In the following pages, I will critique the work of highly esteemed economics professor C. K. Prahalad and his 2006 book The Fortune at the Bottom of the Pyramid. Prahalad has a wonderful ability to make one feel hopeful and inspired for the possibilities of cooperative work between MNCs and NGOs as well as other domestic and foreign agencies, and I will be highlighting some of the real value in his thesis. Questions follow, however, and his book raises some real concerns over the nature of development and the powerful role of government and politics as a barrier to his vision. In fact, there are some sinister overtones of economic development that his work does not acknowledge, and I will discuss the possibility that MNC involvement in the lives of the world’s people may have the opposite effect that Prahalad asserts. My conclusion will offer some alternative solutions to the problems Prahalad sincerely hopes to eradicate through free markets and globalization.
Prahalad’s Vision
In The Fortune at the Bottom of the Pyramid Prahalad had the courage to purposely forgo academic objectivity and a balanced perspective in favor of allowing himself to brainstorm in search of a grand new idea of doing well by doing good (p.2). It does not examine globalization, only imagines how globalization can possibly contribute for the good. In the prologue, Prahalad writes:
This book is concerned about what works. This is not a debate about who is right. I am even less concerned about what may go wrong. Plenty can and has. I am focused on the potential for learning from the few experiments that are going right (p. xiv).
In doing this, Prahalad gives himself and his reader the freedom to image new ways of looking at the world. He dreams of “an interdependent world that lives in peace” (video introduction). Unfortunately, in looking at only the success stories, Prahalad leaves out a lot of data, including the situation of Africa, with no formal case studies or mention of positive examples that come from that continent (2005, Zachary, Pascal The New Republic).
The most important contributions that this book brings are Prahalad’s insistence on a change of attitude toward the poor, a vision of cooperative endeavors, and his access and potential to influence the highest powers in globalization institutions. Prahalad gives a clear synopsis of his thesis on p. 1:
If we stop thinking of the poor as victims or as a burden and start recognizing them as resilient and creative entrepreneurs and value-conscious consumers, a whole new world of opportunity will open up (2006, The Fortune at the Bottom of the Pyramid).
He has a real respect for the people suffering from poverty, and trusts that if they have the chance, latent leaders will emerge and will “influence the start of a transparent and commercially viable system” (p. 72). In fact, he claims that rapid social and economic transformation can happen when the “BOP” (the bottom of the pyramid; the four billion people who live on less than $2 per day) are empowered by newfound “access to information, choice and infrastructure” (p.100-101). To illustrate this, Prahalad tells an inspiring story of a bank in Tamil Nadu, India, which set up groups of 20 village women and educated and empowered them to make decisions about local loan distribution. Through their connected relationships they were able to “take charge of their community and protect their newfound access to capital at reasonable rates” (p. 73).
I really enjoyed the ideas in The Fortune at the Bottom of the Pyramid about how different public and private sectors of society can and should work together for the good. Prahalad envisions NGOs, large domestic firms, MNCs, government agencies and the poor themselves sharing their unique capacities and partnering in a variety of projects (2006, p. xv). One example of this kind of PPP (public/private partnership) is the importance of a public health campaign against the spread of disease with hand-washing, coupled with heavy advertising for brand name soap (p. 237-8).
The third contribution of The Fortune at the Bottom of the Pyramid is the extent of C.K. Prahalad’s personal connections, in that this book has been read and studied by people who can actually make a difference. On the first page of the book, praise is given for Prahalad’s ideas from Bill Gates, Madeleine Albright, Mark Malloch Brown (Administrator United Nations Development Programme) and many others. The book’s introduction claims he has been named in the top ten management strategists of the world in every major study for over ten years, and Business Week is quoted as saying, “he may well be the most influential thinker on business strategy today” (p. xxi). With a resume like this, Prahalad’s brainstorms and dreams of a better world have the potential to go farther than the limits of the page.
Questions From the Bottom of the Pyramid
Prahalad gives twelve examples of situations where companies did well by doing good. In the accompanying video, documentaries are filmed on location in India, Peru, Mexico, Brazil, and Venezuela. Each unique story is inspiring and includes stories of how small entrepreneurs are encouraged and financial advanced by investment by MNCs or by large domestic firms. Yet twelve stories are not many stories in a large, flat world. Prahalad admits that these are the exception rather than the norm, and hopes that they can be examples for other projects to follow. I question the likelihood of that, as well as some of the philosophical foundations of the initiatives he describes.
Microcredit is an important aspect of Prahalad’s new vision for the BOP. He uses the example of ICICI bank in India, which gives small loans to the poor. Through the community accountability program of the women’s SGH groups, these loans are paid back with great profit for the ICICI, which is the second largest bank in India, and helps people improve their lives at the same time (2006, The Fortune at the Bottom of the Pyramid, pp. 115-129). This may indeed be a shining example of benevolent investment with a happy ending, but The Nation writer Alexander Cockburn says that “microcredit is becoming a macro-racket” (2006, “A Noble Peace Prize for Neoliberalism; The Myth of Microloans,” National Public Radio“Weekend Edition”). He quotes P. Sainath, “India’s most outstanding journalist on rural destitution and the consequences of economic policy,” saying that no one was ever liberated by being placed in debt.
Sainath points out that the interest rates micro-indebted women are paying in India are far higher than commercial bank lending rates. ‘They are paying between 24 and 36 percent on loans for productive expenditures while an upper class person can finance the purchase of a Mercedes at 6 to 8 percent from the banking system.’
While Cockburn admits that microloans can be a useful tool, he claims that the only way long-term change can happen in development is through social programs and a macro-credit model such as what was used so successfully by Eastern countries such as Taiwan, China and South Korea.
Another question I have with Prahalad’s vision is what exactly he means by “social transformation?” Pralahad writes on page 109, “social transformation is about the number of people who believe that they can aspire to a middle-class lifestyle.” I worry that Pralahad is equating consumerism with social transformation. Prahalad makes no effort to hide his assumption that to help the BOP, we need to make them consumers. He writes, “to convert the BOP into a consumer market, we have to create the capacity to consume” (p. 16), and also defines success as human beings as winning “the chance to consume” (video introduction, The Fortune at the Bottom of the Pyramid). He uses consumerism, self-esteem, and social transformation interchangeably, writing that these marketing projects, “tend to create opportunities for the poor by offering them choices and encouraging self-esteem” (p. 5). When he talks about self esteem and choice, it is in terms of consumerism, such as the example of the Brazilian grocery store Casas Bahia where the video showed proud people talking with tears in their eyes about washing machines and kitchen stoves (pp. 159-167). I can understand how these machines can really make a difference in a person’s life, but when people’s self worth is defined by their ability to consume, where will it end?
In 2005 The New Republic had an article by Pascal Zachary critiquing an earlier printing of The Fortune at the Bottom of the Pyramid. The writer does not equate consumerism with benefit or self-esteem.
First, so long as the poor spend what little money they have, they will remain poor, even if they now benefit from higher quality goods…in fact, they can still be poor even after they pay less for certain essential goods. How? To start with, they can be persuaded (by those aggressive corporations suddenly paying attention to them in pursuit of profit) to purchase things they did not formerly need.
An example of this is the story of Frito-Lay’s advertising campaign for “healthy” chips, which persuaded Thai people to eat foreign junk food rather than their inexpensive, locally produced traditional meals of rice and vegetables. Another example he takes from Prahalad, who celebrates the success of Avon, selling cosmetics through distribution channels of women in rural areas of Brazil (2006, The Fortune at the Bottom of the Pyramid, p. 44). Another well-known example of corporate marketing that has done great harm is the Nestle baby-formula campaign which convinced women in developing countries to stop breast-feeding their babies, instead buying infant formula. The New Republic chastises:
Pralahad’s blasé attitude toward the effects of marketing on poor people is willful blindness. He ought to know better. Members of the middle class are not alone in trying to live beyond their means. Poor people try too. And they can be ensnared even by well-intentioned marketing campaigns.
This is not a problem unique to the BOP. North Americans are constantly barraged with advertising campaigns manipulating us into consuming things we don’t need, even damaging things, and playing on the promise of self-esteem and a better life if only we would spend more money.
All corporations exist to make a profit. Most would make a profit at any cost, with no regard to the welfare of their customers. Pralahad has pulled together several stories of corporations that make money and are motivated by creating benevolent products as well, but I don’t even need to question the motivations of the corporate world in general. Their motivation is one thing, and that is profit. Pascal Zachary gives examples of failed attempts to make a profit off of the BOP in China and in Africa (2005, The New Republic), pointing out that there are many situations where profit simply cannot be generated and the only solution is public service.
The third way I question Pralahad’s work is on the importance of government. Pralahad’s case studies seem to happen seamlessly, almost under the radar of regulation, but his examples provide a simplification of reality. In “Development Economics: The Wealth and Poverty of Nations” (2003, Wheelan, Charles Naked Economics), the author points out that government controls almost every aspect of economics and trade:
Basically, good governance matters. The World Bank rated 150 countries on six broad measures of governance such as accountability, regulatory burden, rule of law, graft (corruption), etc. There was a clear and causal relationship between better governance and better development outcomes…(p.209).
Pralahad doesn’t ignore government’s role altogether. He writes, “we need to make sure that no organization abuses its power and influence, be it corrupt governments or large firms” (p 108). He goes on to explain that the way BOP consumers can do that is by an evolving form of checks and balances that include TV, wireless internet and cell phones, which “make it impossible for any group to abuse its position for long.” This statement unveils the greatest vulnerability of Prahalad’s thesis; a naïve belief that as long as neoliberal economic development is followed, people will have ways to participate in the forces that control their lives, and transform their societies for the better. On page 81 he writes:
Fundamental to the evolution of capital markets and a vibrant private sector is the need for a transparent market for capital, land, labor, commodities and knowledge. Transparency results from widely understood and clearly enforced rules.
This situation of transparent, non-corrupt government to allow the ideal, transforming, free market of Pralahad’s dreams currently does not exist. He describes each country as having its own portfolio of challenges in TGC (transaction governance capacity), and its own road to improvement (p. 82). Giving some more examples of private sector attempts to work for TGC through technology, he still points to the need for democratization of the individual: “There are significant impediments to the entire process, the most important being the education of the citizen” (p. 94). My question is who is going to educate the citizens and how? Will they be educated to think critically about their needs, their political freedoms, and their human rights? Or will the education of the citizen Prahalad endorses be only one more attempt to create consumers at the bottom of the pyramid, not citizens actively engaged in governmental, as well as labor reform?
Sinister Overtones
There is danger in looking at the field of economics without politics. Prahalad writes, “while cases certainly can be found of large firms and MNCs that may have undermined the efforts of the poor to build their livelihoods, the greatest harm they might have done to the poor is to ignore them altogether” (p. 5). The New Republic once again accuses him of “present(ing) a seductive alternative reading of the multinational corporation as an agent of transformation and empowerment, not a force for exploitation and the concentration of wealth” (2005, Zachary, Pascal). Any large corporation is a powerful political entity that has only their own profit on the agenda, and there are examples from around the world that show violence and human rights abuses committed against people who challenge it. According to Andrew Cockburn in his microloan commentary:
The trouble with publically-subsidized credit programs is that they’re public and they’re large and run contrary to the neo-liberal creed. That’s why Younus (an economist who wrote in favor of microcredit) got his Nobel prize, whereas radical land reformers get a bullet in the back of the head (2006, “A Noble Peace Prize for Neoliberalism; The Myth of Microloans,” National Public Radio, “Weekend Edition”).
Human rights are a huge concern in Colombia, the most violent country in the world. In a report she titled “Globalization and ‘Free’ Trade in Colombia”, Anne Montgomery describes the connection between multinational corporations and the paramilitary terrorist forces that are responsible for much of the killing (2001, www.colombiajournal.org). Montgomery claims that the paramilitaries are private armies are hired by wealthy families and foreign corporations who abuse human rights for the benefit of their business interests.
Colombia has resulted in an increased popular resistance to the implementation of neoliberal economic policies. Consequently, there has been a corresponding increase in the levels of violence used against such elements as guerrillas, peasants, union leaders, and human rights activists who challenge a system of economic relations that ships resources needed for survival off to foreign lands under the label of “free trade.”
According to Montgomery, the paramilitaries intimidate and attack rural peasants, and then take control of their abandoned land on behalf of foreign investors. While globalization as a concept can’t be blamed for this kind of political chaos, the situation in Colombia shows a lack of concern for human rights versus the right to profit in any way possible, a globalization priority.
In conclusion, I return to a question Prahalad asks in the introduction to The Fortune at the Bottom of the Pyramid.
Why can’t we mobilize the investment capacity of large firms with the knowledge and commitment of NGOs and the communities that need help? Why can’t we co-create unique solutions (p. xiv)?
Though the solutions of neo-liberalism and global free market economies are not the answers Prahalad claims, his question is still essential to solving the problem of poverty in the world. If large scale corporations and governments are too politically corrupt and invested in profit at the expense of people, what alternatives are we left with? I propose that we put our hope in “fair trade” instead of “free trade.” Already there are hundreds of small local and international companies that are fueled by a commitment to just and sustainable economic development and political freedom under the umbrella of free trade. All of them are collective or cooperative and rely on professional knowledge of marketing and small scale manufacturing. These organizations are not about aid or charity, but are providing jobs for people to work their way, not buy their way out of poverty. For more information about fair trade, visit www.fairtradefederation.org.
The true winners of the fortune at the bottom of the pyramid should be the people at the bottom of the pyramid.
References
Cockburn, Alexander, National Public Radio Weekend Edition, “A Noble Peace Prize for Neoliberalism; The Myth of Microloans,” Oct 20/22, 2006. A shorter version also published in The Nation Magazine.
Leamer, Edward, “A Flat World, A Level Playing Field, a Small World After All, or None of the Above?: A Review of Thomas L Friedman The World is Flat”, Journal of Economic Literature, Vol. XLV (March 2007). P. 84 April 16, 2006
Montgomery, Anne, “Globalization and ‘Free’ Trade,” 2001; www.colombiajournal.org.
Prahalad, C.K. The Fortune at the Bottom of the Pyramid; Eradicating Poverty Through Profits, 2006, Pearson Education, Inc; Upper Saddle River, NJ.
Wheelan, Charles,, Naked Economics; Undressing the Dismal Science, “Development Economics: The Wealth and Poverty of Nations,” 2003, Norton, W.
W. & Company, Inc.
Zachary, Pascal, G. The New Republic, “Poor Idea,” March 7, 2005, pp. 16-19.
Wednesday, March 19, 2008
Globalization: Trading Human Rights
Human rights are my primary concern related to globalization. At this point, globalization is not a choice; it’s a reality. The challenge of maintaining human rights is both a by-product of globalization and something that threatens its viability as a system of world order.
Obviously, definitions of human rights vary tremendously, however, according to the WTO-Human Rights Caucus “the canon of international human rights law (comprising civil, political, economic, social and cultural rights) offers a comprehensive legal definition of the fundamental elements of human wellbeing and human dignity.” It goes on to assert that “therefore, any trade or other economic policy that offends against the principles of human rights, either in design or practice, lacks moral and political legitimacy,” Their statement, which was presented on December 10, 2005 on the occasion of the Sixth Ministerial Conference of the World Trade Organization makes it seem like human rights should be a strong concern of the WTO and globalization in general. But does the evidence support the hope that globalization leads to increased human rights rather than decreased human rights? The same statement of the WTO-Human Rights Caucus conceded that “nevertheless, the international trade regime has repeatedly denied and rejected any intersection between its mandate and human rights.”
Statistics on human wellbeing and dignity are confusing. Globalization proponents would have us believe that when people are able to make more money (at least temporarily) working for or selling their land to a multinational corporation, their wellbeing goes up. However, what about the other aspects of human rights such as civil, political, social and cultural rights? I contend that a accurate assessment of globalization is only possible when its effects on people are considered in these broader terms.
It seems clear that political rights are limited when workers are not allowed to organize, such as in China, where independent labor unions are forbidden. “The Chinese Communist Party, although having allowed the flourishing of capitalism within its borders, continues to stifle human rights and civil liberties” according to Stephen Cheng in his article “Red Star Over Asia” (www.sonshi.com)China is an appealing business environment because of its lack of regulation, but C. K. Prahalad points out, “the poor in villages might be paying a price. For example, in the absence of institutions and laws, farmland can be appropriated for other uses by bureaucrats without a legal recourse for the farmer” (2006, The Fortune at the Bottom of the Pyramid, p. 80). The argument that globalization will increase democracy and political rights fades when the very governmental structures created to invite globalization do so at the cost of suppressing political freedoms.
This week my husband made two day-long trips to immigration offices as a translator for an illegal immigrant named Mario. Over the long drives, he learned Mario’s story of why he came to the US looking for work. Mario and his extended family own a farm in Mexico that they are very proud of. They grow corn for local food consumption. Over the years since the North American Free Trade Agreement, cheap US corn has been imported to Mario’s village, and his family farm can no longer compete. Thus he left his wife and children to illegally cross the border to find work and help his family survive. Eventually, his wife joined him, leaving two small children in Mexico, and together they had another child here. In Lima, where they live, Mexican people are often stopped by the local police and have been jailed indefinitely if they don’t have papers. Because of this fear, Mario and his family rarely leave the house. With recent crack-downs on hiring illegals, they have not found work, and can not buy adequate food. Now Mario is being deported, and bringing his 18 month old son home with him, leaving his wife to struggle here alone.
This story is anecdotal, and apparently economists would claim that there are more people helped by globalization than there are “Marios” in the world. However, I wonder if the statistics used for those conclusions take into account the millions of illegal aliens and economic refugees that are the acceptable collateral damage of globalization? Mario’s social human rights have been violated. His lifestyle and family have been torn apart, forcing him from his land to a strange country where the jobs available are often below social and legal standards.
An example of a violation of cultural human rights is described in the article “Genetic engineering and the Privatization of Seeds.” The authors describe the protests of Indian people who object to the “colonizing the food system” by Mosanto and other biotech corporations in India (2001, Mittal and Rosset, Real World Globalization, p. 241). In last week’s paper I wrote about the potato farmers in Peru who rejected a chemical-process-laden replacement for the hundreds of traditional species of potatoes know to their culture. The loss of the lifestyle of small scale farming, as well as the loss of culturally important species and plants in favor of the cash crops and agribusiness imports offered by globalization is a violation of cultural rights.
Human rights are a huge concern in Colombia, the most violent country in the world. In a report she titled “Globalization and ‘Free’ Trade in Colombia”, Anne Montgomery describes the connection between multinational corporations and the paramilitary terrorist forces that are responsible for much of the killing (2001, www.colombiajournal.org). Montgomery claims that the paramilitaries are private armies are hired by wealthy families and foreign corporations who abuse human rights for the benefit of their business interests.
Colombia has resulted in an increased popular resistance to the implementation of neoliberal economic policies. Consequently, there has been a corresponding increase in the levels of violence used against such elements as guerrillas, peasants, union leaders, and human rights activists who challenge a system of economic relations that ships resources needed for survival off to foreign lands under the label of “free trade.”
According to Montgomery, the paramilitaries intimidate and attack rural peasants, and then take control of their abandoned land on behalf of foreign investors. While globalization as a concept can’t be blamed for this kind of political chaos, the situation in Colombia shows a lack of concern for human rights versus the right to profit in any way possible, a globalization priority.
The human right to food cannot be ignored. Bjorn Lomborg claims “Food has become more plentiful and affordable, especially in the developing world...the proportion of hungry in the Third World has dropped from 50% in 1950 to less than 17% today.”(2007, “Global Warnings”) But, the WTO-Human Rights Caucus disagrees. Their 2005 statement says:
In a world that has more than enough food to feed everyone, the number of people who suffer from hunger and malnutrition is increasing…There are close linkages between agricultural trade liberalization and the failure to respect, protect or fulfill the human right to food. Developing countries have been pushed to open their agricultural markets to foreign imports that are often exported at less than the cost of production.
Relying on foreign imports can be dangerous. Cuba relied on Eastern Europe for much of its food production according to Mittal and Rosset, and when that part of the world became unavailable due to political upheaval, Cuba began to starve (2001, Real World Globalization, pp. 245-6). Fortunately, it was able to re-build its local small scale food producing infrastructure and once again provide for its citizens’ human right to food.
One compelling argument in favor of globalization is the benefit to women’s rights, an essential aspect of human rights. In The Fortune at the Bottom of the Pyramid, Prahalad writes, “in the cases in this book, there is adequate evidence of the role of women in building a new society at the BOP (bottom of the Pyramid (2006, p. 108).” Women have been given new access to training and employment through globalization, where many individual cultures would suppress their role in the economy. However, the picture for women is not all rosy, as is the case of stories of forced sterilizations in factories in China.
I must say that I see nothing inherent to globalization that has to be in opposition to human rights. Yet, as Anne Montgomery says, when “profit maximization is the name of the game… unequal relations of exchange are desirable” (2001, “Globalization and ‘Free’ Trade in Colombia,” www.colombiajournal.org). Increased trade can be a proponent of human rights, especially the right to monetary wealth, but human rights are not an inherent goal or concern of those with power under a system of globalization. “Even when trade does bring increased wealth, poor distribution of the benefits both within and between nations, perpetuates poverty and impedes the progressive realization of human rights” (2005, Statement of the WTO-Human Rights Caucus, www.hrichina.org).
References
Cheng, Stephen, “Red Star over Asia,” Sun Tzu's Art of War Applied to Modern Strategy and Leadership; www.sonshi.com.
Lomborg, Bjorn, “Global Warnings,” 2007, Project Syndicate; www.project-syndicate.org.
Montgomery, Anne, “Globalization and ‘Free’ Trade,” 2001; www.colombiajournal.org.
Prahalad, C.K. The Fortune at the Bottom of the Pyramid; Eradicating Poverty Through Profits, 2006, Pearson
Education, Inc; Upper Saddle River, NJ.
Rakocy, Betsy, Reuss, Alejandro, Sturr, Chris, ed. Real World Globalization, 2007, Economic Affairs Bureau;
Boston, MA.
WTO-Human Rights Caucus, On the occasion of the Sixth Ministerial Conference
of the World Trade Organization, 2005, Human Rights in China; www.hrichina.org/public/contents/article?revision%5fid=26420&item%5fid=26396.
Obviously, definitions of human rights vary tremendously, however, according to the WTO-Human Rights Caucus “the canon of international human rights law (comprising civil, political, economic, social and cultural rights) offers a comprehensive legal definition of the fundamental elements of human wellbeing and human dignity.” It goes on to assert that “therefore, any trade or other economic policy that offends against the principles of human rights, either in design or practice, lacks moral and political legitimacy,” Their statement, which was presented on December 10, 2005 on the occasion of the Sixth Ministerial Conference of the World Trade Organization makes it seem like human rights should be a strong concern of the WTO and globalization in general. But does the evidence support the hope that globalization leads to increased human rights rather than decreased human rights? The same statement of the WTO-Human Rights Caucus conceded that “nevertheless, the international trade regime has repeatedly denied and rejected any intersection between its mandate and human rights.”
Statistics on human wellbeing and dignity are confusing. Globalization proponents would have us believe that when people are able to make more money (at least temporarily) working for or selling their land to a multinational corporation, their wellbeing goes up. However, what about the other aspects of human rights such as civil, political, social and cultural rights? I contend that a accurate assessment of globalization is only possible when its effects on people are considered in these broader terms.
It seems clear that political rights are limited when workers are not allowed to organize, such as in China, where independent labor unions are forbidden. “The Chinese Communist Party, although having allowed the flourishing of capitalism within its borders, continues to stifle human rights and civil liberties” according to Stephen Cheng in his article “Red Star Over Asia” (www.sonshi.com)China is an appealing business environment because of its lack of regulation, but C. K. Prahalad points out, “the poor in villages might be paying a price. For example, in the absence of institutions and laws, farmland can be appropriated for other uses by bureaucrats without a legal recourse for the farmer” (2006, The Fortune at the Bottom of the Pyramid, p. 80). The argument that globalization will increase democracy and political rights fades when the very governmental structures created to invite globalization do so at the cost of suppressing political freedoms.
This week my husband made two day-long trips to immigration offices as a translator for an illegal immigrant named Mario. Over the long drives, he learned Mario’s story of why he came to the US looking for work. Mario and his extended family own a farm in Mexico that they are very proud of. They grow corn for local food consumption. Over the years since the North American Free Trade Agreement, cheap US corn has been imported to Mario’s village, and his family farm can no longer compete. Thus he left his wife and children to illegally cross the border to find work and help his family survive. Eventually, his wife joined him, leaving two small children in Mexico, and together they had another child here. In Lima, where they live, Mexican people are often stopped by the local police and have been jailed indefinitely if they don’t have papers. Because of this fear, Mario and his family rarely leave the house. With recent crack-downs on hiring illegals, they have not found work, and can not buy adequate food. Now Mario is being deported, and bringing his 18 month old son home with him, leaving his wife to struggle here alone.
This story is anecdotal, and apparently economists would claim that there are more people helped by globalization than there are “Marios” in the world. However, I wonder if the statistics used for those conclusions take into account the millions of illegal aliens and economic refugees that are the acceptable collateral damage of globalization? Mario’s social human rights have been violated. His lifestyle and family have been torn apart, forcing him from his land to a strange country where the jobs available are often below social and legal standards.
An example of a violation of cultural human rights is described in the article “Genetic engineering and the Privatization of Seeds.” The authors describe the protests of Indian people who object to the “colonizing the food system” by Mosanto and other biotech corporations in India (2001, Mittal and Rosset, Real World Globalization, p. 241). In last week’s paper I wrote about the potato farmers in Peru who rejected a chemical-process-laden replacement for the hundreds of traditional species of potatoes know to their culture. The loss of the lifestyle of small scale farming, as well as the loss of culturally important species and plants in favor of the cash crops and agribusiness imports offered by globalization is a violation of cultural rights.
Human rights are a huge concern in Colombia, the most violent country in the world. In a report she titled “Globalization and ‘Free’ Trade in Colombia”, Anne Montgomery describes the connection between multinational corporations and the paramilitary terrorist forces that are responsible for much of the killing (2001, www.colombiajournal.org). Montgomery claims that the paramilitaries are private armies are hired by wealthy families and foreign corporations who abuse human rights for the benefit of their business interests.
Colombia has resulted in an increased popular resistance to the implementation of neoliberal economic policies. Consequently, there has been a corresponding increase in the levels of violence used against such elements as guerrillas, peasants, union leaders, and human rights activists who challenge a system of economic relations that ships resources needed for survival off to foreign lands under the label of “free trade.”
According to Montgomery, the paramilitaries intimidate and attack rural peasants, and then take control of their abandoned land on behalf of foreign investors. While globalization as a concept can’t be blamed for this kind of political chaos, the situation in Colombia shows a lack of concern for human rights versus the right to profit in any way possible, a globalization priority.
The human right to food cannot be ignored. Bjorn Lomborg claims “Food has become more plentiful and affordable, especially in the developing world...the proportion of hungry in the Third World has dropped from 50% in 1950 to less than 17% today.”(2007, “Global Warnings”) But, the WTO-Human Rights Caucus disagrees. Their 2005 statement says:
In a world that has more than enough food to feed everyone, the number of people who suffer from hunger and malnutrition is increasing…There are close linkages between agricultural trade liberalization and the failure to respect, protect or fulfill the human right to food. Developing countries have been pushed to open their agricultural markets to foreign imports that are often exported at less than the cost of production.
Relying on foreign imports can be dangerous. Cuba relied on Eastern Europe for much of its food production according to Mittal and Rosset, and when that part of the world became unavailable due to political upheaval, Cuba began to starve (2001, Real World Globalization, pp. 245-6). Fortunately, it was able to re-build its local small scale food producing infrastructure and once again provide for its citizens’ human right to food.
One compelling argument in favor of globalization is the benefit to women’s rights, an essential aspect of human rights. In The Fortune at the Bottom of the Pyramid, Prahalad writes, “in the cases in this book, there is adequate evidence of the role of women in building a new society at the BOP (bottom of the Pyramid (2006, p. 108).” Women have been given new access to training and employment through globalization, where many individual cultures would suppress their role in the economy. However, the picture for women is not all rosy, as is the case of stories of forced sterilizations in factories in China.
I must say that I see nothing inherent to globalization that has to be in opposition to human rights. Yet, as Anne Montgomery says, when “profit maximization is the name of the game… unequal relations of exchange are desirable” (2001, “Globalization and ‘Free’ Trade in Colombia,” www.colombiajournal.org). Increased trade can be a proponent of human rights, especially the right to monetary wealth, but human rights are not an inherent goal or concern of those with power under a system of globalization. “Even when trade does bring increased wealth, poor distribution of the benefits both within and between nations, perpetuates poverty and impedes the progressive realization of human rights” (2005, Statement of the WTO-Human Rights Caucus, www.hrichina.org).
References
Cheng, Stephen, “Red Star over Asia,” Sun Tzu's Art of War Applied to Modern Strategy and Leadership; www.sonshi.com.
Lomborg, Bjorn, “Global Warnings,” 2007, Project Syndicate; www.project-syndicate.org.
Montgomery, Anne, “Globalization and ‘Free’ Trade,” 2001; www.colombiajournal.org.
Prahalad, C.K. The Fortune at the Bottom of the Pyramid; Eradicating Poverty Through Profits, 2006, Pearson
Education, Inc; Upper Saddle River, NJ.
Rakocy, Betsy, Reuss, Alejandro, Sturr, Chris, ed. Real World Globalization, 2007, Economic Affairs Bureau;
Boston, MA.
WTO-Human Rights Caucus, On the occasion of the Sixth Ministerial Conference
of the World Trade Organization, 2005, Human Rights in China; www.hrichina.org/public/contents/article?revision%5fid=26420&item%5fid=26396.
Tuesday, March 4, 2008
"Big Foot" quote from The New Yorker Magazine
"As a source of global warming, the food we eat-and how we eat it-is no more significant than the way we make clothes or travel or heat our homes and offices. It certainly doesn't compare to the impact made by tens of thousands of factories scattered throughout the world. Yet food carries enormous symbolic power, so the concept of "food miles"-the distance a product travels from the farm to your home-is often used as a kind of shorthand to talk about climate change in general. "We have to remember our goal: reduce emissions of greenhouse gasses," John Murlis told me not long ago when we met in London. "That should be the world's biggest priority." Murlis is the chief scientific adviser to the Carbon Neutral Company, which helps corporations adopt policies to reduce their carbon footprint as well as those of the products they sell. He has also served as the director of strategy and chief scientist for Britan's Environment Agency. Murlis worries that in our collective rush to make choices that display personal virtue we may be losing sight of the larger problem. "Would a carbon label on every product help us?" he asked. "I wonder. You can feel very good about the organic potatoes you buy from a farm near your home, but half the emissions-and half the footprint-from those potatoes could come from the energy you use to cook them. If you leave the lid off, boil them at a high heat, and then mash your potatoes, from a carbon standpoint you might as well drive to McDonald's and spend your money buying an order of French Fries."
and later in the article...
"The environmental burden imposed by importing apples from New Zealand to Northern Europe or New York can be lower than if the apples were raised fifty miles away. "In New Zealand they have more sunshine than in the UK, which helps productivity." Williams explained. That means the yield of New Zealand apples far exceeds the yield of those grown in northern climates, so the energy required for farmers to grow the crop is correspondingly lower. It also helps that the electricity in New Zealand is mostly generated by renewable sources, none of which emit large amounts of CO2. Researchers at Lincoln University in Christchurch found that lamb raised in New Zealand wand shipped eleven thousand miles by boat to England produced... about a fourth of the (emissions) produced by British lamb. In part, that is because the pastures in New Zealand need far less fertilizer than most grazing land in Britan (or in many parts of the United States). Similarly, importing beans from Uganda or Kenya-where the farms are small, tractor use is limited, and the fertilizer is almost always manure-tends to be more efficient than growing beans in Europe, with its reliance on energy-dependent irrigation systems."
Michael Specter, "Big Foot"
The New Yorker, Feb 25, 2008
newyorker.com
and later in the article...
"The environmental burden imposed by importing apples from New Zealand to Northern Europe or New York can be lower than if the apples were raised fifty miles away. "In New Zealand they have more sunshine than in the UK, which helps productivity." Williams explained. That means the yield of New Zealand apples far exceeds the yield of those grown in northern climates, so the energy required for farmers to grow the crop is correspondingly lower. It also helps that the electricity in New Zealand is mostly generated by renewable sources, none of which emit large amounts of CO2. Researchers at Lincoln University in Christchurch found that lamb raised in New Zealand wand shipped eleven thousand miles by boat to England produced... about a fourth of the (emissions) produced by British lamb. In part, that is because the pastures in New Zealand need far less fertilizer than most grazing land in Britan (or in many parts of the United States). Similarly, importing beans from Uganda or Kenya-where the farms are small, tractor use is limited, and the fertilizer is almost always manure-tends to be more efficient than growing beans in Europe, with its reliance on energy-dependent irrigation systems."
Michael Specter, "Big Foot"
The New Yorker, Feb 25, 2008
newyorker.com
Pessimistic
Generally speaking, I am a “globalization pessimist.” I concur that globalization has the potential increase the welfare of most of the world’s citizens. I support trade between international businesses. I dream of a world capitalist system that allows for private ownership of business, and nurtures small business initiatives, encouraging trade between them. In my mind this would be a kind of utopia that would benefit all. However, in the end I am pessimistic about the realistic possibility of this utopia, and I am convinced that the corruption, imperialism, environmental destruction, and violence potential of both multinational corporations and governments destroy this ideal.
My reading this week highlighted some concerns for me about some of the more realistic byproducts of globalization. I agree with Arthur MacEwan that those with the capital have the power, and this power imbalance between the “haves” and the “have-nots” is a human rights warning signal (2000, “Free Markets, International Commerce and Economic Development,” Real World Globalization, p.19). I am also pessimistic about the role of the US military, which could be motivated by protecting global business interests by force. Finally, I suspect that globalization puts cultural variety at risk, which does not enhance the welfare of the world’s citizens.
Capitol is Power
Even though globalization increases the ranks of the middle class, those middle class workers are at the mercy of the factory owners and MNCs. They have very little power over their own means of production and survival. The threat of jobs simply moving to a less empowered place in the world limits these workers’ abilities to organize, negotiate or democratically participate in their livelihoods. “Free Markets, International Commerce, and Economic Development,” by Arthur MacEwan, points out how globalization gives ultimate power to the owners of capital:
Power in economic life means primarily an ability to shift more and more of the value produced by society into one’s own hands. In this way, neo-liberal globalization is a de facto formula for shifting income to the owners of capital, that is, for increasing inequality in the distribution of income (2000, Real World Globalization, p.15)
In his book The Fortune at the Bottom of the Pyramid, C.K. Prahalad describes the danger of corruption in a globalized world. Many developing countries such as China do not have protective laws and institutions and “farmland can be appropriated for other uses by bureaucrats without a legal recourse for the farmer”
(2006, p. 80). Those with capital and the bureaucracies that support them have power over those without capital.
Protecting Business Interest by Force
MacEwan’s interview article “Rich and Poor in the Global Economy” points out that globalization optimism may be used to “placate critics of the present world order”
(2005, Real World Globalization, p. 19). When globalization is analyzed free of politics, power imbalances and human rights violations can be ignored. In the real world, however, we are facing a world order dominated by the US, which has a foreign policy of doing as they like without regard to international opinion or law.
“The Political Economy of War and Imperialism” by Alejandro Reuss sarcastically mocks the likelihood of the US government to support freedom, “as if that were what the US government were really after” (2003, Real World Globalization, p.303). “The Business of War in the Democratic Republic of Congo” provides a direct example of where US military intervention was needed to protect US corporate investment at the expense of the citizens of the DRC (2001, Montague and Berrigan, Real World Globalization p. 42)
In contrast, Thomas Friedman’s chapter “The Dell Theory of Conflict Prevention” shows an example of how he as a globalization optimist naively discounts the responsibility of US foreign policy for world violence and acts of terror, instead blaming Al-Qaeda alone for “geopolitical instability” (2007 The World is Flat, p. 595). He writes:
In The Lexus and the Olive Tree I argued that to the extent that countries tied their economies and futures to global integration and trade, it would act as a restraint on going to war with their neighbors (p. 586).Though I wish that this were the case, he is ignoring historical situations such as the American Revolution, where the colonists were dependant on trade with England yet staged a revolution, or the Central American revolutions in the 1980s that risked losing lucrative cash crop customers such as Dole. In this theory he admits that he doesn’t count border skirmishes and civil wars (p. 586), but part of the new world order strategy is low intensity warfare, in which powerful nations prop up revolutions or civil violence in the hope of destabilizing a government under attack. Terrorism warfare can also not be included in his assertion that “no two countries that both had McDonald’s had ever fought a war against each other” (p. 586).
Cultural Disintegration
“Cultures that are open and willing to change have a huge advantage in this world,” Friedman applauds, quoting Jerry Rao, MphasiS CEO (2007 The World is Flat, p.422). Of course, all cultures change over time, but the rapid influences of globalization (and its global warming effects) threaten the destruction of many traditional ways of life. This replacement of traditional culture with consumer or corporate culture is a serious concern that I have about globalization.
"Retailing analyst Victor Lebow articulated the solution that has become the norm for the whole system (of globalization). He said: “Our enormously productive economy…demands that we make consumption our way of life, that we convert the buy and use of goods into rituals, that we seek our spiritual satisfaction, our ego satisfaction, in consumption…we need things consumed, burned up, replaced and discarded at an ever-accelerating rate.”(The Story of Stuff)
Recently, I heard a news report on National Public Radio that described potato farmers in Peru who were losing many of the hundreds of varieties of potato plants due to global warming:
Alejandro Argumedo is a plant scientist and social activist (who)…says climate change threatens not just farmers like Baca Huaman, but Peru's whole native culture.
"Potato is not just food. Potato is also spirituality; it's culture," Argumedo says. "There are songs, dances, ceremonies…They (mountain farmers) turned down new varieties the government offered because the plants would need fungicides, pesticides and fertilizers. They preferred… varieties that have been boiled, fried, mashed and poached for centuries. (NPR Website)
Though they were offered “high tech” solutions of modern varieties of potatoes, the farmers rejected the MNC influenced additions of poison products that were necessary for that option. Unfortunately, I think it is an unusual to choose traditional culture over “progress” in a globalizing world.
I believe that globalization as we know it now works because of a manufacturing economy based on waste and consumption. The assumption that consumption and monetary wealth determine global citizens’ self-worth and wellbeing, is seriously threatening to our world wide environment and the earth’s safety.
Referrals
Friedman, Thomas, The World is Flat, 2007, Picador; New York, New York.
http://www.npr.org/templates/story/story.php?storyId=87811933
http://www.storyofstuff.com/pdfs/annie_leonard_footnoted_script.pdf
Prahalad, C.K., The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits, 2006, Pearson Education, Inc; Upper Saddle River, New Jersey.
Rakocy, Betsy, Reuss, Alejandro, Sturr, Chris, ed, Real World Globalization, 2007, Economic Affairs Bureau, Inc; Boston, Massachusetts.
My reading this week highlighted some concerns for me about some of the more realistic byproducts of globalization. I agree with Arthur MacEwan that those with the capital have the power, and this power imbalance between the “haves” and the “have-nots” is a human rights warning signal (2000, “Free Markets, International Commerce and Economic Development,” Real World Globalization, p.19). I am also pessimistic about the role of the US military, which could be motivated by protecting global business interests by force. Finally, I suspect that globalization puts cultural variety at risk, which does not enhance the welfare of the world’s citizens.
Capitol is Power
Even though globalization increases the ranks of the middle class, those middle class workers are at the mercy of the factory owners and MNCs. They have very little power over their own means of production and survival. The threat of jobs simply moving to a less empowered place in the world limits these workers’ abilities to organize, negotiate or democratically participate in their livelihoods. “Free Markets, International Commerce, and Economic Development,” by Arthur MacEwan, points out how globalization gives ultimate power to the owners of capital:
Power in economic life means primarily an ability to shift more and more of the value produced by society into one’s own hands. In this way, neo-liberal globalization is a de facto formula for shifting income to the owners of capital, that is, for increasing inequality in the distribution of income (2000, Real World Globalization, p.15)
In his book The Fortune at the Bottom of the Pyramid, C.K. Prahalad describes the danger of corruption in a globalized world. Many developing countries such as China do not have protective laws and institutions and “farmland can be appropriated for other uses by bureaucrats without a legal recourse for the farmer”
(2006, p. 80). Those with capital and the bureaucracies that support them have power over those without capital.
Protecting Business Interest by Force
MacEwan’s interview article “Rich and Poor in the Global Economy” points out that globalization optimism may be used to “placate critics of the present world order”
(2005, Real World Globalization, p. 19). When globalization is analyzed free of politics, power imbalances and human rights violations can be ignored. In the real world, however, we are facing a world order dominated by the US, which has a foreign policy of doing as they like without regard to international opinion or law.
“The Political Economy of War and Imperialism” by Alejandro Reuss sarcastically mocks the likelihood of the US government to support freedom, “as if that were what the US government were really after” (2003, Real World Globalization, p.303). “The Business of War in the Democratic Republic of Congo” provides a direct example of where US military intervention was needed to protect US corporate investment at the expense of the citizens of the DRC (2001, Montague and Berrigan, Real World Globalization p. 42)
In contrast, Thomas Friedman’s chapter “The Dell Theory of Conflict Prevention” shows an example of how he as a globalization optimist naively discounts the responsibility of US foreign policy for world violence and acts of terror, instead blaming Al-Qaeda alone for “geopolitical instability” (2007 The World is Flat, p. 595). He writes:
In The Lexus and the Olive Tree I argued that to the extent that countries tied their economies and futures to global integration and trade, it would act as a restraint on going to war with their neighbors (p. 586).Though I wish that this were the case, he is ignoring historical situations such as the American Revolution, where the colonists were dependant on trade with England yet staged a revolution, or the Central American revolutions in the 1980s that risked losing lucrative cash crop customers such as Dole. In this theory he admits that he doesn’t count border skirmishes and civil wars (p. 586), but part of the new world order strategy is low intensity warfare, in which powerful nations prop up revolutions or civil violence in the hope of destabilizing a government under attack. Terrorism warfare can also not be included in his assertion that “no two countries that both had McDonald’s had ever fought a war against each other” (p. 586).
Cultural Disintegration
“Cultures that are open and willing to change have a huge advantage in this world,” Friedman applauds, quoting Jerry Rao, MphasiS CEO (2007 The World is Flat, p.422). Of course, all cultures change over time, but the rapid influences of globalization (and its global warming effects) threaten the destruction of many traditional ways of life. This replacement of traditional culture with consumer or corporate culture is a serious concern that I have about globalization.
"Retailing analyst Victor Lebow articulated the solution that has become the norm for the whole system (of globalization). He said: “Our enormously productive economy…demands that we make consumption our way of life, that we convert the buy and use of goods into rituals, that we seek our spiritual satisfaction, our ego satisfaction, in consumption…we need things consumed, burned up, replaced and discarded at an ever-accelerating rate.”(The Story of Stuff)
Recently, I heard a news report on National Public Radio that described potato farmers in Peru who were losing many of the hundreds of varieties of potato plants due to global warming:
Alejandro Argumedo is a plant scientist and social activist (who)…says climate change threatens not just farmers like Baca Huaman, but Peru's whole native culture.
"Potato is not just food. Potato is also spirituality; it's culture," Argumedo says. "There are songs, dances, ceremonies…They (mountain farmers) turned down new varieties the government offered because the plants would need fungicides, pesticides and fertilizers. They preferred… varieties that have been boiled, fried, mashed and poached for centuries. (NPR Website)
Though they were offered “high tech” solutions of modern varieties of potatoes, the farmers rejected the MNC influenced additions of poison products that were necessary for that option. Unfortunately, I think it is an unusual to choose traditional culture over “progress” in a globalizing world.
I believe that globalization as we know it now works because of a manufacturing economy based on waste and consumption. The assumption that consumption and monetary wealth determine global citizens’ self-worth and wellbeing, is seriously threatening to our world wide environment and the earth’s safety.
Referrals
Friedman, Thomas, The World is Flat, 2007, Picador; New York, New York.
http://www.npr.org/templates/story/story.php?storyId=87811933
http://www.storyofstuff.com/pdfs/annie_leonard_footnoted_script.pdf
Prahalad, C.K., The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits, 2006, Pearson Education, Inc; Upper Saddle River, New Jersey.
Rakocy, Betsy, Reuss, Alejandro, Sturr, Chris, ed, Real World Globalization, 2007, Economic Affairs Bureau, Inc; Boston, Massachusetts.
The Flattening of the World, the Flattening of Humanity
What has caused the increases in globalization over the last two decades?
Thomas Friedman blames it on technology (2006, The World is Flat, p.48). In “Critical Perspectives on Globalization” Arthur Macewan says governments have pushed forward globalization in a concentrated bid for power (2006, Real World Globalization, p.1). Ellen Frank claims that globalization is a misguided grasp by poorer countries to better themselves that has only led them to more poverty (2003, Real World Globalization, p. 80). Pankaj Ghemawat tells us that the percent of the world really affected by globalization is minimal and that this huge monster or savior is just a lot of hot air (2007, “Why the World Isn’t Flat”).
I muse that the increase in globalization is the result of the export of American materialism as a world-wide goal. It is due to the expectation and greed of consumers for low cost goods, combined with a US economy and matching hegemony that relies completely on domestic consumerism to survive. The rise of globalization is due to the fact that money is more powerful than politics, and multi-national corporations now make the decisions that control the lives of the world’s citizens rather than governments, no matter what façade of democracy, monarchism or socialism; multi-nationals want to make as much money as possible with no regard for the people who make them that money.
How well does Friedman’s list of “Flatteners” in chapter 2 explain globalization and what does he leave out?
Technology amplifies the best and worst of humanity. As we plunge forward into the “warp speed” described by Friedman (2006, The World is Flat, p.49) we are not evolving into a more compassionate or communicative bunch; we are remaining the same complex package of greed and generosity that has always characterized humans. Our traits are simply magnified, echoed and manipulated more powerfully by the screen, the chip and the fiber-optic cable. Globalization reflects this: not an evolution, but a magnification of good and bad on a scale not yet imagined.
Friedman’s technology-based flatteners accent the good and naively ignore the bad (i.e. the potential for a decrease in positive communication and the situation of arrogance in that if an entity does not exist online it does not exist period). Because of this, Friedman does not exactly explain globalization as much as he frames it in a good light using “flattening” as a desirable reality.
A realistic aspect that is largely ignored in his paradigm is that flattening cannot overcome the political upheaval that racism, imperialism, cultural insensitivity, and warfare which keep the world quite round indeed. He does allude to this briefly when he writes, “the faster and broader this transition to a new era, the greater potential for disruption,” on page 49 (2006, The World is Flat.)
Several flatteners that he leaves out include environmental destruction and the rise of world mono-culture, both artistically and biologically. The threat posed to the planet by all this so-called “prosperity” is certainly flattening. We all face it equally, and, according to Friedman, are causing it more equally all the time. Cheap goods or quality goods, it doesn’t matter as long as those goods are made with non-renewable resources, and are destined to exist for millennia releasing toxins into the water, soil and air that sustain us.
Another flattener is the elimination of variety in human cultures. American standards of ugliness and poor artistic quality of life are exported along with the multi-national corporate conquistadores. A round world is a world of adventure and mystery, where human cultural variety is beyond our comprehension. As the world is flattened (if the world is flattened), there will be nothing more to discover or learn in the familiar abyss of standardized strip malls, factory farms and gated communities, with architecture as wasteful as it is hideous to behold. Friedman conveniently trivializes this with patronizing stories such as his craving for sushi that was satisfied in Arkansas (2006, The World is Flat, p.156).
How do the changes of the past two decades compare with previous patterns of globalization?
Again, I would assert that the basic appetites or impulses for globalization have not changed; what has changed is the technological ability to achieve it faster and on a wider scale. Humans are not worse or better than they ever were, however, those with money are ever more able to make more money, and those with resources are ever more anxious to control their use. If one thing doesn’t change in the progression of humanity, it is that unchecked power will protect itself and expand itself at all costs. Globalization is a manifestation of the power of the rich over the poor and it continues in accordance with the human ability to control the world through imperial force (both monetary and military) and technological innovation.
Technology and human “advancement” have not changed an essential basic principle. If a worker does not own his/her means of production, land, raw materials, tools, and does not have the skills for survival outside of what a multi-national or government chooses to provide, that person is at the mercy of an entity that does not have his/her best interest in mind. The closer people are to owning their own land and their own means of making a living, the happier, more creative, liberated, stable, and safe they will be. The Friedman paradigm of societies specializing in mono-commodities or services, participating in large scale trading between them controlled by multinational profit maximization takes the average person ever further from his/her means of production and leads us into a world that is dangerous, exploitative, and very, very, boring.
Thomas Friedman blames it on technology (2006, The World is Flat, p.48). In “Critical Perspectives on Globalization” Arthur Macewan says governments have pushed forward globalization in a concentrated bid for power (2006, Real World Globalization, p.1). Ellen Frank claims that globalization is a misguided grasp by poorer countries to better themselves that has only led them to more poverty (2003, Real World Globalization, p. 80). Pankaj Ghemawat tells us that the percent of the world really affected by globalization is minimal and that this huge monster or savior is just a lot of hot air (2007, “Why the World Isn’t Flat”).
I muse that the increase in globalization is the result of the export of American materialism as a world-wide goal. It is due to the expectation and greed of consumers for low cost goods, combined with a US economy and matching hegemony that relies completely on domestic consumerism to survive. The rise of globalization is due to the fact that money is more powerful than politics, and multi-national corporations now make the decisions that control the lives of the world’s citizens rather than governments, no matter what façade of democracy, monarchism or socialism; multi-nationals want to make as much money as possible with no regard for the people who make them that money.
How well does Friedman’s list of “Flatteners” in chapter 2 explain globalization and what does he leave out?
Technology amplifies the best and worst of humanity. As we plunge forward into the “warp speed” described by Friedman (2006, The World is Flat, p.49) we are not evolving into a more compassionate or communicative bunch; we are remaining the same complex package of greed and generosity that has always characterized humans. Our traits are simply magnified, echoed and manipulated more powerfully by the screen, the chip and the fiber-optic cable. Globalization reflects this: not an evolution, but a magnification of good and bad on a scale not yet imagined.
Friedman’s technology-based flatteners accent the good and naively ignore the bad (i.e. the potential for a decrease in positive communication and the situation of arrogance in that if an entity does not exist online it does not exist period). Because of this, Friedman does not exactly explain globalization as much as he frames it in a good light using “flattening” as a desirable reality.
A realistic aspect that is largely ignored in his paradigm is that flattening cannot overcome the political upheaval that racism, imperialism, cultural insensitivity, and warfare which keep the world quite round indeed. He does allude to this briefly when he writes, “the faster and broader this transition to a new era, the greater potential for disruption,” on page 49 (2006, The World is Flat.)
Several flatteners that he leaves out include environmental destruction and the rise of world mono-culture, both artistically and biologically. The threat posed to the planet by all this so-called “prosperity” is certainly flattening. We all face it equally, and, according to Friedman, are causing it more equally all the time. Cheap goods or quality goods, it doesn’t matter as long as those goods are made with non-renewable resources, and are destined to exist for millennia releasing toxins into the water, soil and air that sustain us.
Another flattener is the elimination of variety in human cultures. American standards of ugliness and poor artistic quality of life are exported along with the multi-national corporate conquistadores. A round world is a world of adventure and mystery, where human cultural variety is beyond our comprehension. As the world is flattened (if the world is flattened), there will be nothing more to discover or learn in the familiar abyss of standardized strip malls, factory farms and gated communities, with architecture as wasteful as it is hideous to behold. Friedman conveniently trivializes this with patronizing stories such as his craving for sushi that was satisfied in Arkansas (2006, The World is Flat, p.156).
How do the changes of the past two decades compare with previous patterns of globalization?
Again, I would assert that the basic appetites or impulses for globalization have not changed; what has changed is the technological ability to achieve it faster and on a wider scale. Humans are not worse or better than they ever were, however, those with money are ever more able to make more money, and those with resources are ever more anxious to control their use. If one thing doesn’t change in the progression of humanity, it is that unchecked power will protect itself and expand itself at all costs. Globalization is a manifestation of the power of the rich over the poor and it continues in accordance with the human ability to control the world through imperial force (both monetary and military) and technological innovation.
Technology and human “advancement” have not changed an essential basic principle. If a worker does not own his/her means of production, land, raw materials, tools, and does not have the skills for survival outside of what a multi-national or government chooses to provide, that person is at the mercy of an entity that does not have his/her best interest in mind. The closer people are to owning their own land and their own means of making a living, the happier, more creative, liberated, stable, and safe they will be. The Friedman paradigm of societies specializing in mono-commodities or services, participating in large scale trading between them controlled by multinational profit maximization takes the average person ever further from his/her means of production and leads us into a world that is dangerous, exploitative, and very, very, boring.
Answers from Jonathan on Economics Assumptions
1. Assumption: that people always choose to buy the cheapest product.
Wendy: In our marketing class we learned that price is only one aspect of the decision to buy something. Andy and I often choose to buy something that is not the cheapest product available for reasons such as where it is made or sold, or if our purchase helps someone we know to make a living. I think governments do this (choose to buy something more expensive for various reasons) as well as individuals.
Jonathan:This is an assumption for identical goods. A car sold by your best friend is not really the same as a car sold by the guy who murdered your mother. Altruism is something that people value. Unfortunately, governments often buy things from cronies (Haliburton) at the expense of taxpayers.
2. Assumption: that the ownership of stuff measures wealth or wellbeing.
Wendy:need I say more?
Jonathan: It doesn’t measure wellbeing and it only indicates relative wellbeing if people chose more wealth over less. We assume that people generally try to increase their wellbeing. There are also models of irrational people (think addicts), but that is more complicated and so most models just assume that each person knows what is in their best interest. Simplifying assumptions do not mean that we assume that people are rational. It is what people would do if they were rational. It is like models of physics that assume zero friction. Physicists know that there is friction, but models are simpler if we leave it out.
3. Assumption: that more consumerism is good or desireable.
Wendy: See #2
Jonathan: If people desire it and there are no externalities, then it is.
4. Assumption: that the rise of Global Production is good (same question as above, probably).
Wendy: See #2,3
Jonathan: Another kind of externality is a coordination problem like a prisoner’s dilemma situation where everyone is competing for status. If everyone would be better off with less production, but everyone just wants to get more than their neighbor, then everyone could be made worse off. I could draw it out for you sometime.
5. Assumption: that consumer goods (manufacturing) are equal or better in value to survival goods (food, water, fuel).
Wendy: This is not true in the case of any kind of upset or conflict. Trade can be cut off in a single day and then those countries that are dependant on export crops or manufacturing and importing food or fuel are suddenly vulnerable to starvation. This seems to happen often in the world.
Jonathan: It is a bit out of fashion these days, but this is captured by the concept of the diminishing marginal utility of wealth. I don’t think it happens often that disrupted trade causes starvation. War causes starvation whether people try to produce food self-sufficiently or not because it cuts production. A country that is always cut off from trade is much more likely to suffer from starvation because there will be problems every time there is normal fluctuation in the weather. Kenya is trying to set up a grain commodities market to prevent starvation due to fluctuations in local production.
6. Assumption: that if the amount of win outnumbers the amount of loss, the change is acceptable.
Jonathan: Unfortunately, some economists do sometimes subscribe to this theory! It is called the Bergson-Samuelson social welfare function.
A few of the rich could be winning in such large amounts that it seems to balance what could be a widespread loss amoung many people who started out with very little to begin with.
7. Assumption: that the situation in #6 will not be the probable cause of conflict or war in the world, or increase racism or class hatred.
Jonathan: No. However, sometimes this potential problem is ignored partly because it is harder to measure. Conflict is a well-understood problem from inequality and there are many others.
8. Assumption: that environmental concerns will eventually work themselves out by those wanting to make a profit off them.
Wendy: Is this an assumption of economics? If so, I don't see how any profit-based company would ever invest in something like the storage of Nuclear waste or other long-term environmental damage control, because the pay-back is not going to happen in our lifetime.
Jonathan: No. Externalities are perfectly-well understood by all economists. It is non-economist libertarians who tend to caricature us as being free-market fundamentalists. About 3/4 of economists vote Democratic however.
9. Assumption: that the best quality goods are always created through competition.
Wendy: Just look around a Wallmart, or any kind of new housing development. Good quality just doesn't win the battle.
Jonathan: No. Competition tends to promote cost reduction. Walmart and fancy department stores are arguably competing equally. They specialize in different niches though. In reality there is no perfect competition and there is no way to really objectively quantify the amount of actual competition in a market. Even a duopoly may face severe competition. Quality may even be increased through granting a monopoly. That is what the patent system is supposed to do.
Wendy: In our marketing class we learned that price is only one aspect of the decision to buy something. Andy and I often choose to buy something that is not the cheapest product available for reasons such as where it is made or sold, or if our purchase helps someone we know to make a living. I think governments do this (choose to buy something more expensive for various reasons) as well as individuals.
Jonathan:This is an assumption for identical goods. A car sold by your best friend is not really the same as a car sold by the guy who murdered your mother. Altruism is something that people value. Unfortunately, governments often buy things from cronies (Haliburton) at the expense of taxpayers.
2. Assumption: that the ownership of stuff measures wealth or wellbeing.
Wendy:need I say more?
Jonathan: It doesn’t measure wellbeing and it only indicates relative wellbeing if people chose more wealth over less. We assume that people generally try to increase their wellbeing. There are also models of irrational people (think addicts), but that is more complicated and so most models just assume that each person knows what is in their best interest. Simplifying assumptions do not mean that we assume that people are rational. It is what people would do if they were rational. It is like models of physics that assume zero friction. Physicists know that there is friction, but models are simpler if we leave it out.
3. Assumption: that more consumerism is good or desireable.
Wendy: See #2
Jonathan: If people desire it and there are no externalities, then it is.
4. Assumption: that the rise of Global Production is good (same question as above, probably).
Wendy: See #2,3
Jonathan: Another kind of externality is a coordination problem like a prisoner’s dilemma situation where everyone is competing for status. If everyone would be better off with less production, but everyone just wants to get more than their neighbor, then everyone could be made worse off. I could draw it out for you sometime.
5. Assumption: that consumer goods (manufacturing) are equal or better in value to survival goods (food, water, fuel).
Wendy: This is not true in the case of any kind of upset or conflict. Trade can be cut off in a single day and then those countries that are dependant on export crops or manufacturing and importing food or fuel are suddenly vulnerable to starvation. This seems to happen often in the world.
Jonathan: It is a bit out of fashion these days, but this is captured by the concept of the diminishing marginal utility of wealth. I don’t think it happens often that disrupted trade causes starvation. War causes starvation whether people try to produce food self-sufficiently or not because it cuts production. A country that is always cut off from trade is much more likely to suffer from starvation because there will be problems every time there is normal fluctuation in the weather. Kenya is trying to set up a grain commodities market to prevent starvation due to fluctuations in local production.
6. Assumption: that if the amount of win outnumbers the amount of loss, the change is acceptable.
Jonathan: Unfortunately, some economists do sometimes subscribe to this theory! It is called the Bergson-Samuelson social welfare function.
A few of the rich could be winning in such large amounts that it seems to balance what could be a widespread loss amoung many people who started out with very little to begin with.
7. Assumption: that the situation in #6 will not be the probable cause of conflict or war in the world, or increase racism or class hatred.
Jonathan: No. However, sometimes this potential problem is ignored partly because it is harder to measure. Conflict is a well-understood problem from inequality and there are many others.
8. Assumption: that environmental concerns will eventually work themselves out by those wanting to make a profit off them.
Wendy: Is this an assumption of economics? If so, I don't see how any profit-based company would ever invest in something like the storage of Nuclear waste or other long-term environmental damage control, because the pay-back is not going to happen in our lifetime.
Jonathan: No. Externalities are perfectly-well understood by all economists. It is non-economist libertarians who tend to caricature us as being free-market fundamentalists. About 3/4 of economists vote Democratic however.
9. Assumption: that the best quality goods are always created through competition.
Wendy: Just look around a Wallmart, or any kind of new housing development. Good quality just doesn't win the battle.
Jonathan: No. Competition tends to promote cost reduction. Walmart and fancy department stores are arguably competing equally. They specialize in different niches though. In reality there is no perfect competition and there is no way to really objectively quantify the amount of actual competition in a market. Even a duopoly may face severe competition. Quality may even be increased through granting a monopoly. That is what the patent system is supposed to do.
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