Cameron Corbin

Essay 2 Globalization

Tuesday, November 03, 2015

“Globalization has produced a new of level of interdependence among us. The economy and

multinational supply chains do not abide by political boundaries. A computer ordered in Brazil is

designed in California and assembled in several other countries. Economic integration was the first

strong evidence of a new era.”(Eduardo Paes, Mayor of Rio de Janeiro.) It truly is a new era in the long

history of human achievement and many of the great technological advancements would never have

been able to succeed without the help of global trade and increased networks of communications.

Unfortunately, the global markets are what can be described as a game, with the more powerful players

such as the United States, members of the European Union and other first world countries being much

more powerful and controlling most of the game board while the poorer more developing countries sit

at large disadvantages with little control. These steep differences have many people calling for trade to

be fairer; tipping the balance in a way that gives the developing countries a chance to actually compete

in the global markets against the larger players. The hope is that these poorer countries will better

themselves in all aspects resulting in higher standards of living, lower mortality rates due to disease and

illness, and more stable governments. As with all complex political issues there are strong

disagreements among economists on which way is the correct way to conduct trade so that both parties

walk away happy rather than one party feeling as if they were being taken advantage of. Right now the

four main arguments for the best way to conduct trade are Free Trade which is the total lack of

regulation and restrictions on trade that occurs around the world, Developmental State Fair Trade which

allows poorer developing countries to have looser standards so that they can compete and grow in the

global market, Global Standards Fair Trade which is the advocation of paying a fair wage to workers in

developing countries which will help improve local sustainability, and finally Economic Nationalism

which emphasizes complete domestic control of the labor, economy, and growth of capital even if

restrictions and tariffs are needed to do so.

In Russell Roberts’ book, The Choice, he paints a lively tale of a ghost discussing American trade

with a 1960’s American television manufacturing executive and in a similar vein to what happened in the

famous movie It’s a Wonderful Life, showed what the world would look like without free trade;

technologically stunted and with fewer choices and damaged horribly under a policy of protectionism.

The main point of the book was to show that the best choice a nation can make to insure that it has a

bright future is to support the idea of the “roundabout way to wealth.” What this means is that it is not

efficient for a country to manufacture everything that they need and that by trading with other

countries freely, both parties end up satisfied with the deal. For instance, one country could specialize in

production of medicine and focus on growing that industry while another country would focus on

production of rubber and by trading with each other, both countries end up with more resources and

wealth than if they had become isolationist and produced everything that they needed themselves.

Another benefit that grows from this idea is that there will be more choices available to the consumer

and as a result companies will have to compete with each other overseas in order to sell to the customer

which increases innovation and technological advances benefitting everyone equally. While total free

trade does sound lovely at face value, there are a few weaknesses of the idea. Firstly, having zero

restrictions on trade will have many companies moving their means of production to developing

countries in order to better compete in the global markets leading not only to a loss of jobs in the

domestic market but also not improving the economic situation of the countries where the factories are

located as the workers are still paid incredibly low wages. While there is the argument that those who

were laid off could always find a new job and that the poor factory workers are at least making

something rather than nothing; however in the pursuit of fairness, absolute free trade simply does not

hold up. The next argument of fair trade was developed by a South Korean economist named Ha-Joon-

Chang and is aptly named “developmental state fair trade” after the idea that states that were late to

industrialize leading themselves to heavily invest into the most promising industrial sector that will have

the greatest chances to spillover and improve society as a whole.

Developmental states are very different from regulatory states such as the United States that

governs the economy by using regulatory agencies that set standards in order to protect the public

against abuses of market power including monopolies and predatory trading. Collective goods are also

provided such as public education and national security that otherwise would not have been supplied

freely by the market. Unfortunately, many developing countries can’t adhere to the high standards set

by first world countries simply because they don’t have the economic resources to do so. The theory of

developmental state fair trade addresses this very issue. Chang states that making poorer countries

have the same safety standards and protection in the markets against monopolies actually holds the

countries back and worsens the lives of the citizens rather than improving them as is the goal of

regulatory states. By allowing developing countries to have looser regulations and restrictions they are

able to build up industry at a much greater rate and can compete in the global marketplace. Chang sums

up the idea of forcing expensive regulation as a vivid metaphor of “kicking a ladder away” from

developing countries showcasing how unfair it would be to developing nations. As a lover of the

environment and worker rights, I simply can’t agree with Chang on his viewpoint. By allowing factories

to employ sweatshop conditions, low wages, and buildings that are fire deathtraps, all the while

destroying the local environment from pollution due to lack of environmental regulation, all in the name

of improving the economy simply does not sit well with me. This theory is supposed to increase the

economy and as a result the living conditions for citizens but in reality the rampant increase in pollution

will do the exact opposite, with the best example being the smog in Beijing cutting off almost 5.5 years

in the lifespan of the average citizen (CNNMoney). This is not fair at all and in a way is even worse than

100% free trade. Thankfully however there is another theory that addresses the economic plight of

developing countries called the “global standards fair trade.”

This theory states that the best way to ensure that developing countries are truly being helped

to grow economically is to advocate for the payment of higher prices for exporting the products

produced as well as higher environmental and social standards. By increasing the transparency and

respect by both parties a greater equity in the global trading market is achieved. “Currently items such

as honey, tea, wine, coffee, cocoa and many other materials are being traded globally, marked with the

seal of approval from one of the four international fair trade networks”.(Fair Trade USA) This is a great

win-win scenario as workers are paid fair wages and not subjected to intolerable working conditions.

The purchaser of the products, while they pay a slightly higher price, will be able to feel a strong sense

of ethical pride in being able to directly help someone in need. While there is the argument that this

theory will not last as it can’t compete with the much cheaper options, it falls apart simply due to the

staggering amount Americans already donate each year to charities, topping 358 billion dollars for 2014

alone. (Giving Statistics) Most of these contributions are given expecting nothing in return, but if the

idea that one can receive goods used every day for slightly more and all of the proceeds go to charity as

well, the idea will catch on like wildfire and will produce real results. At the same time of improving the

economy, the environment is helped by avoiding aggressive expansion of dangerous factories that belch

out toxic chemicals and in return is another added benefit to the citizens under the Fair Trade theory.

While the past three theories have dealt with some sense of global trade, the last theory focuses on a

policy of isolationism and is named Economic Nationalism.

Economic Nationalism is heavily supported by Lou Dobbs and states that a nation should

emphasize a strong control over their economy and work to improve issues at home rather than

improve problems abroad in other countries. Dobbs treats the global market place as a zero sum game

in which every worker that we lose with a plant closing and moving to a foreign country is another

defeat for America. Dobbs would see that the most important issue is the shrinking of the middle class

due to outsourcing and would scoff at the idea that we should even be remotely concerned with the

wellbeing of foreign workers before our own. Dobbs would disagree strongly with Roberts’ unlimited

free trade idea and state that the heinous act of destroying the lives of the working middle class, just to

appease shareholders by cutting costs would in no way be fair or even ethical. Dobbs sees the world as

dog-eat-dog and because of this mentality, wants to always focus on one’s own country before any

other, even at risk of destabilization and collapse of developing countries due to lack of outside help

from stronger and more developed countries. I personally strongly disagree with Dobbs and the entire

idea of economic nationalism. We can’t be a closed off isolationist regime such as Japan pre-1860s or

North Korea today and avoid economic contact with other countries all together. While it is unfortunate

that some companies are moving factories, and as a result workers are losing their jobs, but in a global

marketplace economies evolve and the saying “adapt or die” comes into play. Our own economy has

moved from a focus of manufacturing to a service-based economy and as a result the types of jobs

available are changing at a more rapid pace. Workers need to adapt by either gaining more education or

switching job fields. By being so caught up in the numbers game of unskilled factory workers being laid

off you risk falling into the trap that Dobbs has; completely ignoring the plight of workers around the

world that need much more help than our own middle class.

These four theories are incredibly different with strengths and weaknesses but they all address a

similar issue; how to make life for the citizens around the world better and make the global marketplace

as fair as possible. I personally am incredibly biased towards this issue and would agree that the Fair

Trade theory is in fact the best course of action as it addresses the issues of protecting the environment,

improving working conditions, paying a fair wage, and being able to count as a charitable donation for

members of richer first world nations. However with Fair Trade only accounting for about 80 million

dollars of trade in 2011, it would be very difficult to scale the current system up to encompass the entire

globe. (How Fair Trade Works) Although I am biased toward environmental issues, I am also a realist and

so really the best course of action that would be able to actually apply to the trillions of dollars of trade

that goes on annually, a mix of all four theories is really the only solution to producing the fairest trade

possible. We need free trade to help with innovation and increase efficiency but also need to focus on

slowing down the deterioration of the middle class and loss of jobs as well. For developing countries,

they need to have a little bit of leeway when it comes to regulations and standards set by richer nations

but at the same time they need to support their citizens by not destroying the environment and paying

living wages as well as providing a safe workplace. By taking a moderate position on all four theories we

can help developing countries with improving their economies and at the same time help improve our

own. “We are all in this together. We will all make it or none of us will make it. If everyone cleans up

their act except one big ole country, it isn't going to work.” (Ted Danson)

Citations:

"Eduardo Paes." BrainyQuote.com. Xplore Inc, 2015. 8 November 2015.

http://www.brainyquote.com/quotes/quotes/e/eduardopae630298.html

"Fair Trade USA." Products & Partners. Fair Trade USA, n.d. Web. 08 Nov. 2015.

<http://fairtradeusa.org/products-partners>.

"Giving Statistics : Charity Navigator." Charity Navigator. Giving USA 2015, n.d. Web. 08 Nov. 2015.

<http://www.charitynavigator.org/index.cfm/bay/content.view/cpid/42>.

"How Fairtrade Works." Fairtrade.net. Fairtrade Labelling Organizations International, n.d. Web. 8 Nov. 2015.

<http://info.fairtrade.net/info-how-fairtrade-works.0.html>.

"Ted Danson." BrainyQuote.com. Xplore Inc, 2015. 8 November 2015.

http://www.brainyquote.com/quotes/quotes/t/teddanson263569.html

These Are the Findings of a Landmark Study Conducted an International Team of Researchers. "Air Pollution Cuts

Life Expectancy by 5.5 Years in China." CNNMoney. Cable News Network, n.d. Web. 08 Nov. 2015.