2. Economics of globalization: good or bad consequences?

McAnany, Emile G.

It may seem too simplistic to ask the question about outcomes in dichotomous terms of good or bad when most scholars recognize that the outcomes are a mixture of consequences that come from a very complex process we call globalization. This is not done to limit discussion but to highlight from the beginning that the discourse on globalization is a contentious one because it involves values closely held by ordinary people as well as by experts. The global markets have consequences that affect people in their livelihoods, their religious values, and their identities--and people, beginning to recognize this, eagerly enter the debate about policy. One needs only to look at a country like Argentina to see the national attention that monetary policy has garnered or at how the NAFTA treaty affects the everyday lives of Mexicans to understand that the economic policies of governments have become part of the national consciousness through the political and media discourses in these countries. We will examine several positions below to understand how economics intersects with both communication media and with peoples' everyday lives.

Friedman (1999) has best expressed the demands and rewards of the new global market in his popular book, The Lexus and the Olive Tree. He argues that the real change for nations in the 1990s comes from what he calls the "democratization" of three critical factors in the global economy, i.e., finance, technology, and information. By this he refers to the increasingly borderless flow of capital for business borrowers from banks and other financial institutions who seek out customers on a world-wide scale; the diffusion of the ICTs (like the computer networks or the Internet and Web) that make the markets much more interconnected and frictionless; and finally the global flow of economic information as well as money. All of these have become more widely available to different users around the globe.

Three other concepts are important to understanding Friedman's apologia for the global economy. First, he talks about the "golden straightjacket" that refers to the need for countries to abide by the strict rules of openness of markets, soundness of banking institutions, and honesty in government and the dire consequences for those that break these rules. Second, he refers to the "electronic herd," investors who punish countries for not following the rules of the golden straightjacket by pulling out their investment capital and putting it elsewhere. Finally, he talks about the inevitability of this process--by this he means that countries have to choose to abide by the rules of the game or be marginalized economically.

Friedman does not avoid looking at the negatives of globalization for the world's majority of poor people, the ecology, the world's diverse cultures, and national sovereignty. His belief in the inevitability of the process convinces him that individuals and nations somehow must come to terms with the process and its consequences. Toward the end of the book, he proposes a way out of the dilemma for those threatened by globalization through a kind of global safety net that governments would develop, but the proposals are at best weak and depend on the varied politics of many nations which have not historically made help for citizens available. It also goes against his own argument that in the global economy there is "nobody in charge," and makes it difficult for governments to protect their citizens against this massive but nameless force.

If Friedman serves as the point man for globalization, Aristide, the former president of Haiti, represents a voice of protest against it. In his very brief book, The Eyes of the Heart (2000), he details a case of failure for globalization in one of the poorest countries in the world. In the 1980s and 1990s Haiti was one of the earliest countries to embrace the prescriptions of a free and open market, but this has resulted in an increasing economic dependency without any noticeable benefits. Aristide points out that the majority of Haiti's people are small farmers like the majority of the world's poor, and when the markets opened up to cheap food imports from subsidized and modern agricultural markets like those in the U.S. and Europe, local farmers could not compete but also could not afford to buy the imported food, thus creating a crisis for the already impoverished farmers.

Like Friedman, Aristide has no simple solutions for the increasing globalization of markets. He does suggest that the International Monetary Fund (IMF) and the World Bank could soften the demands made on governments to impose rules that hurt people. In addition he argues that the investment in basic human needs must have priority in national governments over the investment interests of markets. This highlights the political aspect of economic policies imposed by institutions like the IMF as well as by what Friedman calls the "golden straightjacket."

Two articles on economic policy continue the debate. Bhagwati (2002), a globalization economist, tries to grapple with the "discontents" of the anti-globalization movement among young people in the West that first surfaced in Seattle several years ago. His arguments are surprisingly tied to the media among other factors to account for what he believes is a mistaken idea about the nature of capitalism and globalization. He says that the media are sources of confusion that "... are propelling the young into anticapitalist attitudes ... cable television and the Internet [are the culprits]" (p. 3). He argues that because young people can witness misery in distant countries on television, they empathize without understanding the complex causes of poverty. He also blames higher education for fostering critical theories in the humanities and disciplines like sociology, but touts economics and sciences as the source of sounder knowledge of how globalization and capitalism work to help solve economic problems. His conclusion returns to the media where he sees a hope to enlighten young people about the benefits of globalization and to develop a "civil society" where people discuss rationally the issues at hand rather than going into the streets. Bhagwati's argument sounds familiar from the Vietnam War discussions about how the media lost the war for the U.S., but it seems to hold an unexamined belief in the power of the media to both create and to solve problems over deeply held beliefs and values.

The second article is by Rosenberg (2002), a New York Times editor, who takes a negative view about the globalization phenomenon. She disagrees with many people like Friedman on the nature of the process. She points out:

 It is often said that globalization is a force of
 nature, an unstoppable and difficult to contain
 storm. This is untrue and misleading. Globalization
 is a powerful phenomenon--but it is not
 irreversible, and indeed the previous wave of
 globalization, at the turn of the century, was
 stopped dead by World War I. Today it would be
 more likely for globalization to be sabotaged by
 its own inequities, disillusioned nations withdrawing
 from a system they see as indifferent or
 harmful to the poor. (p. 3)

Her arguments rest on the lack of direct benefits of the open economic trade policies that many countries have adopted (e.g., Haiti as referenced above). These policies tend to benefit the middle classes in countries but actually cost poor people their livelihoods in agriculture and other vulnerable economic sectors. She argues for a variety of policy options but maintains that the belief that globalization can be made to help poor people even in the long run is not based on solid evidence.

She is skeptical of the argument made recently by economists Dollar and Kraay (2002) that shows globalization working to improve the economies in developing countries. The problem, she points out, is a methodological one. By selecting countries like China and India in their sample and aggregating the data for the sample of those nations globalizing, the authors show that globalization works to improve per capita incomes. India and China's economic size is one factor that tends to dwarf other countries, but the data are from a decade that partly preceded the open trade policies that both China and India now have begun to implement. Rosenberg points out that the large agricultural sectors of these two countries have not yet modernized nor have the poor majorities in either country benefitted from trade surpluses nor yet faced the cheap agricultural imports that have devastated other economies. She ends the paper with a series of suggestions of how countries can avoid the draconian dictates of the IMF and World Bank in negotiating loans for economic development. She concludes that nations can tame globalization and make it work for poor people if national governments take strong measures to provide economic support to the public as well as to the private sectors.

The issues that the economic debate over globalization have raised touch on the following discussion in this review. Three issues seem important to highlight: the suffering of the poor majorities (and even middle classes in some countries) have political consequences that governments need to address; the debate over the nature of globalization, whether it is inevitable or not, will have both economic and political consequences; and the media are important in the political process of convincing constituents of the beneficial effects of their government's policies. Friedman made an important argument that reflects a key assumption for the globalization process when he focused on the diffusion of new ICTs and the information carried on them. He did not point out in detail how these work in the economic process nor did he offer insights of how individuals are incorporated into the social and cultural processes of globalization. It is to those concerns that we turn next.

Emile G. McAnany

Santa Clara University

Email: emcanany@scu.edu