Point: The Threat of Globalization



Point: The Threat of Globalization

This article presents an argument on the threats of globalization. Like the Industrial Revolution, the revolution of worldwide corporate dominance threatens the stability and sovereignty of many nations, as they cope with the onslaught of multinational corporations seeking cheap labor and new markets for goods. Sweatshops and other poor working conditions are manifestations of this trend. In the beginning of this fair trade movement, such goods were primarily the province of natural foods stores, including coffee, chocolate and crafts products. But as awareness of the exportation brought about by globalization has grown, even mainstream stores and companies are now taking note.

Thesis: Like the Industrial Revolution, the revolution of worldwide corporate dominance threatens the stability and sovereignty of many nations, as they cope with the onslaught of multinational corporations seeking cheap labor and new markets for goods.

Summary: This article presents an argument on the threats of globalization. Like the Industrial Revolution, the revolution of worldwide corporate dominance threatens the stability and sovereignty of many nations, as they cope with the onslaught of multinational corporations seeking cheap labor and new markets for goods. Sweatshops and other poor working conditions are manifestations of this trend. In the beginning of this fair trade movement, such goods were primarily the province of natural foods stores, including coffee, chocolate and crafts products. But as awareness of the exportation brought about by globalization has grown, even mainstream stores and companies are now taking note.

Like the Industrial Revolution, the revolution of worldwide corporate dominance threatens the stability and sovereignty of many nations, as they cope with the onslaught of multinational corporations seeking cheap labor and new markets for goods. Sweatshops and other poor working conditions are manifestations of this trend. Only in the late 1990s did Americans begin to realize that the purchase of cheap imported goods not only eliminates American jobs; it also reflects social, environment and economic dislocation among foreign countries. The cultural and economic hegemony of giant corporations around the world is causing a backlash of anti-corporate, anti-American sentiment that could threaten both U.S. security and the very future of free international trade.

Introduction

In the late 1800s, the Industrial Revolution created a small but incredibly wealthy group of business leaders in the U.S. The robber barons, as they came to be known, were primarily the Getty, Rockefeller, and Morgan families, who controlled steel, oil, railroads, newspapers and other businesses.

They came to wealth largely by plundering cheap natural resources, with little heed to the environment consequences, and exploiting cheap labor, including child labor. They raked in $50 or more per hour in profits, while their laborers were paid 22 cents per hour, a ratio of more than 200 to one.

Eventually, the U.S. government and workers both fought back against this corporate domination. Monopoly enterprises were forced to disband, the government instituted income taxes and labor organized into unions to fight for better wages and safer working conditions. U.S. corporations were also forced to meet reasonable environment standards for domestic operations.

At the turn of the twenty-first century, this cycle is repeating itself on a global scale. Today, the cheap resources, lax environmental regulations and exploited labor belong to developing countries in Asia, Latin America, South America or Africa.

The Rich Get Unbelievably Rich

Today's robber barons hide behind cloaks of corporate secrecy. Having learned from the misfortunes of the corporate kings of a century ago, they are generally adept at hiding their wealth, both from public scrutiny and from the Internal Revenue Service (IRS). The average CEO of a large American corporation made about $12 million per year in 1998. With average employees at many such corporations making little more than $30,000 per year, the modern ratio of CEO-to-employee salaries is often around 400 to one. As outrageous as this may seem, for many American corporate leaders, it is not nearly good enough. By exploiting cheap foreign labor, wherein workers may earn little more than a few dollars per day, or perhaps as much as $8,000 per year, CEOs can increase that ratio to 1,500 to one. Those few Americans that held substantial amounts of stock didn't complain during the 1990s, since what was left after upper management skimmed off millions in salaries, perks and stock options, was usually still enough to maintain stock prices.

Not surprisingly, given the increasing disparity between costs of production and prices of goods, multinational corporations can swallow their competition as they become ever larger. Of the 100 largest economies in the world as of 1999, only 51 were countries. The other 49 were corporations, including General Motors, DaimlerChrysler, Ford Motor and Wal-Mart Stores all in the top third, well above countries such as Greece, Poland, Finland, Portugal, Chile and New Zealand.

The World Trade Organization

The flagrant greed of corporate leaders has come under increased scrutiny due to the three-year collapse of the U.S. stock market that began in 2000.

However, the wake-up call for opposition to globalization came in 1999, as protestors from around the world gathered in Seattle Washington to protest the World Trade Organization's (WTO) third ministerial meeting. The WTO sets trade rules for its 134-member nations. The history of the organization is one of ignoring consumer rights, environmental protections or even local rule as it strives to make the world a friendly place for multinational auto and oil companies to do business, or for textile firms and others to exploit cheap manual labor.

In November 1999, even as corporate greed was reaching a crescendo in the U.S. stock market, about 100,000 protests marched in Seattle in a successful effort to disrupt the trade conference. Taken by surprise at the magnitude of the protest, police eventually resorted to riot-style tactics, using tear gas, pepper spray and plastic bullets to disperse the protestors.

The IMF and World Bank

Other protests have focused on the International Monetary Fund (IMF) and the World Bank, as in Washington, D.C., in April 2000.

Both of these organizations are holdovers from reconstruction efforts that followed World War II. Created in the Bretton Woods Meetings in 1944, the World Bank was meant to aid in the rebuilding of Europe, while the IMF was meant to stabilize currency exchange rates between war-torn Germany and other countries ravaged during the war. As often occurs with large bureaucracies, both organizations took on a life of their own after the rebuilding of Europe. In this case, as tools to force small developing nations to accede to the demands of industrialized nations.

The two groups arranged for developing countries to receive billions of dollars in loans, but only if they followed Western-style rules of capitalism and social structures, including allowing foreign investment by multinational corporations. Countries in Latin America, including Peru, Chile, Bolivia, Brazil, the Dominican Republic and Argentina, are still struggling with the effects of these policies on their economies and currency. In Africa, the situation is often even worse, as multinational investment has meant little in the way of better living conditions, healthcare or even proper food and shelter in many countries.

McDonald's, Nike and Starbucks

Globalization also results in a loss of local culture. In some ways, this equates to the "one world" utopia that many anti-war activists have long desired. They just didn't realize that the one world would not be lead by elected representatives, but rather by corporate scions that often have little if any concern for the health and well being of people in the countries in which they do business.

American and British music is heard everywhere around the world. American films and television make the world one giant audience for the latest releases. The world comes together, not in peace and understanding, but for the orchestrated violence and commercial marketing of Super Bowl Sunday.

Fighting Back Against Homogenization and Foreign Rule

The 1999 "Battle in Seattle" showed that corporations were being put on notice, just as the robber barons were at the turn of the twentieth century. In Mexico, the Zapatistas declare "The world we want is one where many worlds fit."

Much of the resistance toward globalization remains split. On one side are environmentalists and other activists who favor a more equal playing field between countries, while still generally supporting free trade. On the other side are labor activists who often favor more protectionist tactics, such as those who call for tariffs against foreign steel imports into the U.S., or who continue to rail that the North American Free Trade Agreement (NAFTA) steals jobs from American workers. Both sides have a common greater goal of improving conditions for workers, be it at home or abroad, so that people can earn a living wage and not be forced to struggle to survive, even as their employers continue to hoard cash in their offshore bank accounts.

Specific Solutions

One effort that seeks to correct the unfair labor conditions typical of globalization is the introduction of certified "fair trade" goods into American markets. These products have to be produced under safe and reasonable labor conditions, often with stable minimum price guarantees. They do not have to be made in developing countries, as even many American farmers are turning away from commodities markets that favor middlemen and corporations. Instead, they are taking stable price guarantees for certified fair trade goods, typically from organic farm production.

In the beginning of this fair trade movement, such goods were primarily the province of natural foods stores, including coffee, chocolate and crafts products. But as awareness of the exportation brought about by globalization has grown, even mainstream stores and companies are now taking note. For example, Starbucks stores now sell fair trade certified coffee.

The largest U.S. clothing retailers, including the Gap, Wal-Mart, Nike, and Tommy Hilfiger, are also coming under increasing scrutiny for their goods made with sweatshop or otherwise unfair labor practices in countries such as Thailand.

Gap stores also have operations in Bahrain, Argentina, Brunei, Burma, Costa Rica, India, Indonesia, Israel, Korea, Kuwait, Lesotho, Madagascar, Nepal, Sri Lanka, Turkey and the Ukraine. Obviously, all it would take is for one such huge company to guarantee fair trade and labor practices in order to make a difference to thousands, if not millions, of workers in its supplier countries.

Ponder This

1. What similarities does the author cite between the Industrial Revolution and globalization?

2. In your opinion, is the CEO-to-employee salary ratio a meaningful indicator of worker exploitation? Discuss.

3. According to the author, how have the roles of the World Trade Organization and the International Monetary Fund changed over time? What effect has this change had on globalization?

4. In your opinion, what are some of the opportunities and challenges of "fair trade" as a solution to worker exploitation?

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