November 13, 2001 3:34 PM   Subscribe

Here's an interesting article about the economics of globalization.
posted by electro (12 comments total)
In the short term, globalization is good for foreign producers and workers and US producers. It's bad for US workers.

In the long term, globalization is good for everyone.

The key to moving towards a global economy is making the transition for US workers smother. I've yet to hear a good proposal as to how to do this.
posted by Witold at 4:11 PM on November 13, 2001

I think the article does a good job of highlighting the real debate over globalization, not the one that's been sold to us by the mainstream press, in which protesters are portrayed as Luddite opponents of all trade and technology. Case in point, this little tautological gem from Dollar:

"I sometimes have friendly debates with people in the anti-globalization movement, and I ask them, 'Where are your success stories?' I don't see anything good happening in countries that are closed."

Most of the protesters and organizers I know understand, as I do, that globalization is a fact, globalization is happening, and the real question is: under whose rules will globalization take place, those of democratic third-world governments, or those of first world bureaucrats?

Nations need to develop at their own pace, not have structural adjustment measures rammed down their throats by self-serving first-world institutions like the IMF and World Bank.
posted by Ty Webb at 4:30 PM on November 13, 2001

Here's a comment in a thread about an interesting article about the economics of globalization.
posted by sylloge at 5:16 PM on November 13, 2001

witold: the best proposal i've heard of so far is wage insurance, but as raaka pointed out when i posted this earlier, "Only $10,000 paid over the course of two years, quarterly. That ain’t much —" i think the idea in general though is sound.
posted by kliuless at 5:37 PM on November 13, 2001

Witold said: It's bad for US workers
this is an inaccurate generalization. if we consume good x and foreign suppliers can produce x cheaper than US suppliers. As a result of moving production to foreign suppliers the US consumers save n, and retraining and unemployment cost m, you will find that n < m and there is a net advantage for both US and foreign economies (otherwise they wouldn't make this possible). The problem is that when the market changes the individuals who will require retraining can be clearly identified, but those who will benefit cannot--so obviously they are the outspoken minority and the issue moves from the economic to political arena. Open markets ARE better for everyone--economically speaking. Dani Rodrik's comments are either taken out of context, or are complete nonsense economically speaking. BTW, I recommend econ 200 to everyone, it's really quite interesting. And if I'm not making sense please say so.
posted by greyscale at 7:14 PM on November 13, 2001

Perhaps I'm just showing my naiveté here, but I've always wondered how you can have a global market with the current rather restrictive citizenship model most countries currently employ. A large part of the economic dynamic within the United States (and I'm sure within other countries as well) is that people move in accordance with job and housing markets, creating things like Silicon Valley. How does that balance out in a global market? The companies can hire wherever work is the cheapest, but people can't easily move to wherever their skills are most valuable.

I'm not anti-globalization (though I am slightly anti-trade treaty), I'm just curious.
posted by Nothing at 8:16 PM on November 13, 2001

Dani Rodrik's comments are either taken out of context, or are complete nonsense economically speaking.

Which comments? And what precisely do you mean by "economically speaking"? It's a fairly sound macroeconomic argument that the benefits which stem from trade liberalisation only come about when there's a solid, robust internal market, and that usually comes from policies that are anything but "free trade". An economic settlement that encourages liberalisation without that foundation usually devastates local markets. (Haiti used to be self-sufficient in rice; the WTO demanded that Haiti stop subsidising rice growers and open its market to low-tariff imports as a condition of its loans; Haiti now imports rice from the US; the US subsidises its rice exporters and imposes an import tariff on rice from abroad. The same disparity applies to the EU, with its grotesque farm subsidies under the CAP.) But the comment in another (old but gold) thread on developmental economics describes this eloquently and provides a damn good link.
posted by holgate at 8:57 PM on November 13, 2001

after looking back at the article they both state that open trade is a benefit to everyone, they differ in the method of how that should happen. initially I thought Rodrik's comments were to the effect that barriers to trade are good--which is at odds with what I am seeing and learning. I really don't see any details about their differences sufficient to take either side. Dollar's optimism does seem a little rediculous, but the bottom line for anyone is to pay attention to globalization.
posted by greyscale at 10:50 PM on November 13, 2001

Witold: “In the long term, globalization is good for everyone.”

I know some anarchists you should chat with.

From the article: “Robert B. Zoellick called the international market economy an "antidote" to the "violent rejectionism" of the terrorists.”

What was everybody saying in the days post-911 about not using terrible tragedies to further their pet agendas? Shouldn’t Zoellick but tut-tutted for this oppurtunism?

“‘non-globalizers,’ where trade as a percentage of GDP had declined and tariffs had been reduced less, included Burma, Pakistan, Honduras...”

Okay, these three countries had military conflicts and internal upheavel in the 80s-90s. There are obviously more factors regarding their economic development than whether they reduced tarriffs.

Dollar continues: “Bangladesh, though still very poor, has enjoyed relatively robust growth during the same period, when trade rose from 14 percent to 28 percent of GDP and tariffs were slashed from about 93 percent to about 26 percent.”

Bangladesh’s GDP is roughly equal to Hewlett-Packard’s market cap post meltdown, so the doubling of its international trade during a global economic expansion doesn’t mean very much. If their international trade balance didn’t raise, it would probably be indicitive of either social strife or isolationism.

grey: “Open markets ARE better for everyone--economically speaking.”

You’re conflating ideas. “Better for economics” and “better for people” aren’t neccessarily the same thing.

To truly be an open market, all barriers would have to be thrown open—all of them. Labor, capital, investment, property, intellectual rights, etc. If the restrictions applied to labor also applied to capital mobility the entire business world would fight these treaties as hard as the anarchists. If barriers dropped as described above people would eventually riot because markets tend to act in ways people, especially first-worlders, wouldn’t tolerate. (Keynes, white courtesy phone...)

And now, here’s a comment in a thread about globalization linking to an article about TW Adorno. Butterfield, will you be my Valentine?
posted by raaka at 11:11 PM on November 13, 2001

Butterfield? Wait ... strange, I totally forgot I commented this thread already. (Sorry about the sillyness - I've been working hard today.) I was going to ask:

> If the restrictions applied to labor also applied to capital mobility the entire business world would fight these treaties as hard as the anarchists.

Could you clarify this? (God, it is hard to say that on this site in a thread like this without sounding snarky. I genuinely don't understand and am interested in getting at what you meant.) Obviously the "same" restrictions couldn't apply, but what is the analogy?

(As an aside, find this whole topic, when I really try to come to some kind of informed decision for myself, too rarified to comprehend sufficiently. I can't get the concepts under enough control that I can really understand the ramifications of policies which I could or might or would endorse. I sympathize with The Economist, and I sympathize with Capt. Crackpipe.)
posted by sylloge at 11:32 PM on November 13, 2001

'anarchists' aren't the only ones who may wish to contend with the benefits of 'globalisation'; economic principles deal with money itself, applied under the assumption that a healthy economy provides for better living, which may not be the case if those principles are not facilitative or even at odds with individuals' personal qualifications of 'better living'. the dilemma occurs for anyone (with some sort of self-awareness as opposed to automatic conformation to a collective consciousness) who wants to take a position on the issue as individuals.

mostly, discussing people in groupings just sucks esp. an instance as over-exercised but obscure 'anarchists'; is this referring to people wanting chaos (anarchy) or anarchism (the political ideology: that we all like each other so there's no need for a regulatory structure such as a government)?
posted by elle at 5:05 AM on November 14, 2001

True, true Elle. There are quite a few reasons to oppose globalization—anarchists are just one group who get a short stick.

I was thinking more along the lines of anarchists following anarchism. The type of people who put out articles asking people not to vote because “it only encourages them.”

sylloge: “what is the [labor] analogy?”

It just means capital and investments can move a hell of a lot easier than people. There are physical limitations businesses don’t have to contend with due to their abstract nature. People have to deal barriers written into the trade treaties as well as national and international political realities.

Take Swingline, for instance. They used to make staplers and related goods in a factory in Queens. A few years after NAFTA passed, the owners closed the factory and moved to Mexico to capitalize on, among other things, cheap labor.

The workers in Mexico are cheaper for a myriad of reasons. One being that the only labor union is run by the government — no indepedent entity is lobbying on behalf of Mexican workers. Add to this workers can’t cross the border as easily as capital to earn better wages. (Notice “better” has opposite meanings here.) Which means there’s this huge barrier (a closed market — anti-free trade) against the workforce which capital doesn’t have to contend with. If free traders wanted a “level playing field” they’d address the issue, but they don’t because they want cheap labor to stay put.

One of the provisions of NAFTA lets (at least some) Canadians cross into the US to work. So the question becomes, why Canadians and not Mexicans? You could take the racist view and say Canadians are the “right” kind of worker, but I don’t buy that. Businesses want cheap labor to stay cheap, an easy way to achieve this is to keep them a) from organizing in ways capital can b) in a controlled area. Since Canadian wages are about on par with US wages, it doesn’t matter much if Canadians and Americans have a comparably high level of mobility.

Regarding a) — Imagine if businesses were only allowed to communicate and organize under the supervision of goverments. Business leaders, and hell, just people, would rightly call it stifling and communistic. If labor has to deal with it, it’s free trade.
posted by raaka at 1:27 PM on November 14, 2001

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