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Thursday, September 15, 2011

Essay on Arguments against Globalization

According to Yergin Daniel, globalization is good for a country’s economy because promotes free trade. (p.354)  It is my opinion that the same is not absolutely true.  On one hand, it may be true that plan of George C. Marshall, the former Secretary of State, did bring about serious economic change not only in Europe but in parts of the world. (“Is Globalization Progress?”)   It may also be true that some countries have been able to take advantage of globalization.  Consider the case of China wherein in 1960, the average Chinese was expected to live only 36 years. (Dani Rodrik 4) By 1999, life expectancy dramatically changed to 70 years.  Literacy has also risen from below 50% to 89%. (Dani Rodrik 4) There was also a dramatic reduction in the poverty rates in different regions in China.   In contrast however, not all countries which opened their economies for free trading are winners.  One of the losers is Latin America.  Since it adopted globalization, it has suffered inequality, enormous volatility and stagnant economic growths.  (Dani Rodrik 5)  Another country is that failed to compete in the international market is Argentina which, according to Rodrik (2007), became a victim of an abrupt reversal in “market sentiment” by the end of the 1990s.  Also, since 2000 Canada’s economy has been “de-globalizing” by its reallocation of its resources from export industries to purely domestic sectors.  Statistics shows that since 2000 when Canada’s total exports was equivalent to 45.5% of GDP, it has slowly dwindled to just 36.5% in 2006.  (Jim Stanford 1)            It is my contention that trading systems in globalization is not as free as the proponents of globalization say it is.  On the contrary, the winners in globalization are the wealthy and industrialized countries which have technology and equipment that can compete in any market. On the other hand, products of Third-World Countries cannot compete with the products of the First-World Countries. They are always at a disadvantage because of the inherent desire of every country for self-preservation.  Yergin Daniel’s statement therefore that the industrialized countries need to reduce barriers to imports from poorest countries to make globalization work will not become a reality. (p.354)  

Proponents likewise argues that globalization leads to more goods and services leading to lower costs and improved standard of living for the people.  Yergin Daniel states that globalization offers the most significant means of reducing poverty since it relieves hardships, helps improve health, education and national infrastructure. (p.353) On the contrary, globalization has only resulted in creating artificial needs for the Third-World countries.  It has made people in poor countries aspire for things that are alien to them.  In this regard, I agree with the statement of Helena Norberg-Hodge that people end up “rejecting their own ethnic and racial characteristics – to feel shame at being who they are.” (p.3) 

Not only that they rejected their own culture, they also have developed desire for material needs to the point that they even tolerated abuse.  Although it is true that with the mass production of goods, the cost of goods have been reduced, it is at the expense of the working class who was forced to work on factories for wages below the minimum allowed by law and for harsher, and even extreme, working condition.  Consider the case of Nike Inc which had factories in India during the 1990s.  In its desire to lower the cost of its goods to compete in the international market, they gave their factory workers salaries below the minimum wage set by law and exposed them to harsh working conditions.  It was even discovered that the company employed workers below the age of 16.  The phenomenon of exploitation of labor happens even within the United States.  Consider the case of Wal-Mart one of the biggest retail stores in the world which is known for offering rock-bottom prices of its goods.  In return, the company pays an average wage of $9.68 an hour which is definitely not enough for the employees to maintain a decent standard of living.  (Gregory Heires) There have also been complaints that the said company even compels its employees and managers to work overtime without paying them additional compensation for overtime work.  The employees do not have adequate health care insurance and other benefits. 

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Instead of globalization aiding in the improvement of lives of people in Third World countries, it has in fact become instrumental in the enslavement of the working class who because of their abject state of poverty were forced to accept the terms and conditions of employment imposed upon them by their employers.  The result is the further degradation of the labor sector. 

The proponents also argue that because of globalization investors are attracted to countries that have allowed free trading with other countries.  According to Yergin, globalization attracts long-term foreign investment resulting in the creation of jobs and transfer of technology to Third-World countries. (p.323)  They say this is good for Third-World Countries which can experience economic growth as a result of its influx of investment.  To a certain extent this is true because some companies have transferred its non-core functions to countries like Vietnam, India, and Philippines.  According to Yergin, countries like India are experiencing investment because of the influx of call center companies.  (p.354) The outsourcing of non-core functions have helped generate jobs to these countries resulting in the reduction of unemployment rates.  However, it is also true that the jobs being offered by call center companies are not permanent.  Oftentimes these jobs are offered only for casual employment making job security an issue in these countries.  Thus, the improvement in the standard of living being offered by these call center companies or outsourcing companies is only temporary.  Thus, contrary to the statement of Yergin, increased flow of investment does not necessarily benefit Third World countries. (p.354)  Job insecurity is also felt not only in Third World countries but in developed or industrialized countries as well.  It bears stressing that the jobs previously being performed by American citizens are slowly being transferred to countries like Vietnam, China or Philippines because of cheaper cost of labor.  This trend of loss of jobs will continue so long as companies are allowed to transfer their operations to Third-World countries.

One example is Wal-Mart which initially conducted a massive public relations campaign it called the “Buy American” campaign.  However, in view of its desire to compete in the domestic and international market it had to maintain its low prices.  To maintain the prices of its goods very low means that it has to lower its operating expenses.  Wal-Mart had to look for other suppliers which offered products for a lesser price than the suppliers in the United States.  Eventually Wal-Mart began looking at other countries for the cheapest source of production. In 1995, Wal-Mart said that 6 percent of its total merchandise was imported.  Today, Wal-Mart is considered the largest importer of Chinese-made products in the world, buying $10 billion worth of merchandise from several thousand Chinese factories. (Jim Hightower)  Indeed, gone were days when people had stable and permanent jobs.  Globalization has caused job insecurity among employees all over the world.  In this regard, I agree with the statement of Helena Norberg-Hodge, that globalization only results in environment decay, poverty, homelessness and unemployment. 

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