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A flat map of the world.

World leaders and activists alike have acknowledged that everyone has a stake in making globalization work. Economists, leaders, and thinkers from all ends of the political spectrum say that if globalization leaves too many people out, eventually they will rise up to try to destroy the rest.

New world order: is globalization a powerful force for good or a means of exploi

Is globalization a powerful force for good or a means of exploitation?

By Sara Aase

Like a lot of small manufacturers, Jerry Skoff, has seen better days. His company, Badger Metal Tech, of Menomonee Falls, Wisconsin, makes and applies surface treatments to extend the life of metal industrial tools. But his primary customers in the tool and die industry have been hit hard in the last three years. "There were 1,200 diecasters when I started [in 1983], and there are less than 275 now in the United States," he says. "Some were absorbed by other companies, but the vast majority just went out of business."

Skoff blames much of U.S. manufacturing's recent demise on what he believes is unfair trade with China. According to Skoff, the Chinese threat boils down to this: U.S. manufacturers complain that China's steep tariffs against U.S. imports keep their products out. Meanwhile, a low Chinese currency and low U.S. tariffs make Chinese products cheaper than their raw materials.

Three hundred or so miles west, another, slightly higher-tech firm is in a similar situation. Aaron Pratt, marketing manager of Microboards, a CD/DVD duplication machine manufacturer, agrees that competition in a globalized marketplace can be a nasty challenge. His company isn't big enough to move its California manufacturing plant to China to save on labor costs, Pratt says, and cost competition has forced it to carry cheaper, lesser-quality products from Taiwan and China that require more technical support. "Slimmer margins and more work to get them--those have been the drawbacks of globalization," Pratt says. But he prefers to let market forces work it out. "Different people have different competitive advantages that can't be regulated away."

Globalization is a wide-scale experiment with free-market capitalism--that is, trying to give the rough-and-tumble effects of supply and demand between countries more power than the impulse to regulate them. Depending on your perspective, globalization expands or contracts opportunities. It saves or destroys the environment. It protects us or opens the world to more threats of terrorism and war. It benefits the poor, or it benefits the rich at the expense of the poor. Or it does all of these things and more.


"What we don't appreciate as a society is the extent to which our standard of living depends on globalization," says Stefanie Lenway, professor of strategic management. Because of globalization, Lenway and others say that Americans in particular have more career options in more new industries than would have been conceivable even 30 years ago. Affordable prices for goods such as food and electronics, and more choices in these goods, are the result of increased trade.

More and more, those benefits extend to developing countries. Globalization, say economists and world leaders, has lifted millions of people out of absolute poverty. In an example from The Lexus and the Olive Tree by Thomas Friedman, members of the Kayapo tribe in the Amazon rain forest of Brazil use a satellite TV to make sure they are charging current world rates to local gold miners who dig at the edge of their property.

Globalization can also help save the environment. In another example from Friedman's book, U.S. environmental groups have teamed up with U.S. corporations such as Ford and Anheuser-Busch, Brazilian companies, and the Brazilian government to save what remains of the Atlantic rain forest in southern Bahia, Brazil. By creating an ecopark in the remaining forest, the group helped create tourism jobs for nearby townspeople who had previously logged the forest as their only source of income. It also worked with local farmers to cultivate shade crops such as cocoa and coffee.

Because of its benefits, developing countries want a bigger stake in globalization. That desire was illustrated at last September's round of World Trade Organization (WTO) trade meetings in Cancun, Mexico. When the United States, Europe, and Japan failed to lower farm tariffs and subsidies as they had promised earlier, a group of developing countries collapsed the talks by blocking further proposals on investment rules. Developing countries want greater access to world markets, particularly in agriculture, where many of them can best compete.


If it's easier in today's interconnected world to see the good globalization has wrought, it's also easier to see the bad. Connecting the world's economies accelerates living standards, but it also accelerates the pace of change, and pain, as competition and technological innovation phase out jobs--sometimes whole industries--and replace them with new ones.

In the United States, millions have been thrown out of factory and farm work since the late 1980s, and union membership, with its protections of jobs and wages, has declined from 30 percent of the workforce to about 13 percent today. Even education, the mantra for progress, may no longer be enough to keep up, as skills such as computer programming and even financial analysis become commodified and more easily sold to the lowest worldwide bidder.

Despite the loss of family farms, factory towns, and the way of life they represent, America is better off, says Tom Murtha, associate professor of strategic management. "We're no less a power in agriculture now than 100 years ago," Murtha notes. "In fact we're much more so. Manufacturing is a greater percentage of the economy than ever, but has [fewer] people doing it than ever before. And in knowledge work [i.e., IT- and software-related fields] the same thing is going to happen-we'll do those things we do most productively and continue to invent new things."

But if globalization is to continue to be accepted, then political, education, and business leaders must do a better job of addressing its negative effects on people, says Lenway. "One of my worries about globalization concerns being attentive to people who are paying the cost of adjustment, such as [U.S] textile workers who have been thrown out of work," she says. "Our standard of living depends on their willingness, on the necessity for them to adjust."

Failings on both sides

In short, globalization has become something of an emotional topic in recent years, and parties on opposite sides of the line often have distorted views of each other. Where anti-globalist forces see powerful, secretive, and indifferent leaders, controlled by corporations, pro-globalists see violent anarchists working to derail progress (an image fueled by media depictions of 1999's WTO meeting protests in Seattle, which were marked by violence). Neither picture is accurate, however.

To wit, one anti-globalist tendency is to attack the spreading of Westernized culture and values. While it is inevitable and sometimes ugly that the United States is the largest economic force in globalization, lashing out at its fast-food conglomerates as they expand around the world ignores the fact that the people of the world are demanding them, and that in many cases, they are helping raise the standard of living there. "Many of the things critics invoke about the global trade system [reflect] a fundamental misunderstanding of it," says Russell Roberts of George Mason University. "If French people want to drink Starbucks and eat McDonalds, it's a free world. So the people who smash the windows of a Starbucks should be in their neighbors' faces, asking, 'Why are you eating something I don't approve of?' It's bizarre and arrogant."

On the flip-side, the richest players such as the United States and the countries of the European Union occasionally do not hold themselves to their own standards. The Cancun round of WTO talks was supposed to reduce the $300 billion annually the United States, Japan, and Europe spend in subsidizing agriculture. Those subsidies, which keep developed-world food prices artificially low, mean that many farmers from the poorest countries cannot compete, and they have no other jobs to turn to-so many go hungry.

High stakes

Whatever the mechanism for regulating world trade--whether its the WTO, another organization, or bilateral agreements between governments--it's clear that we all face responsibility for engaging in the debate on globalization. In 1947, at a gathering of economists in Switzerland, Friedrich von Hayek, a Nobel Prize-winning economist and champion of free-market thinking, said economists need to remember one great lesson from the socialists: they had the courage to be idealistic--to have a vision and to work towards it.

World leaders and activists alike have acknowledged that everyone has a stake in making globalization work. As the terrorist attacks of 9/11 illustrated, the interconnectedness of our world has made it increasingly possible for individuals to harness its information and technology against itself. Economists, leaders, and thinkers from all ends of the political spectrum say that if globalization leaves too many people out, eventually they will rise up to try to destroy the rest.

"To the extent we're serious about creating a better life for our kids, we'd better figure it out," Lenway says. "And not just [for] our kids--if you're concerned about poor people and their ability to find a way to live a better life, you have to embrace globalization and figure out how to deal with [the costs] more aggressively."

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