HAS GLOBALIZATION GONE TOO FAR

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HAS GLOBALIZATION GONE TOO FAR?

• Steven Globaerman
• Western Washington University

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Introduction

• Spectrum of Positions
• Globalization is bad for most of the world and
  should be stopped.
• Globalization has some adverse consequences that
  must be addressed.
• Special interest pleading about adverse effects
  will result in more harm than good if accepted.
• What is Rodriks position?

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SPECIFIC ADVERSE CONSEQUENCES

• Some categories of workers are hurt- layoffs and
  greater employment uncertainty
• Wage readjustments are regressive
• Valued social institutions are threatened
• Social safety nets are eroded
• Civic commitments are abandoned

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COMPARATIVE ADVANTAGE AND DISTRIBUTION IMPACT

• Assumptions
• 1. Two Countries - Canada and the U.S.
• 2. Two Products - Newsprint and Software
• Worker Requirements
• Newsprint Software
• 6 3 U.S.
• 5 4 Cda

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TRADE INCENTIVES

• Domestic Exchange Ratios in the Absence of Trade
• U.S. - Software/Newsprint 2 units
• Canada - Software /Newsprint 1.25 units
• Newsprint is relatively cheap in Canada and
  relatively dear in the U.S. Reverse is true for
  software.

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TRADE EFFECTS

• With free trade, prices of goods must be the same
  in the two countries.
• Canada will demand software from the U.S.
• U.S. will demand newsprint from Canada.
• World rate of exchange (software/newsprint) will
  settle somewhere between
• 1.25ltxlt2.00

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IMPACTS ON LABOR MARKETS

• In the U.S., demand for software workers will
  increase. Demand for newsprint workers will
  decrease.
• If software workers enjoy higher incomes, more
  education than newsprint workers, the gap between
  the more and less- highly educated will increase
  in the U.S.

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A QUESTION OF FAIRNESS

• Why care about workers and others who are hurt?
• Could lead to social unrest that hurts everyone
• If other nations are allowing practices that are
  not allowed at home, it is discriminatory towards
  home country workers affected
• Some practices are intrinsically immoral
• Foreign workers may also suffer

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ARE ISSUES OF STANDARDS REALLY IMPORTANT?

• Does capital flee to sweatshop countries?
• Does capital flee to polluting countries?
• Do investors and skilled workers have no
  commitment to home country institutions?
• Do consumers ignore unethical practices?

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RODRIKS PRESCRIPTIONS

• Retreat to protectionism is no answer
• Countries should be allowed to sign-off from
  commitments that are incompatible with social
  imperatives, e.g. cultural sovereignty.
• Enhance mobility of workers domestically and
  internationally
• Maintain social programs. Tie safety net closer
  to labor markets

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CASES TO CONSIDER

• Canadian government officials have long argued
  that restrictions on U.S. media products are
  necessary to protect Canadian producers of
  similar products. The latter, in turn, must be
  protected if Canada is to have its own cultural
  voice. Without a cultural voice, Canada will
  ultimately lose its political sovereignty.
  Evaluate this position.

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CASES TO CONSIDER

• European labor unions have argued against
  allowing European employers to import cheaper
  workers from the Balkan and the Southern
  Mediterranean regions. They argue that imported
  workers undermine the ability of native workers
  to earn a living wage. Evaluate this position.