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.

Go Dawgs!

Props to UMBC for its stunning upset of the 7th seeded Terps in the first round of the NCAA lax tourney. Will Catonsville be the home for the 2007 champs? Only time will tell.

Some Tough Competition

The two articles from the Washington Post - this one by George Will, and especially this one by Marcela Sanchez - got me thinking about something. What would happen if the World Bank and the IMF were not alone? What if there was competition? More likely than not, Chavez's Banco del Sur will not be able to garner much importance on the world scale (though oil money can make magic happen). Still, even the threat of competition will encourage more efficient operations at the global institutions. Sanchez quotes Liliana Rojas-Suarez as stating that there is a "sense of complacency" right now at these organizations due to the comfort provided by the current international economic conditions. One of the benefits of competition would be to launch the IMF and World Bank into a state of almost perpetual crisis since even in the fattest times, they will be concerned with outpacing their rivals.

This competition would be good for the countries contributing to the fund since they can choose to work with a particular bank. Also, since the countries will be able to choose, it is more likely that a wider range of interests will be represented across the two banks than by the current single bank. That means that more countries will loan more money to the institutions. Some may argue that this competition will result in fewer loans to the poorest countries than the single non-competing bank. Still, countries are not value-blind when they make the decision regarding which institution to back. Also, multiple institutions will likely use different methods to foster economic growth, which will shed light on which methods are effective and which methods should be done away with.

Of course, rival banks will have its own share of problems. There are surely some benefits to having a single entity in charge of international finance, such as the view that the single non-competing firm is more stable because it is so large, and the benefits of having a good reputation. The reputation of the World Bank and the IMF is worsening every day because its actions clash with their mission and their actions don't always help to improve situations. The fact there is no competition could be partially responsible for this inefficiency.

Basically, a little competition would do the World Bank and IMF good.

Quick Link

Just wanted to post this article about the EU. It gives a brief overview and analysis of the perceived benefits of EU membership, and then considers whether the EU has stuck to its egalitarian spirit. Not surprisingly, considering the source, the author concludes that the EU is holding Europe back. Still, a pretty interesting read.

A (Bio) Pirate's Life (is not) for Me

Inside their rough, sun burnt and jaundiced skin, pirates are terrible people. They rob people and generally wreak havoc, it's risky business. The pirates of the high seas, however, are no match for the bio-pirates of biodiverse environs around the world. It is definitely despicable to rob merchants who are simply trying to import their fine European booty into the Caribbean islands, but at least they are clear in their cruel intentions.

For the peoples in developing countries, it is mission impossible to prevent and control the outsiders, researchers from pharmaceutical corporations from taking its natural resources and traditional cures and turning them into the color of money without any reciprocal benefit for the countries that provide them. What makes this especially troubling is that because US patents must be recognized in foreign countries due to TRIPs, the people of the developing nations are expected to pay US premiums for the drugs. The firm(s) responsible for this piracy benefit from assymetrical information and can make all the right moves in establishing their patents simply because only a minority report the medicinal benefits of the local fauna because they do not have the means to do so. The corporations can succeed in doing this because US patent law grants patents on the basis of what is novel to the US, and I believe that policy is not appropriate. While the US was born on the fourth of July, this is a globalized world and even the patent department must recognize that other nations and peoples have had knowledge long before that. While patent protection is crucial, we must be mindful to only provide that monopoly protection to developments that are truly developments, and not just presentations of something that many people already know

In some corporations, such as Novartis, a few good men are making all the right moves by producing, marketing, and distributing a derivative from the qinghao tree which has traditionally been used as a treatment for malaria at low to no cost to people in developing countries. Bio-piracy is not something we should continue to accept. While bio-piracy may not be preventing people from obtaining medication for AIDS, it is still related to the issues caused by the current situation of international patent law. We must not stand by with our eyes wide shut while people are robbed of what is rightfully theirs by corporations who do not give a care to the people they rob.

In summary, this is what makes the men of bio-piracy far and away worse than the peg-legged, rum-swilling, arrrrghh pirates of yesteryear.

All Sorts of Legit

Globalization, for many, is something that is both misunderstood and feared. While that fear is largely the result of that lack of understanding, there are many legitimate reasons to be wary of the global marketplace that the WTO is creating. Singer addresses 4 primary complaints against the WTO and, more generally, globalization. These concerns are that economics is the only consideration, that national sovereignty is sacrificed, that the WTO is undemocratic, and that this has and will increase inequality. The one concern that is lurking underneath, which Singer addresses, is legitimacy. For people to buy in to the WTO, they must trust that the WTO's actions match up with its words. Just as it is necessary for American corporations to trust the political, financial, and legal structures in other countries before the corporations is willing to do business in that country, the same holds true for the WTO. While the WTO does not need the support and trust of the citizens of the world since it already has the allegiance of the countries themselves, in order for the WTO to effectively move toward the more fair, globalized economy that it desires, it must have the enthusiasm of all people.

The WTO must be legitimate in that people must be able to understand exactly what the priorities and strategies are. When people demand that the environment or some other non-economic item be given substantial consideration, the WTO must act in accordance with the way it responds to those criticisms as well as to what its charter documents state that it will do. The best example of this is the product v. process policy. While the WTO claims that it will not interfere with a country's attempts to protect the environment as long as it holds foreign and domestic goods to the same standards, that has simply not been the case. While the WTO argues that a governmental regulation regarding process could be used as a protectionist measure, it is completely negating its professed devotion to environmental concerns. While a government could use a process restriction to its advantage, it is more than likely that the process is simply morally reprehensible. One would hope that the WTO policy makers would be intelligent enough to determine if the process restriction falls into the category of legitimate law for a legitimate concern, or a veiled attempt to favor domestic goods. The people, rightly or wrongly, are making that judgment about the WTO. Rather than being honest, it is saying the right things with no follow through for its own benefit; a protectionist measure of its own.

Another factor that puts many people off about the WTO and international organizations in general is that, as Singer states, it regards a government as legitimate as long as that government is in power. This once again marginalizes the importance of the process. Whether a government is democratically elected or it run by an Idi Amin, corporations and organizations are generally going to recognize and trade with the government. While it is impossible for a company to resist the urge to sell when a market exists, it is within a government's power to impose trade embargoes or take other steps to punish 'bad' governments and prevent them from wrongfully taking advantage of resources that belong to the people rather than a general that took power in a coup. This is where international organizations can prove their merit to their detractors, by being proactive and showing that there are values at the core of the organizations. Without being recognized as a legitimate entity, whether it be a government or a trade organization, that body will never be respected unless it is recognized as legitimate by the people it is meant to represent.

First Post

In the first chapter of his book One World, Peter Singer poses the question "To what extent should political leaders see their role narrowly, in terms of promoting the interests of their citizens, and to what extent should they be concerned with the welfare of people everywhere?" Now, the government’s answer to that question seems to be that its citizens are the only people whose interests they should protect. One could argue that our current involvement in Iraq and Afghanistan represent a deviation from that allegiance to the American people, but it is for our safety that the government took military action. The fact that the US government only acts in the interest of its citizens is not a failing on the government’s part, but on the citizens.

The American citizens elect politicians to represent their views. The politicians will have very short careers if the decisions they make and the legislation they support while in office conflict with the views of their respective constituencies. While the politicians themselves receive the brunt of the criticism from human rights activists and other groups that fight for the good of the entire world rather than just their country, it is the citizens who are responsible for this shortsightedness.

For globalization to succeed, as Singer points out, we must get passed our nation-state mentality and adopt the view that all the peoples of the Earth are one. Of course, adopting that mentality may mean that some of our fellow Americans will experience poverty, at least temporarily, as the economy adjusts to the changes that this global mentality entails. Still, it is up to us as Americans to embrace this change and demand that our political leaders also adopt this global ideology. While this change is coming, it is more than likely that Americans will prefer to isolate rather than integrate. For the United States to be a leader in globalization, people must learn about the benefits of the changes rather than be fearful of change itself.