom to keep what you earn, to choose who you will work for, to negotiate contracts freely, then political freedom follows from that. And if you are not economically free, being politically free is irrelevant.
Here’s an example I’ve used before - wouldn’t you say that it would be a severe lack of political freedom if George Bush signed an executive order preventing people from travelling from city to city without an internal visa and the permission of a bureaucrat? I sure would. And I think pretty much everyone would agree.
But what if he signs a law that imposes a gasoline tax, ‘for the environment’, say, which is onerous enough that I can no longer travel? And let’s say that this is such a restriction on the economy that the government has to start issing tax breaks to people who need to travel for the ‘right’ reasons. Have we no achieved exactly the same thing? A government has restricted my ability to move where I want to go.
This is not just academic. One of the things the Chilean government did to oppress the people was to put a tax on newsprint - a tax so high that no one could afford to print newspapers. Of course, ‘necessary’ media (i.e. the kind the government liked) got tax breaks so they could still print their papers. Everyone was out of luck. But hey, they’ve got political freedom, right? After all, no one passed a law preventing the people from printing newspapers.
This happens all the time. Trade tariffs are just one way of saying to some one, “I don’t like what you chose to do with your money, so I’m going to levy a fine on you stiff enough that you will be forced to choose otherwise”. This is without a doubt a restriction on freedom. And what’s worse, these kinds of laws disproportionately hurt the poor, who lack the financial resources to seek out alternatives.
You can certainly have a quasi-capitalist system that is a mixture of capitalism and state control. That describes pretty much every ‘capitalist’ country on the planet. But political repression is the enemy of capitalism, and you can not have a well-functioning capitalist economy in a country which does not have political freedom.
Yes they can, under certain circumstanses (very shortly):
Those adults that are now working can put their children studying => the impact is positive [if the government has suitable schools in the first place].
In those works where the children are working, and thus can’t even learn the basics, it will not lead to anything.
The Internet is a product of good infrastructure and the fact that there was a lot of computers. Computers got cheaper faster, because of the globalisation, making the development of the Internet faster.
But Internet is not a product of globalisation.
Yes, the impact of Internet is immense and will be within some years the biggest step mankind has done since the wheel.
As above; education and only through education.
Yes, if the masses can educate themselves so much that they really know what they are buying. The “masses” here, are the consumers.
In a way yes, but a good thing is, that soon people can not be taught that kind of propaganda that they are used to. Because of the Internet.
I am just waiting that the real big discussion will begin, within ten years or so, on the Internet.
There can be some big news for the citizens in the First World.
gitfiddle
Just to add. When we speak of what is good in the future, we have to ask for whom?
The third world, the first world or both? Or just the employers?
The sweatshops are not the only alternative as some here seems to see it.
The chance to education is imperative.
The sweatshops + an environment that gives no chance to educate the citizens => very bad. It does not give new markets for us, as those countries where there is developing new consumers. They just take our jobs without giving anything for us, the ‘normal workers’.
The question is, that when the third countries has come so far, that any factory can be maintained in their countries, what is the reason that the factory is in the first world countries at all.
And we are there very soon.
Millions of new engineers are coming out from the schools in the third countries every year. One million in China only.
