Globalization at First Sight

Globalization that seems to be a nice seeing eye dog that can lead any country or economy out of the state of depression, decay and isolation into a better and brighter future, may, in fact, be a Cerberus unleashed. The world, especially the developed countries and their societies, tend to perceive globalization as something de facto beneficiary and exclusively positive. However, such a perception is to a great extent biased. In fact, globalization has many pitfalls and negative effects that are often overlooked in the general euphoria of becoming “the global village”. Perhaps it is time to see both sides of the globalization medal that the “ruling elite” of the developed countries proudly wears on their chests. It may turn out that the same metaphorical medal put on the necks of the developing countries, as well as the working class of the developed ones, can become their yoke. If so, globalization should be viewed as a dilemma rather than an undoubted common good. A logical question arises, “Is it ethical to impose globalization on the world and advertise it as something good?”

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The Ethics of Globalization

Since such a phenomenon as globalization exists, it would be only logical to expect the existence of a universal, global ethical system that would regulate the relationships between the actors on the international plane. In this regard, the actors are countries, and the plane is the global arena of geopolitical and market relations. Naturally, there should be a regulatory mechanism to balance this system and make it work properly. Ethics proves to be one of the best levers that regulates conduct and prevents or punishes misconduct, for ethics is “the general inquiry into what is good”. In the global market context, the hegemons and/or the developed countries are the trendsetters and major stakeholders. Respectively, it becomes their responsibility or duty to assess the course of globalization and see where it is going in the short and long run. “A crucial first step is to understand the proposed course of action […] Confident in their own good intentions and focused on their own narrow objectives, they [the stakeholders] often overlook collateral effects, alternative interpretations, and likely impacts on others”. Thus, one should assess the factual data currently available in order to foresee the outcomes of globalization based on its current rate and direction. The primary importance task of the stakeholder analysis is to define the negative effects of globalization and its victims.

The developing countries and markets, as being integral parts of globalization or swept by it, are as much stakeholders as the developed ones are, with one major exception. The developing countries are unempowered, voiceless and helpless compared to major economies and international corporations. Respectively, the former may be disadvantaged in their position of “followers” with no power to change the globalization’s course in their favor or stop it. Why would anyone want to stop globalization? Below is the list of potential reasons.

The Reasons to Worry

Forbes, with a cross-reference to The Washington Post points out that twenty years ago, globalization was viewed as a strategy that would benefit both rich and poor countries, eradicate economic decay, plant the seeds of prosperity, wipe out the borders and level all barriers to free trade among the world countries. Globalization was supposed to start the era of multinational expansion, international organizations and fruitful geopolitical cooperation (Collins). Indeed, some signs and testimonies of the aforementioned benefits did take place: the local markets of developing countries became open to exporting goods to the developed markets. The former got an outlet while the latter got cheap products. The situation seemed mutually beneficiary. Nevertheless, the “cheap” good came with a price: while multinational corporations thrived and prospered, regular low-class workers did not. Unexpectedly and counter to naïve beliefs, “globalization […] has made the rich richer while making the non-rich poorer” (Collins).

Developed and Developing

Developing countries already struggle with their national economies, and surviving in the context of the global economy may become an insurmountable task. By trying to comply with the high standards of the globalized market, third world countries become economically vulnerable to shocks from outside and risk being left behind by more competitive market actors (Tremblay). Interestingly, not only the developing countries appear to be disadvantaged. Globalization backfires at many developed nations, such as the USA, among others. Perhaps the major side effect of globalization is the outsourcing of capital, manufacturing capacities as well as manufacturing blue and white collar jobs to lower-cost developing countries. According to the data provided by the Economic Policy Institute, around 3.2 million jobs were drained to China alone, of which 2.4 million constitute manufacturing jobs. A trade deficit with Japan that reached $78.3 billion in the year 2013 resulted in minus 896,000 jobs, as well as an extra 682,900 jobs from the trade-deficit between the USA and Mexico from 1994 to 2010. In addition, the production of products overseas in countries like China puts the technologies of the developed countries at risk of being stolen or copied without authorization or permit (which occurs relatively often) (Collins). All of the aforementioned leaves an imprint on the working class of the developed countries resulting in what Collins describes as the “culture of fear for many middle-class workers who have little leverage in this global game”.

Multinational Corporations

A dangerous byproduct of globalization is huge corporations. Multinational corporations have gradually become the ones who transformed globalization from a seeing eye dog into a Cerberus that they control and can set loose. Corporations, such as Grupo Mexico, are often accused of social injustice and unfair working and living conditions they impose on the workers, such as slave labor wages. They can drive small local companies out of business (e.g. Monsanto suing small farmers) and prevent the wealth from inward investment from benefitting the local communities, especially those of developing countries (“Negative Impacts Of Globalization”). In addition to an obvious unethical conduct in the realm of business, multinational corporations demonstrate the lack of concern for the environment by implementing non-eco-friendly policies and strategies, mismanaging natural resources, and causing major ecological damage. Ironically, the ecological footprint of such activities is also global (Collins). The biggest violators of this kind are Chevron, Barrick Gold Corporation and Occidental Petroleum.

Additionally, multinational corporations have developed strategies and explored the loopholes in the tax system which allows them to avoid paying taxes. Chevron is only one of the examples. In the realm where economics intertwines with politics, multinational corporations play as influential actors, thus, shifting from once merely commercial activities. The fact arouses a reasonable concern that corporations will soon be or already are empowered and politicized enough to rule the world (Collins; Tremblay). Thus, their global essence mixed with politics results in a new kind of a superpower. Arguably, multinational corporations may soon become empowered and powerful enough to compete with such geopolitical entities as states. The latter scenario threatens to unbalance the world equilibrium of power and resource distribution.

No Barriers In Theory, Many In Practice

In general, many of the barriers to free and fair trade remain, despite the promises and hopes associated with the globalization process. For example, 161 countries have value-added taxes on imported products and goods. In Europe, they are as high as 21.6%. In contrast, some countries like the United States do not have value added taxes, at all (Collins). This divergence hardly accounts for the global parity and unification of the trade standards to ensure this parity. Above all, globalization has proved to be invalid for many if not the majority of countries. It simply does not work. Instead of promoting equality it further worsens the gap (Muskin S48; “Globalization Is Not Saving”). During the most recent period of rapid growth in global trade and investment, 1960 to 1998, inequality worsened both internationally and within countries. Speaking numbers, The UN Development Program reports that the richest 20 percent of the world’s population consume as much as 86 percent of the world’s resources which leaves the poorest 80 percent with only 14 percent that remain (Collins). The share is eloquent: the rich are not willing to share their wealth with the poor for it would mean the rich becoming poorer. That is per se a barrier to equality as globalization’s self-aim.

Seeing People, Not Countries

There is an interesting and insightful perspective from which one can view globalization. Unlike Collins and respective studies that assess globalization from the standpoint of states, Branko Milanovic with the World Bank, suggests that one should consider the effects of globalization on separate individuals rather than whole countries and their nations. From this perspective, new dimensions of globalization unveil. Using a standard indicator called the Gini coefficient, Milanovic calculated that the global inequality is much greater than inequality within a single country, even the most unequal one. Thus, “The gap between a poor person in India or Sub-Saharan Africa and the Western upper-class is an abyss. […] The poorest five percent of Germans are richer than the wealthiest five percent of Ivoirians” (Devictor). It implies that the power of globalization is not enough to change the situation and eradicate the problem of the poor – both, poor nations and poor people. Thus, the problem is not the class hierarchy per se, but more the place of individual residence.

The distribution of wealth among countries is as much an issue as the distribution of wealth among the citizens of a single country. Respectively, there is no validity in trying to cultivate equality on the global economic plane among countries without cultivating equality among people. However, at this point, the mechanism of globalization may come to a halt. The current globalization model works on the following principle: it sucks jobs out of developed countries and suggests them to workers in developing countries only to explore the cheap labor of the latter and put them in ‘slavery’ working conditions. If the economies of the developing countries grow, there will be no cheap labor or raw materials for the developed countries and/or multinational corporations to exploit. Respectively, outsourcing – the engine of modern globalization – will not return enough benefits and will become obsolete. Interestingly and paradoxically, if real equality - the target of globalization – manifests itself on the global scale, globalization, as we now know it, will stumble if not stop.

Apples in the Global Barrel

In his article “Why Corporations Can’t Control Chicanery”, Saul Gellerman discusses the issues of business ethics and refers to an old saying about apples and a barrel: a few bad apples, if not removed, can spoil all the other apples in the barrel. The philosophy of the barrel dilemma, if applied to business world, provides that unreliable employees (especially managers) are screened out of the corporate fabric before they advance too high in the hierarchy and cause the damage. Gellerman believes that the attempts to remove such elements may be futile. Instead, he rethinks the situation and concludes that, “the problem is not with the apples (that is, the individual executives themselves) but rather with the barrel (the system of constraints and licenses in which they operate)”. Further rethinking and reapplying the apple-barrel allegory to the phenomenon of globalization, one may come to a provocative (or, at least, thought-provoking) conclusion. In the wider context of the globalized world, the apples are the states (i.e. both developed and developing countries), and the barrel is globalization per se. The barrel unites all the apples into one holistic and interrelated environment limited by certain confines and laws. Unfortunately, some of the apples down below, in the lowest layers right at the barrel’s bottom, may appear under too much a pressure. Eventually and inevitably, the pressure and the burden will squeeze all the juice out of them. Both developed and developing countries may appear low at the bottom and “rot”. For the former, the squeezed juice would be outsourcing. For the latter, the pressure equals exploitation of cheap labor and materials. Sadly ironic, globalization has become “the race to the bottom” (pun unintended).

A Way Out

There is no way out of globalization. An attempt at crashing the global barrel would make the apples fall apart, uncontained, and scatter around. It is exactly what will happen to the world countries if globalization disappears somehow. Globalization is the environment that holds the modern world together. Though it has been proved that it is by far not the greatest good, it is inevitable and irreplaceable. Once the course for globalization is taken, there is no way back to basics, i.e. to isolation. “Globalization is like being overwhelmed by a snow avalanche. You can’t stop it – you can only swim in the snow and hope to stay on top” (Collins). Having taken globalization for granted and having recognized its two faces, one may ask, “What can be done about it?” Collins suggests the introduction of remedies and additional leverages to control globalization. In his view, global ethics needs (1) political leaders to enforce the rules, address and prevent misconduct of geopolitical actors (such as China ignoring WTO laws); (2) balanced trade and new trade agreements (since NAFTA and the South Korean Korus do not protect all stakeholders and serve foremost multinational corporations), and (3) personalized approach to each country. Another good piece of advice comes from Xavier Devictor with the World Bank who emphasizes “the importance of contributing to other countries’ development to reduce the global inequalities which can be the seeds of geopolitical turmoil”. One thing is clear: in order to become the common good, globalization needs to be based on and ruled by the highest global ethical standards. For now, sadly, it is not.

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