Globalization and My Discontents

The destructive effects of globalization have been described as “the race to the bottom.” Free market advocates have disparaged this slogan, arguing that free global markets keep prices low, and spread wealth to poorer nations. But is globalization really a good idea?

Globalization is about profit. Expanding markets, access to resources, and new labor pools all contribute to this end. If both developing and developed nations benefit, why should anyone object? In one word, exploitation.

Globalization is about making the world safe for business, but this is not quite the same as making the world safe for people. While many in the business community argue for a international level playing field, they mean the least restrictive regulatory systems for products, workers and the environment, not the most protective systems.

Low wages. Manufacturing and service jobs have been moved to countries where wages are very low, undercutting workers in developed nations. Recent declines in U.S wages in union contracts, for example, indicate the power of out-sourcing to drive down wages in the developed world. People whose monthly incomes are only a few tens or hundreds of dollars obviously will be willing to work for wages considered unacceptable in developed countries. Moreover, underdeveloped nations have been forced to compete for the most lax regulatory and wage environments, to get and keep businesses. The logical conclusion of this trend is the constant migration of jobs to the lowest-wage countries.

Environmental destruction. Environmental protection requirements are a means to both protect the natural world, and include the true costs of production in the prices of goods. For example, strip mining and clear-cutting of forests are cheaper than careful resource extraction, but the cost in lost species, polluted rivers, cleanup of wastes, and human/natural habitat rarely is paid by those who create the problems.

While the European Union and the U.S, and a few other developed countries, have well-developed, science-based, environmental protection programs in place, most of the developing world is not capable or willing to restrict poor environmental practices. How many Fortune 500 companies voluntarily meet EU/US environmental standards in their overseas operations? Is a river in South America or Africa somehow better able to absorb pollution than a river in Germany? Not likely, and not scientifically.

Worker safety and standards. The developed world takes for granted reasonable working hours, some measure of benefits, such as health and retirement benefits, and a safe working environment for its workers. In much of the developing world, however, these concepts are but a distant dream. In such situations, workers may work very long hours, in hazardous or unsafe environments, and have no means to protest their conditions without being fired.
The overall impact is that keeping costs low in the developing world involves exporting pollution, wages, worker exploitation, and resource destruction to the underdeveloped world. The field is not level.

What would a long-term and sustainable business environment look like?

1. First, workers rights need to be protected everywhere. This means reasonable hours, living conditions, on-the-job safety provisions, health care, whistle-blower protections, retirement benefits, and a living wage.

2. Businesses operating anywhere in the world should have to meet minimum common environmental standards, based upon the EU/US systems. Exceptions could be made only with approval by an international science-based regulatory body.

3. Compensation for injuries, or for health impacts from their work, should be paid to the workers or their heirs.

4. The cost of cleanup of past environmental degradation or habitat destruction should be borne by those who created the problem.

5. Some part of the difference between developed nation wages and developing nation wages should be paid back to the developed nation, to compensate workers displaced by globalization.

6. Businesses not complying with these conditions should be barred from operating in, selling products to or providing services to the developed nations.

7. Verification of compliance needs to be conducted by impartial international bodies.

This framework is a tentative beginning toward a sustainable and fair level playing field in the global arena. The obvious implication for businesses in developing countries is that if they are unable or unwilling to comply with these principles, then they will be barred from commerce with the developed world.

This probably would create a transitional two-tiered trading system, with underdeveloped countries trading with each other, rather than with the developed world. With assistance from the developed countries, the underdeveloped world could move toward greater technical expertise, regulatory integrity, worker benefits and protections, and product safety, without major global resource and environmental impact. Whether this approach is practicable and beneficial remains to be seen, but I think it is worth the try.