Defense of Globalization

DEFENSE OF GLOBALIZATION
ANSWERS TO PROTESTORS

SUMMARY

Globalization is the international system that replaced the Cold War system. It relies on two principles:

-Firstly, the idea that freedom, human rights and democracy are the most efficient means of sustaining growth and development. (Read "Development as Freedom" by the Nobel prize Armathia Sen)

-Secondly, globalization implies a panel of policies based on the Washington consensus: Fiscal discipline, a redirection of public expenditure priorities toward fields offering both high economic returns and the potential to improve income distribution, such as primary health care, primary education, and infrastructures, Tax reform, Interest rate liberalization, A competitive exchange rate, Trade liberalization, Liberalization of inflows of foreign direct investment, Privatization, Deregulation (to abolish barriers to entry and exit), Secure property rights and so on.

In short, Globalization is the integration of democracy, legal reforms, capital, technology, and information across national borders, in a way that is creating a single global market and a global village. As a result, there is an increase in global wealth: by 1950 world GDP was about $4,000 billion. Today (2002), It accounts for more than $31,720 billion !

What is more, Globalization also means a shift and the entrance in the informative age: Look at the next video:

Nevertheless, globalization meets with a rising opposition. In defense of Globalization, this survey answers to the protestors about their four main criticisms:

- Globalization is not democratic.

- Globalization creates poverty and enhances inequalities.

- Globalization hurts undeveloped countries.

- Globalization enlarges the degradation of environment.

In defense of Globalization, we shall show that these criticisms are not founded.

In fact, the anti-globalization movement includes the supporters of the dictatorships, and the former communists. They hate the liberal society. What is more, the anti-globalization movement exposes only crazy proposals. Their book Bible titled "The case against the globalization" proposes to centered the world economy on local communities with protectionism and specific moneys (the "local exchange trading systems"). They want to make us cultivate our own little gardens! Their economic model is the tribal zones of Ladakh in kashmir. Their entire program can be summed up like: Back to the early Middle ages!

1-SUMMARY - 2-GLOBALIZATION AND DEMOCRACY - 3-GLOBALIZATION-POVERTY-INEQUALITIES - 4-GLOBALIZATION AND UNDER DEVELOPED COUNTRIES - 5-GLOBALIZATION AND ECOLOGY - 6-CONCLUSION

2-GLOBALIZATION AND DEMOCRACY

Globalization favors human rights and for example the emancipation of women. The number of free countries is rising as we have seen in the former modules. Protesters are not happy with this liberal evolution.

21-World institutions and Democracy

Some people say that world institutions which are in charge of globalization lack of democracy. In fact these people do not understand the mechanism of a liberal democracy.

-Liberal democracy is based on personal freedom and functions like a corporate. Free men meet together and establish some rule to reach a goal. Every associate expects an individual profit from the society.

-Social democracy is based upon solidarity. The society is supposed better than the selfish individuals. The government manages the economy in order to create a welfare state. In so doing, the governments increases the number of civil servants. In return, civil servants ask for more state services and vote in this way. The more the civil servants, the more voters for the government. Finally State economy accounts for 60% of GDP. Economic freedom becomes more and more restricted. Anyway, it remains a democracy because people vote as they like.

This type of democracy covers a large part of Western Europe but as corruption grows due to state regulation, the system turns itself into a Plutocracy.

-Plutocracy appears when the leaders get the pools in distributing money and grants to their friends. They divert the people's attention from real problems and provide them with nationalistic propaganda, Soccer matches, crazy TV games and so on according to the old Roman rule: bread and circus. This Plutocracy often emerges as a legacy of the social democracy spoiled by corruption.

With time, folks realize the swindle: Inequalities rise, riots and strikes spread over the entire economy and the citizens finally vote for a return to liberal democracy.

Of course, Globalization favors the liberal society. It looks like King Arthur’s round table: People vote for their own government. These different governments sit around a table and establish the supreme law by consensus. Thus, they appoint few judges to enforce the law ( For example, IMF, WTO, World Bank ). They also designate the peace keeper ( For example, NATO ). Once these governments have performed their role, you do not need them any more. In this situation, free people are like tennis players. They compete and when a problem arises they call for the judge. They do not expect that the people who attend the match will vote to give the point !

In such a system, there is not a permanent link between the citizens and their State. When a merchant has a problem in a foreign country it is useless to call his embassy, he should call the judge who has been designated as above. Social democratic states which want to manage everything are very disturbed by this process and always ask for more " regulations"!

Some protestors also claim that undeveloped countries are not represented enough in world institutions. As we have seen many of them are in fact dictatorships. Such governments do not represent the poor people. Already we can see that the UN is too much a forum for these dog states. In the real interest of poor people who suffer from lack of freedom, free countries must not share their power with dictatorships.

22-Nations and globalization

Nations were both a feeling of membership and a place of power. They were big families ( With of course a "head of family") inherited from the early tribes and cities. Today, there is no more feeling and not too much power.

Nations cannot be seen as a big family because the real family itself is going from a large group to single units:

CLAN-LARGE FAMILY-NUCLEAR FAMILY-ONE-PARENT FAMILY

By 1900, people were married according to social class or race and as a result many people suffered in their family. Thanks to the liberal evolution, women in free countries are today emancipated and sexual taboos have been removed.

As the family dissolves, as migrations develop, it becomes harder to assimilate a nation with any kind of family. Today, you are born by a pure fluke in one country and often you choose to earn your living and to stay in another. In some way the corporate where you work is more important for you than the place where you stay. Very often, you leave this place when your company appoints you in another country. You follow the job more than the " nation".

As for power, the historical evolution is the following:

----------------------------------------------------GLOBALISATION

CLAN–------CITIES–-----STATE------ NATION--- >

-----------------------------------------------------LOCAL POWER

Today you elect a government which has the role described above. Otherwise, you elect a local council in your town in order to manage real problems in the same way as a business manager does. There is just a geographical management instead of a corporate management. In the past, the difference between geographical places were a strong support for ethnic, religious or political tasks but today, with fast transportation, a geographical segmentation is no more significant. Of course, nationalistic leaders are sorry for this evolution but it is the real trend of today.

23-Identity and global culture

Diversity and identity can be assets only if they are federated by a global culture which would be the real knot between the different identities. For example, language is the strongest cultural differentiation. Everyone likes his native language even if it is only spoken by a small group. But of course, you need also an international language to meet other people and communicate with them.

With globalization there is more and more ethnic diversity, but the problems do not arise from this diversity but only from the inequalities in culture. In a same ethnic group, it is already difficult to make an educated and an ignorant person cohabit. As ethnic diversity becomes a general rule, we have to build up a kind of global culture. It starts with the education of the young people.

It means that global culture must be supported by global education. This is the only solution to gather universal and identity and to solve problems arising from ethnic diversity.

24-Individuals and globalization

Globalization offers many opportunities to individuals. It enables people to earn money were the wages are high and to spend it in low cost countries.

Let's us suppose a retired pensioner earning 1000 US dollars per month. It's not too much for a living in Europe or in the States. Now, let's us suppose our pensioner stays during three months per year in a low cost country such as Laos. His expenses will be the following:

-A a/d flight ticket to Laos: 600$
-Renting a bungalow for three months: 300$
-Three full meals per day-2$ a full meal*3* 30days*3 months=540$
-Total for three months:1440$ or 1500
-Saving: 1500$

Unfortunately, many people are unable to enjoy these opportunities, because they do not speak english or just because they are afraid to travel.

1-SUMMARY - 2-GLOBALIZATION AND DEMOCRACY - 3-GLOBALIZATION-POVERTY-INEQUALITIES - 4-GLOBALIZATION AND UNDER DEVELOPED COUNTRIES - 5-GLOBALIZATION AND ECOLOGY - 6-CONCLUSION

3-GLOBALIZATION-POVERTY-INEQUALITIES

Globalization results in a fast rise of wealth. No proof exists that it leads to inequalities.

31-Poverty

Protestors assert that Globalization turns into poverty. Newspapers and some demagogic leaders always repeat the following figures:

- 2.8 billion people live on less than $ 2 a day

- 1.2 billion people live on less than $ 1 a day

- 1.2 billion people have no access to potable water

- 3 billion people have no access to health services- And so on !

You must oppose the following figures:

-Between 1965 and 1998, average income more than doubled.

-Life expectancy in poor countries increased 20 years on average. Infant mortality rate fell by half

-37% of people in poor countries were undernourished in 1970. The figure has fallen to 18% in 1996.

- According to UNDP, world poverty has fallen more during the past 50 years than during the preceding 500 (By 1820, 3/4 of the world people lived on less than $ 1 a day!). The share of the population living on less than $ 1 a day fell from 28% in 1987 to 24% in 1998. In east Asia and pacific ( mainly free countries ) the share fell from 26% to 15%. In sub saharan Africa, ( mainly dictatorships ) this share remains 46% while the population grew in the same period.

These are the facts. Of course, poverty remains a big challenge. It is not surprising because authoritarian societies are still ruling numerous populations.

Nevertheless, deeper poverty is not connected to economic conditions: For example a man earning $ 1 a day is not really poor in Africa. It means that he has got a job, he can easily eat and find a place to rest. In some way, he belongs to the lower middle class. Moreover, if he is young and healthy, he certainly feels quite happy !

In fact, the deepest poverty lies in sickness ( for example, 25 million people are infected by AIDS in Africa ), starvation, humiliation, and above all fear: 30 million people are refugees. Obviously, These factors do not depend on economic conditions and absolutely not on globalization ! They depend mostly on political governance.

32-Inequalities

People emphasize inequalities among countries and individuals inside one same Country. They say that inequalities are rising because of globalization.

321-Inequalities between countries

Demagogic people repeat day after day the following figures:

- The average income of the richest countries is 37 times the average of the poorest.

- 400 persons have a wealth which is bigger than the GDP of India, Bangladesh, Nepal, and Sri Lanka.

Obviously, the numerous power plants, big factories and laboratories owned by some big shareholders in America represent a larger figure than the economy of a lot of nations.

The rising inequalities between countries are due to technical progress. It boosts growth in free countries and it cannot act in dictatorships. So it is not surprising that the gap is widening.

If you want to stop the rise in inequalities, you have only two ways: you stop technical progress or you enlarge freedom to the entire world.

322- Inequalities between individuals

There are very big inequalities inside the poor countries. For example, the money coming from corruption owned by some political leaders often exceed the total GDP of the population they rule. Inequalities in such countries are strongly reinforced by child work, the low status of women and the persecutions against ethnic or religious minorities.

Once again, the stronger inequalities are ethnic or sexual inequalities. Once again, they do not depend on economic condition but mainly on the political situation in a lot of countries.

1-SUMMARY - 2-GLOBALISATION AND DEMOCRACY - 3-GLOBALISATION-POVERTY-INEQUALITIES - 4-GLOBALISATION AND UNDER DEVELOPED COUNTRIES - 5-GLOBALISATION AND ECOLOGY - 6-CONCLUSION

4-GLOBALIZATION AND UNDEVELOPED COUNTRIES

Some protestors claim that globalization hurts undeveloped countries because of privatization, the extension of free trade, and the burden of debt.

41-Privatization

In fact, grand corruption and bureaucracy have undermined the benefit of globalization in many countries. In former communist countries, the oligarchy captures assets and rent. In general, there is not sufficient private empowerment to match the fall in employment in former state owned enterprises. The legal system does not promote private equities and for example many farmers cannot own the soil they cultivate.

It just means that we have not put enough political change in these reforms.

42-Free trade

As we have seen world trade is developing on a fast track. Between 1948 and 1997, trade grew at an annual rate of 6% while world production only increased at 3.7% per year. One explanation of this increase is the technical progress that occurred in transport, communication, and information. Thanks to transnational societies, this increase is also the result of the diffusion of technical progress in a larger number of countries.

TECHNICAL PROGRESS INCREASES TRADE AND IN RETURN TRADE INCREASES TECHNICAL PROGRESS.

Despite these benefit, people focus on terms of trade and Transnational societies.

421-Terms of trade

As a result of negotiations ( notably inside the world trade organization, WTO ) the reduction of tariffs and the elimination of barriers have facilitated the insertion of poor countries in world trade.

Undeveloped countries always plead that the terms of trade are worsened. It means that with one ton of cocoa or cooper, you get fewer and fewer manufactured products. It is true that the prices of agricultural commodities and raw materials have fallen both in real terms and relative to the prices of manufactured goods. Between 1980 and 1998,the price of agricultural commodities fell by 35% while those of manufactured products increased by 40%. The term of trade fell by more 50%. This trend is only the result of the technical progress as we have seen in economics.

TECHNICAL PROGRESS RESULTS IN A LOWER RELATIVE PRICE FOR PRIMARY GOODS AND INCREASES RELATIVE PRICES FOR GOODS INCLUDING KNOWLEDGE.

The only way to improve terms of trade for countries based on primary commodities should be to stop technical progress !

In others respects, it is true that rich countries protect their farmers through tariffs, quotas and export subsidies. For example, the European union tariff on meat peaks at 800% ! These barriers penalize farmers of poor countries. It has been calculated that they cause a loss of $ 20 billion for poor farmers and a loss of about $ 60 billion for the consumers of rich countries. It means that instead of raising protection, the undeveloped countries have a strong interest in reducing all barriers and in developing free trade.

Some movements which recommend fighting free trade are led by agricultural leaders from rich countries who are first interested in keeping high barriers and protection !

422-Transnational societies

Reducing barriers to international trade and capital movement is a key point of globalization. As transnational corporate's account for 40% in world trade, some people say that they have too much power. (There are around 40.000 transnational societies but the first 500 account for 70% of the trade of transnational's. In 1995, 29% of world GDP was produced by the 200 largest companies in the world).

As we have seen before, transnational corporate's are powerful engines for boosting growth because they spread knowledge and technical progress from one country to the whole world.

43-The debt burden

Protestors say that the debt burden is the cause of poverty but this analysis is too superficial.

Usually, when you obtain a loan, you use it for productive tasks and when you have paid it back you find yourself richer than before. The more you borrow, the more your wealth increases. It is the leverage effect of a bank loan. If you are not able to pay back, it means that you have used the loan in a non productive way. So the burden of debt only means that the government which borrowed wasted the money.

In fact a part of public aid had been used to buy weapons or build state factories which only produce commissions ! Of course free countries bear a large responsibility in this situation. They badly monitored the aid and they have not other choice than to cancel the debts.

Some rich countries will not make loans any more. Poor people will suffer from the cut in aid.

1-SUMMARY - 2-GLOBALIZATION AND DEMOCRACY - 3-GLOBALIZATION-POVERTY-INEQUALITIES - 4-GLOBALIZATION AND UNDER DEVELOPED COUNTRIES - 5-GLOBALIZATION AND ECOLOGY - 6-CONCLUSION

5-GLOBALIZATION AND ECOLOGY

Creativity (in connection with education) is the main driver of economic development. However, creativity is more and more impeded by ecological considerations. In fact, the environmentalist movements use ecology as a new weapon targeting the Free world. Since creativity is the magic wand of free countries, the third world dictatorships and their ecologist activists (NGO) are trying to undermine technical progress in western countries.

This obscurantist propaganda gets an increasing success. For example, the French President Chirac is going to include " A principle of precaution" in the French constitution. That could dissuade scientists from doing high-risk experiments. That could stop any advance in the scientific odyssey. Of course, President Chirac is constantly pleading for the Kyoto protocol.

In our opinion, the US are right in refusing to sign the Kyoto protocol. Firstly, there is incomplete scientific knowledge of the causes of global climate change. Huge factors such as change in the sun energy, or cooling effects of volcanic eruption must be taken into account. Secondly, undeveloped countries are mainly responsible for this situation through massive deforestation which is irreversible because the destroyed humus prevents any further replanting. Thirdly, We must engage in carbon storage with a big replanting program in our own territories in order to match the damage. Finally, technical progress remains the effective solution (Hydrogen fusion) instead of complex and unbalanced State regulations (Go to ecology)

Independently of the global warming, Protestors assert that there is an increase in pollution, congestion in town, noise and so on. In fact, creativity reduces pollution: For example, air pollution has dramatically decreased in USA, Europe and Japan. On the contrary, pollution increases quickly in African towns. It's wrong to say that the riches more pollute than the poor's.

What is more, as education raises, people consume more spiritual goods (See "New growth theory"). This evolution authorizes a sustainable growth: Material goods use resources and bring negative externalities such as pollution. On the contrary, spiritual goods which are mainly made up of ideas, need a few resources and have only positive externalities. One again, it means that the fight against pollution depends on the level of education.

1-SUMMARY - 2-GLOBALIZATION AND DEMOCRACY - 3-GLOBALIZATION-POVERTY-INEQUALITIES - 4-GLOBALIZATION AND UNDER DEVELOPED COUNTRIES - 5-GLOBALIZATION AND ECOLOGY - 6-CONCLUSION

6-CONCLUSION

The debate is not over a choice between globalization or no globalization. The debate is over a dichotomy between economic and political reform.

Political reform is a pre-requisite. Societies must eliminate civil war, predatory conducts, and discrimination against women and ethnic minorities.

When freedom is enlarged, technical progress can be harnessed to serve the interests of poor people.

Best links-Click below

www.wto.org

www.worldbank.org

www.unicef.org

www.fao.org

www.oecd.org

www.usaid.gov

www.davos.org

www.adamsmith.org

www.americanvalues.org

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