Globalization

I went to a discussion yesterday on globalization that gave me a better understanding about the issue.

To summarize,

1.  The main complaint about globalization is that developed countries can run over the culture of the developing countries with the lure of economic benefits. The counter argument is that culture is not a static thing and it evolves.  Some languages may be threatened by the universal use of English being the economic push.

2.  The major issue with globalization is its disruptive nature.  Even though a lot of people in India and China improved their lot and it can be argued that as a whole, their improvement is worth the lost of jobs in the developed countries,  it is little comfort to those who lost their jobs.

3.  Even within the developed countries, it can be argued that more new but different jobs have been created,  it is still little consolation to those who lost their jobs.

4.  Trade often operates under rules that we take for granted.  When trading is within a tight community, the social connections within the community prevents cheating and concentrating on short term at the expense of long term interests.  As this trading extends to further and further places and countries as in globalization,  the different customs and lack of concern for distant strangers requires new rules to stop short term predatory behaviour.  The realization of the need for these new rules always lag behind bad experience illustrating the need for these rules.  Therefore, globalization is a learning experience that require development of trade rules to preserve the long term interests of the parties concerned.

5.  Globalization leads to specialization and division of labour.  It encourages the efficiency of scale and drives communities and countries to concentrate on a few product and services they are good at and import the rest.  Madagascar's main export is vanilla and Coca-Cola was a major customer with the old formulation.  When new Coke was introduced without the need for vanilla, it was very disruptive for Madagascar.  Luckily when Coke changed back to Classic Coke, the crises was averted.  However, it shows how much a country's fortune can be disrupted by events it has no control of.  It makes everyone more interdependent on each other and therefore the overall system is more fragile to disruption by problems far away.

6.  Globalization leads to a bigger disparity between the rich and poor.  The very rich are benefiting from profits resulting from improved efficiencies through economies of scale.  The poor ended up competing against lower wages from developing countries.  While the average income may stay the same, there is a spreading out with the high end going much higher while the masses at the low end stagnates.  This is destabilizing for societies.

7.  The middleman very often gets more profits at the expense of the poor in developing countries.  While the  poor may increase their wages from $10 to $12, the middle man may get $200 for this change.  This is perhaps something that we have to live with.  There are still places in this world where the daily income is below $2 per day.  These are really desperate situations and if their income can be improved from $2 to $4 a day while someone out of a hundred of these get $200, so be it.  It is still a great improvement.

8.  Globalization is not just economic but mainly disruptive ideas and technology.  When the British went to India,  they were welcomed by the lower castes as the British brought with them the colonial system of government as well as the concept of people being treated equally.  This gave hope to the lower castes to break out of their lot.

9.  Someone told the story of a Canadian company that was making metal products like manhole covers, fire hydrants etc and moved the manufacturing to China many years ago because it was cheaper.  When someone visited the factory in China,  they found that the factory is a day's journey away from Shanghai in a distant village and the plant is in rough shape with workers working without the Canadian standard of safety and at very low wages.  Thoughts of exploitation comes to mind.  However, that evening,  the Canadian was entertained by the mayor and during the dinner, the mayor thanked the Canadian for having the plant there as the year that the plant opened was the first year that the town went through winter without anyone dying of starvation.

10  The Indian perspective is quite different from the western.  Call center jobs in India are considered high end careers and people train hard to get these jobs considering the attainment of upper middle class values with those jobs.  The Indian perspective to North Americans complaining of jobs being exported to India is that North Americans have unfair advantage with their big influences and can call the shots whichever way they want.

So much for now.  There is more to add.