A Tale of Two Globes

by Lila Rajiva

The statistics – if they can be trusted - tell a Jekyll and Hyde story about the new world of globalization: On the Jekyll side, India has almost a 100,000 dollar millionaires and ranks 8th in the world in the number of billionaires. And, the net worth of these Indian billionaires is second only to those in the U.S. Meanwhile, on the Hyde side, Indian per capita GDP, according to the U.N., is below that of Nicaragua or Indonesia. The country might have been the 15th largest donor to the World Food Program in 2005, but over the last decade, it has also added more hungry people to its population than anywhere else in the world. Hunger increased in India, when it was falling even in Ethiopia. And while India exports grain to Europe, it is to feed Europe’s cattle at prices lower than Indians at home get.i

One used to hear that trade liberalization would bring $500 hundred billions dollars worth of benefits to the developing world.ii

Now, more modest figures of $100 million, or less, are cited. And people are beginning to admit that as trade increased in the 1990s, most of the gains were concentrated in the advanced economies or newly industrialized ones. Almost half of the more mixed agricultural economies actually contracted. Along with the growth of the GDP went the growth of poverty for some, and for others – notably China - growth came from policies that defied the neo-liberal prescription.iii

Still, other things being equal, freeing up trade is usually more often a good thing than a bad. Studies of trade liberalization proposed under the Uruguay round of multilateral trade negotiations, for instance, showed that it would move agricultural production from costly pesticide-intensive European farms to cheaper manure intensive farms in the third world.iv

And trade restrictions aren’t always as benign as they’re said to be. They can hurt communities and the environment just as often as liberalization. In the early 1980s, for instance, the Japanese agreed to restrain the export of their cars to the U.S. The object was to prevent their small compact models from competing with American cars. In fact, the restrictions only ended up driving up the imports of gas-guzzlers because the bigger cars gave the manufacturers a bigger profit margin. The prescription turned out to be worse than the problem.v

Of course, we doubt if many prescriptions are really intended to solve problems. People certainly believe they are when they propose them. In reality they are more in the nature of placebos than rational propositions. People repeat them like Hail Mary’s, because it makes them feel better.

We hear from followers of Maharishi’s Transcendental Meditation that muttering OM raises our brain potential. Other groups have other ways of confronting the great unknown. Confucians call it the Tao or Dao….the Way….and tell us that we should treat it reverently. Wall Street also treats the Dao reverently…the Dao Jones. And it too has a mantra it likes to repeat – Dow 12,000…Dow 24,000…. Dow 36,0000….

Most of our beliefs about the economy – and of everything else - are of this nature. They are forms of self-medication, superstitious lip-service we pay to the powers of the dark…like touching wood, or throwing salt over your shoulder. We repeat slogans to ourselves, because everyone else does and because it is not so much bad luck we object to as being on our own. How flattering to say you lost “a bundle” in semi-conductors! It makes you feel - momentarily - like a Goldman banker or a hedge fund manager about to spring for a fetching blob by Robert Motherwell. We might not know a pixel from a byte and our last acquaintance with a chip might have been at Wendy’s, but losing in the stock market gives us plenty of company. Whatever else it is, it’s not a lonely proposition. Why it is that losing your life savings should be less painful if you have lost it in the company of one million other idiots, we don’t know. But man is first of all a herd animal and fears nothing more than not being part of the herd.

We notice, for instance, that when Americans in Detroit lose jobs to other Americans in California, they might grumble a bit. But by and large, they accept it as part of the nature of things. They move, or retrain or change jobs. But when they lose their jobs to Japanese in Osaka or Indians in Bangalore, then a cry goes up. Unfair trade, howl the trade unions; race to the bottom, scold the social activists; yellow…or brown peril, shriek the xenophobes and racists. And the same thing happens on the other side of the globe. Indian companies have been drying up and polluting their own rivers for the last fifty years without too much attention from the world press. But let a multinational do it and it rouses the wrath of the political class – many of whom until recently were partners in crime with the old polluting companies. Thundering speeches, shaven heads, strikes, bandhs, and civil disobedience become the order of the day. We do not deny that corporations and corrupt bureaucrats go together like wiener and schnitzel. But we notice that people tend to be selective about exploitation. They seem to prefer being ripped off by people of their own kind. It’s all about the herd.

Unfair trade is yet another of the shiny slogans that festoon the spectacle of globalization like tinsel on a pole dancer. How can different regulations and practices in different countries constitute unfairness? Isn’t it the essence of trade that different countries have different things to offer – whether cheaper labor, or better technology, or more bountiful natural resources, or more welcoming business environments? Isn’t it the reason why trade takes place in the first place? If all countries had exactly the same things to offer each other, there would be no reason to trade at all. But what “fair” trade advocates are really advocating, of course, is unfair trade! They want to make sure that their foreign competitors divest themselves of the very advantages that they bring to trading. It is as though Joe Frazier were to find it unfair for Muhammad Ali to “float like a butterfly” or “sting like a bee”!

Race to the bottom! – goes the cry. The idea is that globalization allows corporations to seek out the countries with the weakest environmental regulations and lowest labor standards, thereby making other countries reduce or even undo their regulatory standards to keep up. The nightmare scenario is one in which an endless horde of starving third world slum dwellers drag first world wages down to their level; where polluted third world cities set the standard against which first world cities have to compete.

Quite a nightmare. But is it reality or simply something that haunts the delusions of the world improvers? Econometric studies have shown that environmental regulations do not actually deter industries from relocating wherever they think they have other important advantages. In fact, there are plenty of reasons why there may actually be a race to the top. Firms want to have standardized procedures across their different locations, so they will tend to adopt the highest standard they are subject to… across the board. And they will tend to anticipate a move to higher standards – which are usually also more productive -- and they will want to stay ahead of the curve so as not to tie themselves to obsolete technology. And, finally and importantly, they will want to safeguard their reputation with the public for environmentally sound operations.

Today, there are only two acceptable positions on globalization – it is a Very Good Thing. Or, it is a Very Bad Thing, but the truth is slogans simply don’t do the trick. Each problem has to be thought through in its own terms. Globalization is not only neither entirely good nor entirely bad, it is not even one single thing. It is several. It is about free trade and costly subsidies, about gourmet water and junk food ….hard capital and soft drinks -- all of which have their own reasons for being and their own consequences, and all of which are mislabeled, poorly understood, and constantly confused.

  • i “The Anatomy of a Tiger: India High and Low,” P. Sainath, The Hindu, November 12, 2006.
  • ii “Globalization, Trade and Economic Security,” Robert Zoellick, Remarks at the National Press Club, October 1, 2002. www.state.gov/e/eb/rls/rm/2002/14014.htm.
  • iii “Rebel With A Cause,” Eyal Press, The Nation, May 23, 2002. Of course, Chinese growth has not been without its own problems.
  • iv According to the GATT Annual Report, Richard Blackhurst and Kym Anderson, Geneva: GATT, 1991, cited in In Defense of Globalization, Jagdish Bhagwati, New York: Oxford University Press, 2004, p. 138.
  • v Ibid, p.139.
 published at Endervidualism on February 9, 2007

Lila Rajiva resides in Baltimore, Maryland, has taught at the University of Maryland and freelances as a journalist. In addition to Endervidualism, find her work also published at CounterPunch, Dissident Voice, doublestandards.org, and MRZine. She has written the much talked about book: The Language of Empire: Abu Ghraib and the US Media (Monthly Review Press, 2005).