A Literary View on Globalization*

I realize that the primary purpose of this blog is to demonstrate a full understanding of our assigned readings and to consider the effects of globalization in light of these readings. However, the idea for this post is a little different. This term, along with IPE, I am taking Caribbean Literature. Not surprisingly, much of what we read deals with immigration and post-colonialism, but last week we had the pleasure of reading the memoir/essay A Small Place by Jamaica Kincaid and watching the documentary Life and Debt (the narrator reads a considerable amount of the essay during the film).

Kincaid expresses her anger towards the corrupt government of Antigua and at the disparity between the rich, which is mainly comprised of Indians and Americans, and the poor, who are the black majority. What was unique about Kincaid was the fury she unleashed on tourists and the fact that they are only feeding into this power structure and are driving the populace deeper into poverty. That mentality is something that we really haven't considered. The people in my class seemed to side with Kincaid that tourists are holding the people back. (Not likely to change anyone's summer plans though.) To me, it seemed that Kincaid placed too much blame on the people that are consuming what the nation's economy has to offer. The problem is not with the tourists, but with the corrupt government that enabled such an oppressive power structure to establish itself. Before an economy can develop, you need the infrastructure- both physical and political, and Antigua is clearly lacking the latter. As Wolfowitz would tell you, corruption sucks and we must stop it in order for development to take place. As a tourist, one's dollar is essentially a vote of confidence in the government (kind of), but the people would be worse off if we didn't give them our dollars. Of course, the corrupt and the already rich gain the most when we spend our dollar and they lose the most when we don't spend it but the poor might not survive if we don't spend that dollar. Quite a dilemma, but one we've discussed before. I emerged from class with my beliefs unscathed.

The next class was a bit different. The film that we watched, unlike the book, was centered on the economic, social, and cultural impact of the IMF, World Bank, and WTO on the Jamaican economy. I would like to consider the economic, social, and cultural impact separately but that is not really possible, and as the film would argue- doing so would be a terrible idea. While the film did give our beloved international financial institutions an unfair shake, it had some extremely interesting arguments.

Basically, the film presented issues regarding two industries: manufacturing and agriculture. The majority of manufacturing in Jamaica takes place in Kingston in what are known as Free Zones. From what I could tell, it was just foreign companies with facilities in the Free Zone. A Free Zone is an area on Jamaica that is not technically part of Jamaica so manufacture is not taxed by the government. This is far from a free trade paradise though. The Free Zone is guarded like a prison, and the workers work under terrible conditions for long hours. (I can deal with this, their choice to take the job). The paychecks are often late and sometimes never come. Employees are let go after years of service because of minor mistakes. Now, the Free Zone is replacing its Jamaican employees with Asian women who are willing to work for even less. That is troubling to me. The Free Zone was designed to help the Jamaican people by attracting companies to manufacture cheaply. It has been used to the benefit of the corporations, but the people are not getting many benefits themselves. To me, this is disturbing. Of course, it also shows a failure to think this Free Zone through and prevent free importation of labor as well. This stinks of a race to the bottom. This situation does highlight the danger of inadvertent loop-holes, but it also begs for some sort of global labor standards. Everyone in the class felt the same on this one.

The impact of globalization on Jamaican agriculture is much more interesting. Jamaican agriculture is limited by the fact that there is a scarcity of space on the island. Also, its farmers do not have the technology and education to farm as efficiently as American farmers. As a result, their prices are higher than their American competition. To me, that sounds like a good old-fashioned case of comparative advantage. Not to my classmates and teacher. The cultural impact is undeniable as well. The farmers want to farm, and the film and the rastas in the film argue that is wrong that cheaply priced produce is preventing them from doing so. My classmates sided with the rastas even after I explained the economics to them. That surprised me. Would people rather farm and be poor than have a developed economy? That seems to be how my classmates and the Jamaicans feel.

Another part of the problem is that through their loans, the IMF has forced Jamaica to adopt many of their free-market policies. As a result, Jamaica is limited in its ability to subsidize production or tax imports. Also, they had to forgo a very lucrative agreement with Britain, their formal colonial masters, for selling bananas as a result of the loans. I am all for eliminating trade barriers, but the problem is that while Jamaica cannot impose barriers, the United States can and does. US farm subsidies benefit the American farmer, but decimate the Jamaican farmer. Since the US doesn't need a loan, it is able to take advantage of Jamaica which cannot protect itself from this predatory practice because it is poor and had to take a loan. To me, the issue is that nations that contribute to the IMF and World Bank do not hold themselves to as high a standard as they do the developing nations. As a result, the poor are taken advantage of and the rich get a little richer. Rich nations must support poor nations by supporting the free market rather than using protectionism to feed off of developing nations.

Of course, these are only a few grudges the Jamaican people hold regarding globalization and the IMF (I even ignore the IMF's destruction of the Jamaican currency). While some grudges are legitimate and others are just grudges, it is good to actually see a real example of the impact of globalization rather than vague theoretical discussion. This real life example at least seems to lend itself more towards Stiglitz's desire to make globalization work than it does to Wolf's justification of why it works.

Rogoff Throws Stones

Peter Goodman considers what characteristics Bush is looking for in a candidate to replace Wolfowitz in this article from the Washington Post. Our man Rogoff even weighs in.

"Wolfowitz was a low benchmark," said Kenneth S. Rogoff, a fellow at the Brookings Institution and former chief economist at the World Bank's sister organization, the International Monetary Fund. "I have no particular cause to be optimistic that this time the United States will get it."

Harsh.

Lethal Weapon 5 Starring Hugo Chavez

This article is to absurb to not pass along. Hugo Chavez and the tax payers of Venezuela are paying almost $18,000,000 to finance a movie about Haitian slave revolutionaries that Danny Glover is making.

What's Next?

Wolfowitz is gone, but his goal of eliminating corruption is crucial to the future success of the World Bank. This article by Sebastian Mallaby of the Washington Post argues that Wolfie's successor must go after corruption, but in a less abrasive and combative way.

In case you didn't know, the new Wilco album, Sky Blue Sky, was released yesterday. It's awesome. Don't be stingy, and throw down the extra 4 bucks to get the deluxe edition that comes with a pretty entertaining DVD.

Some Thoughts on Wolf

Wow. Wolf really hates people who really hate corporations. While he does make some valid arguments in response to the "paranoid fantasies" of those opposed to global corporations, his fierce tone detracts from his authority.

It seems like Wolf goes too far in dismissing the power of brands. Of course we buy products that are good. Of course, a company's brand name won't mean much if it is consistently puts out crappy products. But, a company's brand name can buy it some leeway in selling goods that might not be as good as its competition. People are often willing to sacrifice some quality in exchange for brand name goods. Wolf would argue, and rightfully so, that people derive value from the fact that their shirt is Polo and that makes it worth the premium price. That statement however, shows that brands do have a sort of controlling power even though it is a market outcome. Brands also benefit the companies that control them in that it raises the cost of entry into a given market. Companies that seek to enter a given market must have a large amount of capital to invest in advertising, otherwise their company will have no hope of establishing itself. In a way, a Brand causes asymmetrical information. The consumer knows about the brand name good, but may not know about its other options since smaller companies can find themselves 'stuck' under the weight of the brand name.

I don't think that there is anything wrong with branding your product, and you are foolish not to do so. In fact, the opponents of brand names have even provided companies with opportunities to use anti-advertising advertising campaigns, like No-Ad sunscreen. In the end, my beliefs fall on Wolf's side though not to the same extreme as his. I recognize that brands may cause some companies issues in establishing their product, but companies earn that brand recognition and successful companies work even harder to maintain that image. Instead of complaining about the power of brands, people should just be conscious when they make their decisions regarding what to buy. Rather than worrying if someone is reading the label on your shirt collar, buy the best shirt for you. It seems pretty ridiculous to fault corporations for establishing brand names.

We all benefit from established brands since they are a promise of quality - something that we can rely on. A US government official complained to Colombia about the drug problem in the, arguing that Colombia has an issue with drug production. Colombia made the smart response- are you sure you don't have a demand problem? (Can't remember where I heard that, some teacher, some time). The influence that brands can have is not the producer's problem, it is the consumer's problem. Shouldn't we just expect that people are reasonable enough not to care if someone looks down on them for wearing off-label socks? Let's hope so...

Quick Link

Just thought I should pass this article on from CNN. It discusses the foreign direct investment in the US from other countries, which is the opposite perspective of what we have read/ discussed in class. The moral of the story is that the United States relies on other countries just as other countries depend on us. In all of this discussion about globalization, it is good to be reminded about how we, as the hegemon, still have to deal with many of the same issues as any other nation.