Today, Carolina Journal Radio’s Mitch Kokai discusses globalization with Doug Bandow, vice president of the Washington-based Policy for Citizen Outreach. He recently spoke at a John Locke Foundation Shaftesbury Society luncheon on “Globalization: Boon or Bain?” (Go here to find a station near you or to learn about the weekly CJ Radio podcast.)
Kokai: First of all, globalization — we hear the term, and you mentioned in your speech that it means different things to different people, sometimes contradictory.
Bandow: Well, it’s interesting. If you look at people who are critical of globalization, very often they are angry about different things. You find labor union members alongside eco-activists, alongside cultural conservatives and Islamists. It’s a very strange coalition. So, they are really upset about something different. They simply call it globalization. So they all come together, but actually, they agree on virtually nothing.
Kokai: You mentioned some of the key criticisms of globalization as well, and took each of them on.
Bandow: Well, the most important issues — and I think one that is quite legitimate for people to be concerned about — is the question of job loss, or kind of instability in the economy or insecurity for people, because people like security for their job. What we have to recognize is that almost any economic transformation creates economic insecurity. That is, every bankruptcy, somebody loses something. Every new innovation, suddenly something changes. Now, the economist Joseph Schumpeter talked about capitalism as a process of creative destruction. What he meant was that to get something better, something was going to be destroyed along the way. And the examples I like to use — there are two of them. One is, if you imagine you made a lot of buggies and buggy whips and harnesses back in the early 1900s, automobiles came along — your entire industry was gone. And I think most of us viewed that as progress. Well, the same thing if you use typewriters. You know, many of us who are a bit older, when we were in school, we didn’t have computers. We used typewriters. Well, computers came along and wiped out an entire industry. You virtually never see a typewriter now unless it is in the corner of an office for envelopes, but they are gone. You know, people who repaired them, people who made them — and I think we would all agree that, as a society, we are far better off. But if you don’t like economic change, presumably you would have to throw all those computers into the lake. Very few people, including opponents of globalization, would be willing to toss their PCs.
Kokai: I heard someone typing on a typewriter the other day, and it shocked me. I had forgotten the sound. It had been so long.
Bandow: Oh, I mean, I remember the painful memories of writing and retyping articles, and with a typo, and how you have to try to correct. You know, well, computers are just wonderful. Well, this is something, which, along the way, some people did lose their jobs. But overall, we are far better off.
Kokai: You also mentioned a second criticism has to do with this idea of exploitation.
Bandow: You look around the Third World and you see poverty, you see child labor, you see low wages. And people — in my view, strangely —blame Western companies. They blame globalization. But these things — I mean child labor, it’s a manifestation of low — of poverty. That is, families that are desperate to feed themselves put their kids to work. So the best option for them is to give them a better alternative, and that’s what globalization does. If a company comes in and pays higher wages — even if it is not Western-style wages — pays higher wages to a father, then maybe the child can stay home and go to school. But you can’t expect poor people to starve themselves. They’ll do what they can to survive. One of the things that we can do to help them survive is to give them better options. What happened in the West? You know, trying to develop the West, industrialize the West, was painful. It was difficult; a lot of hardship. Well, it wasn’t easy. When we face the same challenge in the Third World, we can help them by investing there, by creating factories, creating jobs, giving them opportunities.
Kokai: You also mentioned in the speech, a third criticism.
Bandow: Well, a third criticism has to do with the environment — a concern that, kind of, depredation is created by Western corporations. But the reality for poor countries is that you are not going to get much environmental protection unless they grow wealthier. One thing is, if your family is not eating, you are not going to care very much about the quality of your air. I mean, you are going to focus. First things first is taking care of your family. And second is that the more wealth you have, the better able you are to care for the environment. And we see that in the examples of countries like Taiwan and South Korea, which as they’ve grown economically have suddenly become much more interested in environmental protection, much more effective at it. And that, I think, is our greatest hope, and the West can help with that. We can transfer technology, we can do other things.
But we — again, we can’t expect poor countries to not develop in order not to have an effect on the environment. But their wealth, as it has for us, makes it possible to care for the environment. We need to aid them in that. But that wealth, I think, is the greatest hope for environmental protection in poor countries.
Kokai: Doug, during the discussion, you mentioned some of the criticisms and answered them, but you also pointed out that there are some definite benefits from globalization.
Bandow: Well globalization — I mean, the most important benefit that I would argue of globalization is economic. That is, at this stage, it’s very hard for anyone to argue that a poor country can develop without kind of a market-oriented economic policy. We could argue about some of the — what kind of a safety net they have. But, broadly speaking, they need to be open. Globalization encourages economic openness. By almost any measure, countries that are more open, countries that are more market-oriented, do better economically. It’s simply beyond contention. Another benefit, I would argue, is that globalization can help promote human rights and democracy. That is, a growing middle class, growing wealth, growing access to what I call the “the tools of freedom” — all of this is advanced by globalization. And again, countries like Taiwan and South Korea once were military dictatorships, have become democratic, and I think critical to that was the economic growth, that you suddenly had a broad middle class demanding political rights that otherwise couldn’t have done so. Finally, there is an element in which I think globalization, over the long term, helps us understand the rest of the world better, and helps them understand us. And it is not enough to stop war and conflict, but it might just help a little bit. You create an interest there. You’ve invested in another country. You’ve met somebody. You understand them a little more. There is a human face on a different society. I think that is helpful. It is not enough to solve world problems, but I do think it is helpful. And we should view globalization, then, as being an advantage in that way. At least we can learn about others a bit more through globalization and realize that we are part of a larger human community.
Kokai: Doug, is one of the problems with the popular perception of globalization that people misunderstand wealth creation and think that if one party is benefiting that they are taking away from someone else, that there is some sort of zero-sum game going on?
Bandow: I think that’s certainly a lot of the analysis of, say, farmers, of perhaps labor unions, and probably, to some degree, the ideological left as well — all of whom have been involved opposing globalization. It’s failing to realize that the goal is to create more wealth. You know, their view is that if it is a fixed pie, we are just divvying it up — who gets to divvy up the shares. But that is really not the way the world works. The great thing about growth of the West — I mean, the U.S. was once poor, Britain was poor, Europe was poor, Japan was poor — is that we’ve grown economically. We’ve done that by creating a larger share, a larger pie. And if you don’t have — if you are not creating wealth, there is nothing to distribute. So it is fair to worry about distribution, but you can’t worry much about it unless you are creating wealth, and that is what globalization helps do. I might note, for the U.S. as well as other countries, the fact that we are a leading global trading nation has helped us grow immeasurably. We are the wealthiest country on earth. We are the most productive on earth. I think the tragedy of Americans who fall into supporting protectionism is they seem scared about America’s ability to respond in the world. And I’m confident about America’s ability to respond in the world. We’ve done extraordinarily well. We don’t want to shut this process off. We do well in it.