Singer is right to complain about the amount of foreign aid the U.S. gives on an annual basis. It is not just nor good that the U.S. gives only .10 percent of its GNP in aid and only .14 percent of GNP when counting private donations as well. According to Singer the United States fails miserably at reaching the UN target for international aid to developing nations, and in fact the United States gives about $3.5 billion less than Japan whose economy is roughly half the size of the United States.
I agree that the United States should give more and maybe they don't because of the misperception of international aid by the American public. The American public, in a Program on International Policy Attitudes survey, believes that the United States spends 15% of its federal budget on foreign aid when in fact it spends less than 1 %. Most Americans also believe that the acceptable level for foreign aid is 5% of the federal budget. That increase in federal foreign aid could be put to good use as $17 will provide immunization to protect a child's life against six leading diseases; and $25 dollars will provide "over 400 packets of oral rehydration salts to help save the lives of children suffering from diarrhea dehydration."
All this is good and I would encourage the United States and its citizens to increase its foreign aid. However, Singer's argument about individuals needing to give globally rather then domestically is just plain wrong. Individuals are selfish in the sense that they get what economists call "utility" from donations/service to charitable organizations. Individuals are more likely to give to a certain cause when they can observe the results. Therefore it is less likely for an individual to want to give to a charity that supports African poverty when they are concerned that the money might not reach its target and will not have the impact they desire. Charity is charity and each and every charity needs help. Singer should not be so picky in saying that citizens of the world need to focus on those that benefit the most. Lou Holtz, former college football coach, use to tell his players that the only rule on his team was to, "do right." If we all do our best to "do right" and help those we feel need helping when we are able to help them then eventually we can make a significant dent into poverty.
Monday, May 28, 2007
Thursday, May 24, 2007
The time is now....
The problem is clear. Global warming is an issue that countries around the world will need to face now. Global warming is most notably caused by the release of Carbon dioxide, which once in the atmosphere splits apart to form O-Zone (O3) and Carbon Monoxide. The O-Zone is a thicker substance, which traps the heat reflecting from the earth’s surface causing the “greenhouse effect.” This in turn will cause an increase in earth’s surface temperature, which can have dramatic affects for the ecosystem and society. Some of the adverse conditions caused by global warming are: extreme weather patterns, rising sea levels, increases in the bug and pest population, and rapid changes in global temperatures.
According to Stiglitz and many others, the United States is the world’s largest emitter of greenhouse gases. The numbers are mind-blowing, the United States accounts for roughly 4% of the world’s population yet tallies 23% of the global Carbon dioxide emissions and 42% of the industrialized country emissions. Although Stiglitz places most of the carbon emissions blame on the United States and applauds Europe for their consistent approach to reducing carbon emissions, other sources show that if the European Union is taking as a whole it pollutes just as much as the United States. The 15 original E.U. nation states account for 3% of the world’s population and approximately 10% of the global pollution emissions.
The question remains what can be done to curb pollution emissions globally. Unlike many political/social/economic problems, global warming affects everyone. The citizens of Bangladesh are affected by the actions of the citizens of the United States, Great Britain and many more. Stiglitz proposes many solutions ranging from tradable permits, caps on emissions and a global carbon tax. It is my opinion the best solution to this problem is a global carbon tax. A tax will set the price for pollution giving individuals, corporations and countries the opportunity to decide whether or not to pollute at that price. A tax does not set the amount of the reduction in pollution; rather it allows market powers to determine that. Furthermore a tax provides an additional source of revenue, which nation states can use how they best see fit. Stiglitz believes a global carbon tax will allow governments to reduce many of their domestic taxes. This is based off the fundamental economic idea that “bads” should be taxed while “goods” should not be taxed. This will promote a more efficient economy, helping benefit everyone and curb pollution emissions. No matter what solution arises in the next 20 years it will take a global effort to slow down Global warming. The global community has united before, an example of that is the Montreal Protocol to eliminate CFCs in the late 1980’s, and must unite again in order to prevent inevitable destruction. As was once said about our nation now must be applied to the world: A world divided upon itself will not stand. A world that does not work together to stop global warming will not survive.
According to Stiglitz and many others, the United States is the world’s largest emitter of greenhouse gases. The numbers are mind-blowing, the United States accounts for roughly 4% of the world’s population yet tallies 23% of the global Carbon dioxide emissions and 42% of the industrialized country emissions. Although Stiglitz places most of the carbon emissions blame on the United States and applauds Europe for their consistent approach to reducing carbon emissions, other sources show that if the European Union is taking as a whole it pollutes just as much as the United States. The 15 original E.U. nation states account for 3% of the world’s population and approximately 10% of the global pollution emissions.
The question remains what can be done to curb pollution emissions globally. Unlike many political/social/economic problems, global warming affects everyone. The citizens of Bangladesh are affected by the actions of the citizens of the United States, Great Britain and many more. Stiglitz proposes many solutions ranging from tradable permits, caps on emissions and a global carbon tax. It is my opinion the best solution to this problem is a global carbon tax. A tax will set the price for pollution giving individuals, corporations and countries the opportunity to decide whether or not to pollute at that price. A tax does not set the amount of the reduction in pollution; rather it allows market powers to determine that. Furthermore a tax provides an additional source of revenue, which nation states can use how they best see fit. Stiglitz believes a global carbon tax will allow governments to reduce many of their domestic taxes. This is based off the fundamental economic idea that “bads” should be taxed while “goods” should not be taxed. This will promote a more efficient economy, helping benefit everyone and curb pollution emissions. No matter what solution arises in the next 20 years it will take a global effort to slow down Global warming. The global community has united before, an example of that is the Montreal Protocol to eliminate CFCs in the late 1980’s, and must unite again in order to prevent inevitable destruction. As was once said about our nation now must be applied to the world: A world divided upon itself will not stand. A world that does not work together to stop global warming will not survive.
Monday, May 21, 2007
Controlling Externalities
Free markets work great. Supply and demand curves for a good or service provide a market price and quantity that should be produced to maximize social surplus. However if there is a negative externality associated with bringing a good or service to market, the socially efficient equilibrium will be different from the market equilibrium. This will create dead weight loss in the market, or in other terms, creates an inefficient or non-Pareto efficient market. This raises the question of who should be responsible for controlling externalities in a free market setting? And do externalities harm development?
Broad, Cavanagh and Bello address the issue of externalities in their essay entitled, “Development: The Market is Not Enough.” And their title says it all, the market is not enough to control externalities. To a firm producing the good or service an externality by definition is not captured within their cost structure and therefore they have no incentive to eliminate it. Externalities have the potential to prevent sustainable development and most of the time cause direct harm to the low income class.
Governments are suppose to be the organization that can regulate and control negative externalities. However developing world governments have too often been twisted in a web of narrow interest groups who promote development to benefit a multinational corporation or high income class over sustainable development to benefit society. Sustainable development has been undermined in country after country in the developing world as governments have often resorted to the easiest short term approach to increasing GDP by exploiting natural resources. (On a side note: GDP is not an adequate measure of development. In order to fully assess whether a country is developing or not one must analyze life expectancy rates, literacy rates, unemployment, average years of schooling and many more non-GDP related factors.)
Why do governments fail to control externalities and who is left to regulate MNCs? Not all governments do fail in controlling externalities. Authoritarian governments most regularly fail in the task of controlling externalities in the market because they/he are typically the group/individual that is benefiting from the transaction rather than their/his people. Broad, Cavanagh and Bello state that a democratic representative government is best in controlling externalities as it is citizens of the state that decide what action/transaction is acceptable. In addition, the authors state that when government approaches to development are failing in such places as Africa, Asia and Latin America, it is up to citizen organizations to lead the charge in establishing sustainable development policies. Across the world organizations are taking on problems such as ecological destruction, inequitable control over resources and land, and governments’ inability to advance the quality of life. These programs and the experienced garnered by these grassroots groups will form the foundation for new development strategies in this next century. Democracy is the vehicle for developing nations to traverse the divide into the developed world. Democracy is founded on freedom of thought, religion and speech. In order to foster those ideals the developing world needs a foundation of education. This should be the role of the developing world: to foster the ability to learn and to provide resources to further educational systems in the developing world. A large task that will have to be a topic address on another day.
Broad, Cavanagh and Bello address the issue of externalities in their essay entitled, “Development: The Market is Not Enough.” And their title says it all, the market is not enough to control externalities. To a firm producing the good or service an externality by definition is not captured within their cost structure and therefore they have no incentive to eliminate it. Externalities have the potential to prevent sustainable development and most of the time cause direct harm to the low income class.
Governments are suppose to be the organization that can regulate and control negative externalities. However developing world governments have too often been twisted in a web of narrow interest groups who promote development to benefit a multinational corporation or high income class over sustainable development to benefit society. Sustainable development has been undermined in country after country in the developing world as governments have often resorted to the easiest short term approach to increasing GDP by exploiting natural resources. (On a side note: GDP is not an adequate measure of development. In order to fully assess whether a country is developing or not one must analyze life expectancy rates, literacy rates, unemployment, average years of schooling and many more non-GDP related factors.)
Why do governments fail to control externalities and who is left to regulate MNCs? Not all governments do fail in controlling externalities. Authoritarian governments most regularly fail in the task of controlling externalities in the market because they/he are typically the group/individual that is benefiting from the transaction rather than their/his people. Broad, Cavanagh and Bello state that a democratic representative government is best in controlling externalities as it is citizens of the state that decide what action/transaction is acceptable. In addition, the authors state that when government approaches to development are failing in such places as Africa, Asia and Latin America, it is up to citizen organizations to lead the charge in establishing sustainable development policies. Across the world organizations are taking on problems such as ecological destruction, inequitable control over resources and land, and governments’ inability to advance the quality of life. These programs and the experienced garnered by these grassroots groups will form the foundation for new development strategies in this next century. Democracy is the vehicle for developing nations to traverse the divide into the developed world. Democracy is founded on freedom of thought, religion and speech. In order to foster those ideals the developing world needs a foundation of education. This should be the role of the developing world: to foster the ability to learn and to provide resources to further educational systems in the developing world. A large task that will have to be a topic address on another day.
Wednesday, May 16, 2007
Mr. Wolfowitz's exit strategy
It appears that most of the international community will get what they want as World Bank President Paul Wolfowitz seems to be heading out the door. Most recently the New York Times is reporting that he is working on a deal that will clear him of all charges associated with the promotion and pay raise of his girl friend before formally resigning his post. (FULL ARTICLE)
Tuesday, May 15, 2007
The Loop Hole
Firms become multinational corporations in an effort to find the cheapest way to make a profit. Author Richard E. Caves summarizes this idea as the “transaction-cost” approach, where dispersed plants fall under common ownership and control, rather than trade with each other because it is more cost efficient for the firm to own plants in different locations. This approach is used in horizontal integration (producing the same products in different countries), vertical integration (making inputs in one location to go into another plant’s outputs), and offshore procurement by firms, which involves carrying out labor-intensive stages of production at foreign locations with low labor costs. Firms are flexible and are able to move across boundaries in the long run because all costs are variable costs. For example, if a firm believes it can make a greater profit by seeking a lower tax rate in country A over country B then the firm will most likely move to country A. This type of a scenario where incentives are involved for firms; whether it is low taxes, low labor standards, or low environment standards, create market failures where firms have no incentive to provide the social equilibrium quantity rather only the profit maximizing quantity. This forces citizens to subsidize private firm operations by paying for any clean-up costs associated with pollution as well as any deductions that corporations are receiving by writing off their assets in another country.
This is where government regulation must be used to align private incentives with social benefits and costs. One country which is trying to do his part to make sure multinational corporations are paying their fair share of taxes is Canada. (ARTICLE) The Canadians have recently issued a Anti-Tax Haven Initiative to make sure that a fair burden of taxes is assessed to the multinational corporations. Canada’s current tax rules allow multinational corporations to avoid paying taxes by getting a double deduction for a single expense relating to a foreign investment. Furthermore the additional tax revenue generated through the Anti-Tax-Haven Initiative will be used to further reduce business taxes in Canada; and will be used to appoint an advisory panel of experts in the near future to look for ways to further improve the fairness and competitiveness of Canada’s international tax system.
The idea of competition limiting abuses by multinational corporations is something Stiglitz examines in his chapter. He notes that corporations threatened to move elsewhere when countries try to impose stricter tax or environmental regulations. However if a perfectly competitive market is present then barriers to entry are removed and a company’s decision to move does not effect the national economy as another company takes its place. When there is a lack of competition, the potential for abuses by multinational corporations grows much worse. Furthermore Stiglitz desires reforms, such as the Canadian reform, that focuses on laws governing corporations. Although this is a great idea it will be almost impossible to implement and enforce. It is hard enough to get two countries to agree on trade policy, let alone get hundreds of countries to agree on global laws for a global economy. What is more likely to curb the influence of multinational corporations is to find away to align private interests with the social interest. By providing companies incentives to invest in a developing nation, or produce less pollution, one is able to reach the social equilibrium of goods produced and sold without forcing the firm to incur greater costs.
This is where government regulation must be used to align private incentives with social benefits and costs. One country which is trying to do his part to make sure multinational corporations are paying their fair share of taxes is Canada. (ARTICLE) The Canadians have recently issued a Anti-Tax Haven Initiative to make sure that a fair burden of taxes is assessed to the multinational corporations. Canada’s current tax rules allow multinational corporations to avoid paying taxes by getting a double deduction for a single expense relating to a foreign investment. Furthermore the additional tax revenue generated through the Anti-Tax-Haven Initiative will be used to further reduce business taxes in Canada; and will be used to appoint an advisory panel of experts in the near future to look for ways to further improve the fairness and competitiveness of Canada’s international tax system.
The idea of competition limiting abuses by multinational corporations is something Stiglitz examines in his chapter. He notes that corporations threatened to move elsewhere when countries try to impose stricter tax or environmental regulations. However if a perfectly competitive market is present then barriers to entry are removed and a company’s decision to move does not effect the national economy as another company takes its place. When there is a lack of competition, the potential for abuses by multinational corporations grows much worse. Furthermore Stiglitz desires reforms, such as the Canadian reform, that focuses on laws governing corporations. Although this is a great idea it will be almost impossible to implement and enforce. It is hard enough to get two countries to agree on trade policy, let alone get hundreds of countries to agree on global laws for a global economy. What is more likely to curb the influence of multinational corporations is to find away to align private interests with the social interest. By providing companies incentives to invest in a developing nation, or produce less pollution, one is able to reach the social equilibrium of goods produced and sold without forcing the firm to incur greater costs.
Thursday, May 10, 2007
After reading about the reserve system and the burden of debt, I am struck by the amount of financial risk that countries and private creditors undertake financing projects. The Stiglitz reading suggests that the IMF puts countries in a worse position overtime through some miscalculated advice. Critics often site that IMF conditions for debt relief are ill suited for the particular country and essentially worsen any economic downturn or depression. Furthermore, the structure of the IMF and the international loan-able funds market allows debt contracts to be strongly influenced by fluctuations in interest rates and exchange rates. Additionally, Stiglitz states that countries should rely more on their own savings to finance capital accumulation and infrastructure investment, by encouraging a higher national savings rate.
Those points seem to be well justified by the evidence but is it not true that when countries invest in other countries either through loan-able funds or direct investment, that everyone will benefit creating a market suitable for trading based on the idea of comparative advantage. Developed countries need the developing world to sell their products and the developing world needs the developed world to help finance their development. Nonetheless this idea has recently come under assault by extremist groups wanting isolationist type policies in their respective country/region. (ARTICLE) This article summarizes how currently China is coming under attack for its increased investment in Ethiopia. This is because Chinese companies and the government of China have been investing in projects and regions where there is an on going physical struggle between ethnic and religious groups. Now not only are the Chinese facing a financial risk on their investment but also a physical risk. The saying that the countries that “trade together won’t go to war with each other,” might be true for now. However with nations that are partitioned along racial and ethic divides could change this policy. This is because these groups propagate violence within the region and will caused developed countries to think twice about investing in unstable regions.
Those points seem to be well justified by the evidence but is it not true that when countries invest in other countries either through loan-able funds or direct investment, that everyone will benefit creating a market suitable for trading based on the idea of comparative advantage. Developed countries need the developing world to sell their products and the developing world needs the developed world to help finance their development. Nonetheless this idea has recently come under assault by extremist groups wanting isolationist type policies in their respective country/region. (ARTICLE) This article summarizes how currently China is coming under attack for its increased investment in Ethiopia. This is because Chinese companies and the government of China have been investing in projects and regions where there is an on going physical struggle between ethnic and religious groups. Now not only are the Chinese facing a financial risk on their investment but also a physical risk. The saying that the countries that “trade together won’t go to war with each other,” might be true for now. However with nations that are partitioned along racial and ethic divides could change this policy. This is because these groups propagate violence within the region and will caused developed countries to think twice about investing in unstable regions.
Wednesday, May 2, 2007
Medical advancements in procedures and pharmaceutical drugs are a building block for which successful societies are constructed. When developing nations are forced to buy drugs for a premium, they are required to sacrifice valuable resources on medicine that they could readily and more efficiently allocate to develop infrastructure such as the construction of new schools and/or hospitals. Stiglitz points out that this is a continuing problem in the global economy where patents on drugs that can treat diseases and viruses, such as AIDS, Malaria and Heart Disease, are being challenged by generic drug makers in the developing world with the intent to make important essential drugs cheaper to purchase for their citizens.
Recently there has been a struggle between the pharmaceutical giants and the developing world. The most recent pharmaceutical giant to back down was Abbott Laboratories, as the conceded to selling the latest version of their AIDS drug Kaletra in Thailand at a discounted rate. This occurred after Abbott Laboratories in February withheld its newest AIDS drug from sale in Thailand after the government said it would allow the sale of generic versions of this and other drugs, violating the patent right. Abbott joins Merck and Sanofi-Aventis SA in slashing prices of their AIDS and heart-disease drugs in order to dissuade Thailand and other developing nations from switching to less-expensive generic alternatives. (FULL ARTICLE)
This type of news raises the question of whether medicine and drugs should be universally provided? The private sector clearly spawns innovation and development, so if medicine was to be socialized what incentive would many individuals have to spend the countless hours working to develop new cutting edge drugs. Money makes the world go round, but if companies can’t make drugs affordable for developing countries there will be a lack of human capital development which will stunt market development/growth and essentially cause companies to lose out in the long run. Something to think about the next time you develop a cutting edge drug that could help solve or alleviate many of the problems of the developing world.
Recently there has been a struggle between the pharmaceutical giants and the developing world. The most recent pharmaceutical giant to back down was Abbott Laboratories, as the conceded to selling the latest version of their AIDS drug Kaletra in Thailand at a discounted rate. This occurred after Abbott Laboratories in February withheld its newest AIDS drug from sale in Thailand after the government said it would allow the sale of generic versions of this and other drugs, violating the patent right. Abbott joins Merck and Sanofi-Aventis SA in slashing prices of their AIDS and heart-disease drugs in order to dissuade Thailand and other developing nations from switching to less-expensive generic alternatives. (FULL ARTICLE)
This type of news raises the question of whether medicine and drugs should be universally provided? The private sector clearly spawns innovation and development, so if medicine was to be socialized what incentive would many individuals have to spend the countless hours working to develop new cutting edge drugs. Money makes the world go round, but if companies can’t make drugs affordable for developing countries there will be a lack of human capital development which will stunt market development/growth and essentially cause companies to lose out in the long run. Something to think about the next time you develop a cutting edge drug that could help solve or alleviate many of the problems of the developing world.
Monday, April 30, 2007
Misconceptions of the World Trade Organization
Singer outlines four commonly made charges against the World Trade Organization (WTO) that critics use to show that globalization is failing. The first charge is that the WTO places economic considerations ahead of concerns for the environment, animal welfare, and even human rights. The second charge is that the WTO erodes national sovereignty. The third charge is that the WTO is undemocratic. The fourth charge is that the WTO increases inequality or it makes the rich richer and leaves the world’s poorest people even worse off than they would otherwise have been. Singer presents evidence that most of these charges seem to have some validity to them, however the underlying issue seems to be the structure of the WTO.
Theoretically trade has the ability to expand each country’s GDP through comparative advantage. That is that each country specializes in producing the good in which their relative advantage is to other countries. According to Singer this type of trading has been estimated to increase Japan’s real income by 65 percent. However with this type of global trading changing the way labor and capital markets function, barriers are often put up by countries to protect young industries and products or labor that are needed to produce fruitful life for their citizens, often with the negative effects of higher consumer prices. Barriers are what cause organizations such as the World Trade Organization to have to be in place in order to promote free and fair trade. However most often, fair trade is out of the question and as Singer shows there are many problems with how the WTO conducts business.
Many of the WTO’s problems evolve from its structure. Rather then set up like a global government where countries are represented in a voting structure it is set up similar to a town meeting where consensus must be reached in order for things to occur. However just like many town meetings, the more wise and experienced have more influence and therefore direct policy; just as the major, highest income countries control much of the lobbying and policy direction. Singer does a very good job of showing how this proves the third charge to be correct. Due to this structure the WTO rules make it seem and historically have shown that economic considerations have been placed ahead of concerns for the environment. This is because of rules that essentially state that a country cannot stop trade due to unacceptable practices if in the country that erects the barrier is still practicing that practiced. I know that sounds a little confusing but that is the WTO for you.
The WTO might not be the answer but in order to find a solution one of two things must occur. Either there must be a stronger international regulatory agency to promote free and fair trade as well as protect the environment, that is recognized by all countries; or their must be a restructuring of the WTO to include environmental concern aspects as well as well as a coalition with the IMF to encourage foreign direct investment in developing countries so that they have the technology to successfully trade and not be left behind by trade. For it could be that the only thing holding back developing countries is the lack of technology preventing them from trading successfully.
Theoretically trade has the ability to expand each country’s GDP through comparative advantage. That is that each country specializes in producing the good in which their relative advantage is to other countries. According to Singer this type of trading has been estimated to increase Japan’s real income by 65 percent. However with this type of global trading changing the way labor and capital markets function, barriers are often put up by countries to protect young industries and products or labor that are needed to produce fruitful life for their citizens, often with the negative effects of higher consumer prices. Barriers are what cause organizations such as the World Trade Organization to have to be in place in order to promote free and fair trade. However most often, fair trade is out of the question and as Singer shows there are many problems with how the WTO conducts business.
Many of the WTO’s problems evolve from its structure. Rather then set up like a global government where countries are represented in a voting structure it is set up similar to a town meeting where consensus must be reached in order for things to occur. However just like many town meetings, the more wise and experienced have more influence and therefore direct policy; just as the major, highest income countries control much of the lobbying and policy direction. Singer does a very good job of showing how this proves the third charge to be correct. Due to this structure the WTO rules make it seem and historically have shown that economic considerations have been placed ahead of concerns for the environment. This is because of rules that essentially state that a country cannot stop trade due to unacceptable practices if in the country that erects the barrier is still practicing that practiced. I know that sounds a little confusing but that is the WTO for you.
The WTO might not be the answer but in order to find a solution one of two things must occur. Either there must be a stronger international regulatory agency to promote free and fair trade as well as protect the environment, that is recognized by all countries; or their must be a restructuring of the WTO to include environmental concern aspects as well as well as a coalition with the IMF to encourage foreign direct investment in developing countries so that they have the technology to successfully trade and not be left behind by trade. For it could be that the only thing holding back developing countries is the lack of technology preventing them from trading successfully.
Wednesday, April 25, 2007
The Complexion of Globalization
Singer is right in that we do indeed live in “one world.” Furthermore, his assessment, on whether or not the United States can remain the world’s leading power in this time of globalization being dependent upon the U.S. acting ethically in accordance with the idea of all the countries functioning as “one world,” is valid. However as Wolf, Stiglitz and Freeman point out there are other factors and actors that make this concept of being apart of “one world” virtually impossible.
If individuals expect globalization to occur smoothly then they are greatly mistaken. Every country has a different heritage, leadership and values, which will affect how countries view others actions and policies. Additionally the idea of self-interest still looms large and will forever preside in a democratic form of government. This is because in order for leaders to be elected they must do what is best for their constituents. In other words as much as the global interest is important, the fact is that the global community does not vote for the President of the United States. However Stiglitz acknowledges that globalization has the potential to work and help benefit every country through free and fair trade. In order for this occur there needs to be stronger trade protection to prevent poor countries from being exploited by a version of market economics that embraces corporations. China and India are perfect examples of success in globalization, but the developing nations of Africa are examples of where globalization has actually increased the poverty level.
Critics of globalization say that globalization is really represents Americanization of the world. Part of this is true, with much of the world’s wealth located in the Western hemisphere it is hard to see globalization occur without an exchange of cultural ideas and values. Many Americans feel that because their way of life has been so successful that it should be the developing world that embraces their lifestyle in order to taste similar success. Critics say that this erodes the culture of the developing nation and creates hostility that is most often expressed in acts of violence against the western world. The West can also be seen as a loser in the unskilled labor market. Freeman reports a positive correlation between the increase in imports from developing nations and a decrease in wages for unskilled labor in the United States. Furthermore this relationship holds in Europe as an increase in trade has shown an increase in the unemployment rate of the unskilled. However Freeman notes that as countries specialize they can actually be more successful and cause the economies that trade together to grow together.
No matter what globalization is a sticky process. On one hand with corporations, governments, individuals and ideas all conflicting with each other, it may indeed be ethics that keep the world in harmony, or the other hand could it be free markets and democracy that truly unites the world. In the short run there may be winners and losers but as technology develops globally everyone may be a winner in the long run.
If individuals expect globalization to occur smoothly then they are greatly mistaken. Every country has a different heritage, leadership and values, which will affect how countries view others actions and policies. Additionally the idea of self-interest still looms large and will forever preside in a democratic form of government. This is because in order for leaders to be elected they must do what is best for their constituents. In other words as much as the global interest is important, the fact is that the global community does not vote for the President of the United States. However Stiglitz acknowledges that globalization has the potential to work and help benefit every country through free and fair trade. In order for this occur there needs to be stronger trade protection to prevent poor countries from being exploited by a version of market economics that embraces corporations. China and India are perfect examples of success in globalization, but the developing nations of Africa are examples of where globalization has actually increased the poverty level.
Critics of globalization say that globalization is really represents Americanization of the world. Part of this is true, with much of the world’s wealth located in the Western hemisphere it is hard to see globalization occur without an exchange of cultural ideas and values. Many Americans feel that because their way of life has been so successful that it should be the developing world that embraces their lifestyle in order to taste similar success. Critics say that this erodes the culture of the developing nation and creates hostility that is most often expressed in acts of violence against the western world. The West can also be seen as a loser in the unskilled labor market. Freeman reports a positive correlation between the increase in imports from developing nations and a decrease in wages for unskilled labor in the United States. Furthermore this relationship holds in Europe as an increase in trade has shown an increase in the unemployment rate of the unskilled. However Freeman notes that as countries specialize they can actually be more successful and cause the economies that trade together to grow together.
No matter what globalization is a sticky process. On one hand with corporations, governments, individuals and ideas all conflicting with each other, it may indeed be ethics that keep the world in harmony, or the other hand could it be free markets and democracy that truly unites the world. In the short run there may be winners and losers but as technology develops globally everyone may be a winner in the long run.
Tuesday, April 24, 2007
First Post
Hi, Hello and Welcome to a location full of knowledge. As we know knowledge is power and so to get us started feel free to check out this page of link for additional reading. For more news check out CNN.
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