luc: “odious debt”? Shit, Kimstu, look out!*
No worries, it’s a technical term of long standing, not some insult I made up. Even the IMF disapproves of odious debt and is looking for mechanisms to prevent it. (& thankyou!)
Well, just so you know I caught an avalanche of whale-dreck for even mentioning it!
“No worries”, eh? I smell Aussie. Its an aroma very akin to beer. Odd, isn’t it?
- Aggressive international “intellectual property” and patent regulations that privilege companies’ property rights to the point of criminalizing long-standing traditional practices or resource use (e.g., seed saving, folk medicines).
luc: “No worries”, eh? I smell Aussie.*
Secondhand Kiwi, actually, but Aussies are fine too. Esp. the beer.
Thanks to Kimstu for an excellent point-by-point roundup. As worthy as these goals are, however, they illustrate why the “protest in the streets” approach is unlikely to succeed.
Street protests, IMHO, can only be effective when the message is simple and straightforward, and when success or failure can be fairly easily determined. For example (from my own, more wild-eyed youth), marching on Washington to end U.S. involvement in the Vietnam conflict was a reasonable thing to do. What we wanted was pretty unambiguous, and one could readily determine whether the Government was acceding to our wishes or not.
From an earlier era, protesting against segregation in the South was probably an effective strategy: keep sitting down at the “whites only” lunch counter until there’s no longer any such thing as a “whites only” lunch counter.
Street protests against “globalization” are, I believe, doomed. The goals, even if one thinks they’re worthy, are just too difficult to get across to those at whom the protests are targeted, to say nothing of the general public. Add to that the difficulty of figuring out whether you’ve won or not, and you’ve got a problem.
While it’s not nearly as much fun, working within the system is probably the only way to make any headway on these fronts. Lobby your representatives, engage in grass-roots organizing, write letters to the media, support candidates who support your views, and so on. (Even the examples I mentioned above ultimately yielded results only via a combination of street protest and more systematic approaches.)
Another alternative, I suppose, would be to focus on just one primary goal at a time, make sure the message is clear, and that success is somehow measurable, then hammer away at it. Generating that kind of internal discipline among the anti-globalization folks is probably beyond reach, however.
Globalisation isn’t the problem, it’s the people who are running it.
I’m skeptical of the way globalization is currently being implemented for all the reasons Kimstu lays out…most particularly #s 1 through 4 (for an example of #1, look at practical uses of NAFTA’s Chapter 11). In my perception, there’s too much of a tendency among institutional elites to view market liberalization as a panacea, a one-size-fits-all solution to any country’s problems. It’s not clear whether that’s true in the long run, however, and in the short term the needs and stability of the state seem too often to come second to the desire of outside investors to secure an easy flow of capital, both in and out.
I also agree with this in its entirety. And RickJay’s post, as well. Anti-globalization is too big an umbrella, and protests aren’t the ideal way to focus the dialogue.
By all means list some. Every case study used to argue against NAFTA based on Chapter 11 I have ever read left out an enormous chunk of the facts and often totally misled the reader. It’s not the horrible thing it’s made out to be.
Anti-Globalization is an interesting ‘philosophy’, in that it is largely incoherent.
Most political movements have at their core a philosophy, an ideal, a vision of how people should live. The adherent to those philosophies espouse those fundamental beliefs with varying degrees of success, but by and large they are at least rational and relatively consistent.
But most of the anti-globalization types I’ve met are just incoherent. They have no common vision. What they do share is common fear. They fear change. They want the world to stay as it is. In that sense, it’s a fundamentally conservative viewpoint, and Pat Buchanan is the most rational proponent of it. But the funny thing is that most anti-globalization types consider themselves members of the left, and hate Buchanan and his ilk. So why do they share so many common viewpoints? Because again, they have no philosophy, no vision. Their beliefs overlap where their fears touch.
Susann said:
Fewer and fewer each year, thank God.
Fallacy #1 - that labor is all equal, and the inevitable result of free markets is a ‘world price’ for labor. Here’s some news: The price of labor is set by the laws of supply and demand. American labor is valued more than Chinese labor not because Americans are protected from competition, but because Americans are more productive. More capital is invested in each worker, education is higher, the infrastructure they work in is more efficient, the government is more stable, etc.
People in the Philippines aren’t paid less because evil businessmen are exploiting them. They are paid less because they are worth less. They have worse access to markets, the government is less stable, the cost of doing business is higher, etc.
Protectionism can prop up individual industries, but ALWAYS at the cost of overall productivity, which in the end makes countries poorer.
That’s because the average world level of productivity is lower than it is in America. And by the way, the falling wages for computer programmers and IT people has nothing to do with globalization. It’s due to the collapse of a tech bubble and the resulting oversupply of labor.
Neglecting to consider that there are OTHER costs to hiring workers in other countries. Try managing a team of programmers, half of which are in India and the other half in America, and tell me how it works out for you. Add in travel time for liason, long distance phone bills, shipping costs to move product back and forth, communication difficulties, cultural differences, and other inefficiencies that creep in, and suddenly Indian programmers aren’t worth as much as you’d think. In fact, they’re worth about what they get paid, which is a lot less than what Americans get. Free trade won’t change that one bit.
Of course, you could just make it illegal for companies to set up subsidiaries in India or farm out labor to Indian programmers. I take it that’s your ‘solution’. The result would be to remove a competitive advantage from American companies, which would make it harder for them to compete on the world stage. So then maybe GE’s Logic Controllers would cost even more than Siemens’ products, which means GE’s sales falter - especially in those huge emerging markets like China where these companies see most of their growth coming from. So GE loses market share, GE stockholders (mostly American) get hurt, and AMERICAN programmers lose their jobs. Nice plan.
This is a strawman, since there is no such thing as a ‘global labor price’. You anti-global types should really look into taking an Econ 101 course. It would save you a lot of effort.
Those other nations do not have such uneconomic laws because they can’t afford it. Passing laws won’t change that. In fact, forcing them to maintain U.S. standards of health care, worker safety, etc. will result not in those countries becoming better, but in those countries staying destitute.
If you want those countries to have better labor standards and healthier, happier workers, you should stop protesting globalization and start working TOWARDS it. Because it’s only a heavy influx of foreign investment and access to wealthy markets that is going to bring those countries a standard of living that allows them to start thinking about ‘uneconomic’ things.
SS: The price of labor is set by the laws of supply and demand. American labor is valued more than Chinese labor not because Americans are protected from competition, but because Americans are more productive. More capital is invested in each worker, education is higher, the infrastructure they work in is more efficient, the government is more stable, etc.
Isn’t this seriously oversimplified? Specifically, doesn’t it ignore the very important factor of fair labor laws? American labor is valued at more than Chinese labor partly because we have a mandated minimum wage, the right to form unions, etc: that is, there are some democratically and legally guaranteed protections against the unfettered operation of supply and demand.
*In fact, forcing them to maintain U.S. standards of health care, worker safety, etc. will result not in those countries becoming better, but in those countries staying destitute. *
You see why this looks to many people as though the developed world is offering a bitter Hobson’s choice to the developing world: “you can have globalization and continuing poverty, with environmental degradation and low standards of healthcare and worker safety, or you can resist globalization and be absolutely destitute.” Many frustrated workers are simply rejecting the premise altogether, no longer believing that the choice is being presented honestly.
If you want those countries to have better labor standards and healthier, happier workers, you should stop protesting globalization and start working TOWARDS it. Because it’s only a heavy influx of foreign investment and access to wealthy markets that is going to bring those countries a standard of living that allows them to start thinking about ‘uneconomic’ things.
The trouble is that globalization advocates have been holding out those promises of “better times coming” for many years now, and for a lot of the developed world, the benefits just haven’t kicked in. Argentina, Philippines, Indonesia, Bangladesh—how long are they supposed to wait before that “standard of living” arrives? You can understand why many poor people, without access to Econ 101 courses, begin to suspect that they have simply been sold a bill of goods by investors and governments that want to make money out of their cheap labor without actually doing anything to improve their lot.
Ironically, the severely poor country that’s seen the most improvement in the standard of living of the poorest in recent years is—
China. Although it’s liberalized its markets somewhat, it’s done so in a very government-controlled way instead of adopting the “rapid liberalization” policies of most globalization advocates.
Like I said above, the advantages of global trade and capital liberalization ought to be able to produce much more prosperity for all. But how has it worked out in practice? What is the explanation that the globalization advocates offer for why the promised “better labor standards and healthier, happier workers” are so hard to find? Even here in the top-dog US, the average worker isn’t making significantly more than he earned a couple of decades ago—and now works more hours, is more likely to have a two-income household, and has higher debt.
Is it any wonder that some people have grown to distrust the promises of globalization? I don’t argue that all their criticisms are necessarily right, mind you, I just wonder how you would respond to them in immediate practical terms, rather than large generalizations about the transcendent ubiquity and inevitability of Econ 101-type principles.
Do you honestly think that things like fair labor laws are responsible for the well being of American workers? Did they just vote themselves prosperity?
Fair labor laws and minimum wage laws only distort the labor market. They do not create wealth. A minority of workers make minimum wage, after all. And many workplaces have standards that are higher than the government-mandated minimums. I get two weeks’ more vacation per year than the law demands. I make much more than minimum wage. The office furniture I am given is of much better quality than mandated by minimum ergonomic standards.
So some workers may be able to bargain themselves a better deal by using the government to protect their jobs from competition in the marketplace. At the expense of other workers, who now pay higher taxes or make less money.
The only way to make EVERYONE more wealthy is to increase the size of the pie. And the only way to do that is to free markets, increase investment, and grow the economy.
And I never promised you a rose garden, either. Globalization is not an automatic guarantee of wealth. There are plenty of other ways to screw up a country. The Argentinians seem to be doing a rather good job of that at the moment.
These things also take time. The U.S. average growth rate over it’s history is 1.75% per year. If Ethiopia were to grow at that rate, it would take over 200 years to reach the standard of living of the U.S.
Luckily, most of these poor countries are growing at a much faster rate. South Korea, for example, opened its markets and grew at an annual rate of 6% since 1960, and now has a first-world economy.
It’s interesting you mentioned Indonesia as a failure. Indonesia has been growing at an annual rate of 3.3%, and now has only 27% of its population below what it considers to be the poverty line. The per-capita GDP is now over $3000, which is not U.S.-and-Canada levels, but on par with countries like Romania, Egypt, and China.
Much of the poverty that’s in the world is not due to evil capitalist exploitation, but to civil wars, instability, tyranny, and gross mismanagement. Usually of the collectivist variety.
I believe this needs to be highlighted.
Jewish bankers? Jewish Bankers?
What the fuck are you talking about? Jewish bankers?
Yep. That needed to be highlighted. I missed that little nugget of paranoid racism.
SS: Do you honestly think that things like fair labor laws are responsible for the well being of American workers? Did they just vote themselves prosperity?
Partly, yeah; you notice I said “partly” above. The eight-hour day, the five-day week, the abolition of child labor, the right to unionize—all these things contributed to the wellbeing of American workers, and all of them required intervention from outside the market.
For the rest, your “response in immediate practical terms” to critics of globalization seems to be
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The problems aren’t all the fault of globalization.
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These things take time.
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South Korea is a success story.
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Indonesia has had recent economic growth and increase in its mean income [emphasis mine].
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Globalization’s no guarantee of wealth.
Specific recommendations? Once again, just the vague “free markets, increase investment, and grow the economy.” Not much there there.
So you’re telling me that Indonesia’s per-capita income of $3300 would magically increase if you passed American-style fair labor laws and environmental regulations? By what mechanism?
Or are you suggesting that Americans simply shouldn’t buy from Indonesia until such laws are passed? What effect do you think that would have on the Indonesian economy, and please explain how this benefits Indonesian workers.
Or how about just telling us what your economic plan is? It’s easy to be against something, especially when it involves rich people doing business with poor people and the natural inequities that result. It’s quite another to come up with a coherent economic plan that will make the world a better place. So what’s the plan?
Coll replied to Susanann: Jewish bankers? Jewish Bankers? What the fuck are you talking about? Jewish bankers?
I think she was quoting kniz’s post above:
As far as I could make out, Susanann was trying to say that globalization couldn’t be a “Jewish Banker/Federal Reserve Conspiracy”, because it minimizes opportunities for central/elite control of markets.
Susanann is one of our more right-wing right-wingers, but I’ve not personally heard her say that she has any beef with “Jewish Bankers”.
SS: Or how about just telling us what your economic plan is? It’s easy to be against something
Like I said above, I’m not against globalization per se. I’m just answering the question of the OP about what the specific issues of the anti-globalization movement are, and pointing out some of the problems that have raised those issues.
I’m the one who asked you “how you would respond to them in immediate practical terms”. You’re not obliged to answer that question, of course, but I’m not going to be diverted from it by your just turning it back on me.
I’ll answer for Sam since this is what I actually do:
(a) institute realistic wage and labor policies, ones that are not nice shiny make the comfy leftists happy types, but sustainable in the economy
(b) institute economic and social policies favorable to economic growth
© invest in long term human capital, meaning properly fund basic education (typically far too much educ. $$ in the developing world goes to elite or sub-elite apparchic consumed higher educ largely useless in the developing world), and social infrastructure that allows risk taking.
And be patient. One does not, as Sam said, legislate prosperity. I’ve seen the hard fucking reality of all the fuzzy wuzzy visions.
Yep, Collounsbury pretty much nailed it.
I would add, “Encourage foreign investment in the infrastructure by concentrating on political stability.” Companies don’t like building factories that are expropriated or have to be abandoned.
Well, now we are on a topic Sam and I agree on through and through. (and why I bristle when being named a leftist by some).
No, Sam has it pretty much right on. Legally mandating a wage doesn’t change the economics, and one can see quite clearly in developing economies with legally mandated formal sector wages that are above economically sustainable levels the fallacy of this nonsense. Employment moves to the informal sector to market wage rates.
Now, obviously, a legally mandated minimum wage that falls within that blurry line of “market sustainable” – I visualize a line drawn with a big ass stick of chalk – may have social gains that exceed the costs, but at what $5 something, that minimum wage is hardly the key driver in US competitiveness.
Certainly it is of import in some import competing industries such as certain textiles, but you must also recall that it is total cost of employment, of which the wage is but one portion, that is what we look at. Certainly for low wage work the addition of a minimum wage sets a floor that may serve as a trigger to look outside the US, but so what? Competition is competition, that’s the name of the game. Frankly, given low productivity and quality in the developing world, in comparison in general with the developed world, they have to compete on price? How else would you have it work? Incentive for US workers to retrain and move into more competitive industries. Does that hurt individuals, yes it does, it most certainly does. In the short run these things are painful, however we have a clear historical record that in the aggregate over a medium and long term running in decades that in aggregate one is better off with this rather than namby pamby ooh they’re losing their jobs whinging.
I further will note that the right to form unions and other workers protections may be in part against “unfettered” supply and demand, however in terms of unions as a general matter, I see them as rebalancing certain kinds of workers against the market power of certain kinds of employers. I am not an immense fan of unions, indeed real life entrenched unions often have wrong headed idiot ideas, but as a general matter the right to form them and bargain collectively – without excessive add on protections is fully in keeping with free markets. In general, in regards to workers protections, in my view if they are market sensitive, they are a good thing for several reasons: (a) buying social peace and acceptance of the free market system – something I find to be non-trivial insofar as I find free markets badly understood in general even in the West (here we have market illiteracy on left and right); (b) ensuring higher quality and more stable work force (efficiency wage also helps with this, empirically many industries pay clearly more for workers, even w/o unionization etc. than a pure labor pricing model might allow) © imposing standard behaviour on fellow employers such that some short-termist / quick buck artist doesn’t kill my careful long term investment. That’s a bloody issue I look at out here, pain in the ass.
As such I differ from my North American conservative colleagues insofar as I see very Bismarkian reasons for having social programs. Now, I will readily agree too much and too many are bad for the economy and bad for society in the long run, however I do find the ideological aversion to them, per se, to be stupid.
However, as I have noted in the past, different levels of protections are more or less affordable according to the economic infrastructure one has in place to pay for them. Rather similar to physical infrastructure, over investing at unsustainable rates in human capital (which I place worker protections in) merely leads to wastage as it proves to be unsustainable. The fancy new airports and motorways built in the 1960s in Africa have decayed away, partly for political instability but partly due to a pure inability to sustain.
In the same manner, excessively advanced legislation which is both too expensive to enforce and unsustainable from a economic point of view only leads to the doubly negative effect of (a) pushing the economy into the gray and black markets, where employers and job seekers both avoid entering on the books
Whatever, what fucking ever. Many workers schmerkers.
First, Sam is perfectly correct. Your characterization is without merit. One can legislate into existence the economic ability to support a certain level of rights and so forth, what you get is illegality and economic rigidities that are impoverishing. One need only look at my region, or indeed Africa, with its beautiful worker protections on the book (will largely 1960s and 1970s conceptions thereof) and massive informal sectors. Those rigid, overdone laws have had one effect: the creation of an elite and immobile ‘working class’ and a mass lumpenproleteriat working in the informal sector with no protections at all. The Perfect has been the enemy of the Good. Tied to this has been real wage stagnation if not regression, and economic under performance, which has been impoverishing in the aggregate. That is not to deny that there are systematic abuses by elites (speaking of my region, but surely this is true in Asia as well) however these are largely, in my opinion, enabled by ill-conceived aims to replicate unattainable Western style worker rights and the like. Rather like politics, merely importing pretty laws on the books only hands more power to those who can manipulate, and thus reinforces economic rigidities that serve only the rent-seeking elites.
It is absolutely not a Hobsonian choice that is posited, rather merely a dose of unsentimental reality. Build up the economy, ensure liberal ideas in re freedom of association and minimal rights – realistic ones—are actually enforced, and let the process take care of itself.
Your assertion is poppycock.
First, the issues of Argentina are not the same as those of Bangladesh (a corrupt mess in many respects, although a fair working democracy, for all that the elites are an insular bunch. I should know, I dated the ex president’s daughter, pain in the ass family.) Bangladesh’s problem is stunning levels of corruption that even match or exceed those of Nigeria. That bleeds away resources, causes capital flight and causes people like me to look elsewhere unless we get a really perfect deal, and even then think twice. Argentina shot its own damn self in the foot for somewhat similar reasons – although the IMF can shoulder some blame for not having been insistent on Argentina changing its monetary policy in the face of fiscal imbalances and severe appreciation vis-à-vis its trading partners. But then the IMF only extracts promises which countries then routinely violate. And blame the whole fucking mess on IMF when its as much the corrupt and half-assed application by them that fucked the mess up.
Much of the criticism ignores this and ignores the fact that rentier elites in the developing world love to serve up hypocritical excuse making to ready audiences. I recall back in my spin through West Africa hearing the academic types, researchers and the like, telling me how evil it was that the CFA Franc had been devalued, and how the “Big Capitalist” interests and the IMF were screwing “the Africans” for imperialist reasons. Now should they have been speaking to the market power foreign buyers have in re certain commodities I could in a limited way agree with them – there is real scope in my opinion to see better information and institutions in developing world private sectors to reduce the market power of Western buyers. However, these twits were blithering on about the devaluation that hurt their comfy elite friends who they spoke French or English to, ignoring the fact the overvalued CFA Franc was a subsidy to the largely elite import consuming class and a tax on the largely impoverished local agricultural and crafts producers who were faced with severe pricing pressures and competition, while those in the export sector saw lower incomes. In short, the nice little largely lefty and almost entirely economically ignorant crowd simply acted as an echo chamber for a pampered rentier elite. Not to say that some issues were not real, such as the issue of rising medical costs, but no transition is without costs.
Second, as in the case of foreign aid, you have to think about what your benchmark is, and whether it makes sense. I have torn into some of knee jerk opponents of foreign aide for their insistence that if foreign aid has not created wealth at US style rates, it must have failed. The possibilities are more than that, things could actually be worse than current situation, which is not the floor. Indonesia has clearly gotten richer, and one need only compare it with more closed economies to see that while they have yet to get rich per se, they certainly are doing better than the closed boys. See Myanmar/Burma for example, or Vietnam and Cambodge, the first esp. before they began to open up.
Simply complaining these guys have not gotten rich yet ignores internal problems, the reality that getting rich takes time and the reality that alternatives are as general matter, impoverishing. Simply blaming lack of wealth on globalization or trying to legislate wealth into existence is a fools game.
For all the above, I will agree that the developed world has partly stacked the deck against the developing world. We lower trade barriers on items that do not entirely fall into the competitive sphere of the developing world, stack rules in a way that favors us over them, impose dumping and “fair trade” penalties when they do compete, etc. I grant that – although I note it is as much the ‘fair trade’ bullshit that is a problem as anything, and frankly I would like to see the next Doha negotiations see real climb downs by the US and Europe vis-à-vis the developing world on issues of IP flexibility and agricultural exports. I note that my arguments in re unrealistic rules internal to the market apply to the wider global market and despite my past with an IP intensive industry, I do feel that we, the developing world, may be imposing standards that will simply lead to a more flourishing and impossible to stamp out black market. I disagreed strongly with my colleagues on how heavy to push on these issues, even in market, since I feel liberal licensing to occupy the space for the long term is a better policy than the quarter driven extractive ones they favored, but….
I will not speak to China as China Guy knows more about this situation than myself, although it seems to be that China does not fit your bill at all, be it in worker protection, social support or whatever.
Let me speak to Tunisia, a small scale but successful example to date, and perhaps similar to China on one or two items, esp. lack of real political liberalization, with a cautious step-wise economic liberalization.
Certainly it is true Tunisia has not simply thrown open its doors, and here I can agree that the simplistic idea that one throws oneself open to competition and wait for the benefits is an oversimplified crock. There are real transition costs to more competitive economies, and one has to build acceptance for free markets, and work to retain it as I don’t find people naturally like the short term … transitions very much. Tunisia has not undertaken real political liberalization, certainly, but has done careful, sustained (over a long term of the past 15 years or so) policy changes that has seen it be far and away the leader in the region in GDP growth off of its own efforts (not doped by Gulf oil money transfers, massive foreign aid or oil exports themselves). Runs about 4%-6% real growth a year for about the past five years, which is not too shabby considering they’ve brought pop growth down to roughly 1.5%. With GDP in the $20-25 billion range and per capita GDP at around $3,000, they’re moving sustainable. The time is doubtless coming for political reforms as the growing middle class is growing restive under Ben Ali, but at least they’re moving in the right direction at a speed that works for them. (Take a look at this: http://www.imf.org/external/pubs/ft/fandd/2003/03/abed.htm
This is muddle headed.
First, the results are not all that hard to find, if one benchmarks against the right thing – not an overnight transformation into little Europes and Americas, but into Koreas, Taiwans, Chiles, perhaps Tunisias eventually. If one looks at the differences between the long term growth patterns of Asia and Africa and the MENA region, one sees a clear difference between sometimes modest but real growth and pitiful and often negative real growth in the later regions – and the policy differences are fairly stark. Want to guess which regions are more liberal on average?
Now of course if people expect, and they often do, wildly unrealistic results – i.e. the transformation into Switzerland in but a generation, they are not going to be happy, but objectively they would be worse off with other policies – other than I will readily grant that strategic behaviour in regards to trade negotiations is absolutely necessary insofar as the real behaviour of even ‘free marketeers’ such as Bush (the man…. ) can not be characterized as optimal for free trade.
In practical terms, see prior post. There are no magic elixirs.