Wexistence

My notes from a talk Vida and I gave last year to high school seniors in LSGH, and then some. Relevant to some points I want to make in a later post.

“It is time to move the debate about globalization forward … we can to a large extent pick and choose between the bits of globalization we like and those we don’t … Our challenge is to grasp the opportunities that globalization offers while taking the sting out of its threats.” ¹

Economic Globalization

Some view globalization as a key to future world economic development. In theory, removing barriers to trade should bring immense benefits to everyone. It will lead to greater specialization and division of labor as each country concentrates on producing goods and services in which they have a competitive advantage. Freer trade leads to greater efficiency and cheaper products.

Other regard it with hostility and even fear, believing that it increases inequality within and between nations, threatens employment and living standards and thwarts social progress. The increased integration of markets and the free flow of capital and labor across borders can result in greater social instability. Local economies are made more vulnerable to external shocks in the wider economy and local industries are threatened to be run out of business by their more competitive counterparts elsewhere.

The benefits of globalization are real, yet so are its dangers. It is up to countries to strike a balance between the two, to “grasp the opportunities that globalization offers while taking the sting out of its threats.”

Sovereign nations can manage the rate and pace of globalization by the laws they make, the policies they adopt and the international agreements they enter. International institutions such as the WTO exist precisely so that the nations of the world can come together to discuss and negotiate the “bits of globalization that they like and those they don’t.”

There are no international laws that tell nations precisely how they should go about globalization. There is no manual on globalization, there are no easy steps 1, 2 and 3. Globalization can be viewed as a game: nations are the key players, international institutions like the WTO are the referees, and the rules are negotiable and are made up as they go along.

Free Trade vs. Fair Trade

Some people may hold the false notion that the WTO is for free trade at any cost. Beyond free trade, the WTO is for fair trade. The WTO seeks to establish an equitable trading system among developed and developing countries. This means implementing rules that will ensure that trade is fair, stable, predictable and transparent. Within this framework, countries can come up with policies and agreements that will allow them to benefit from globalization while cushioning themselves from the negative effects.

The WTO has nearly 150 members, accounting for over 97% of world trade. The legitimacy of the WTO is unquestionable.

The WTO puts order where there would otherwise be anarchy. According to microeconomics, markets are not effective in producing “public goods” and unrestrained competition can lead to “public bads”. When the market fails, the state intervenes to generate collaboration rather than competition. In the international political economy, there is no “super-state” to force sovereign states to collaborate instead of compete. Economic globalization can lead to global market failures such as trade barriers and ruinous competition . The WTO is essential in promoting equitable trade practices and in settling disputes.

The WTO system is intended to facilitate the flow of trade. It seeks to establish an equitable trading system among developed and developing countries. This means implementing rules that will ensure that trade is fair, stable, predictable and transparent.

The WTO provides the forum for negotiating liberalization. It also provides the rules for how liberalization can take place, and a venue for dispute settlement. Guided by the rules of the WTO, member countries bargain with each other on how low trade barriers should go. Their negotiating positions depend on how ready they feel they are to lower the barriers, and on what they want to obtain from other members in return.

Over three quarters of WTO members are developing or least-developed countries. Freer trade means great adjustment costs for these countries. Thus, all WTO agreements contain special provision for them, including longer time periods to implement agreements and commitments, measures to increase their trading opportunities and support to help them build the infrastructure for WTO work, handle disputes, and implement technical standards. The provisions are intended to help local producers adjust to the demands of freer trade.

A WTO committee on trade and development, assisted by a sub-committee on least-developed countries, looks at developing countries’ special needs. It is responsible for the implementation of the agreements, technical cooperation, and the increased participation of developing countries in the global trading system

In sum, the WTO system aims to be:

• Non-discriminating — a country should not discriminate between its trading partners (they are all, equally, granted “most-favored-nation” or MFN status); and it should not discriminate between its own and foreign products, services or nationals (they are given “national treatment”).
• Freer — with barriers coming down through negotiation
• Predictable — foreign companies, investors and governments should be confident that trade barriers (including tariffs, non-tariff barriers and other measures) should not be raised arbitrarily; more and more tariff rates and market-opening commitments are “bound” in the WTO.
• More competitive — by discouraging “unfair” practices such as export subsidies and dumping products at below cost to gain market share.
• More beneficial for less developed countries — by giving them more time to adjust, greater flexibility, and special privileges.

The WTO can be beneficial to countries, but it requires their participation. Negotiation is the game. The countries are the players. The WTO is the referee. The referee cannot do anything if the players refuse to play. But nothing fruitful will come about if countries refuse to come to the negotiating table. When talks collapse, it does not mean that there is something wrong with the game or with the arbiter. It only means that the players are not very good at playing the game.

Issues to Consider:

Equalization of Production Costs

Free trade promotes greater capital and labor mobility. According to the Heckscher-Ohlin model, free trade will cause nations to export goods that use their most abundant factors of production and import goods that use their scarce factor of production.

An important implication of the Heckscher-Ohlin model is that trade equalizes factor prices across different countries. It tends to increase the demand for factors of production in relative abundance and decrease the demand for factors of production relatively scarce in a country.

As trade increases, the demand for capital-intensive goods increases in a capital-intensive country, and the price of capital will rise. As the demand for capital rises, the demand for labor will decrease, causing the price of labor to fall. The process happens in reverse in labor-intensive countries.

Adjustment Costs

Freer trade will cause a dislocation of workers in an industry in a country that does not have a comparative advantage relative to another country in that industry. The workers from these firms face job loss as production of their product shifts to another country. These workers can be retrained for a different industry, but this takes time and is difficult for older workers near retirement.

To soften the blow countries have tended to phase out trade barriers. The transition is made slowly over time, so that workers from the declining industry can retrain or retire over time, and so that firms will not go bankrupt at the initiation of free trade.

For example, AFTA has a scheme called the Common Effective Preferential Tariff (CEPT), which aims to lower tariffs in stages. In some cases, tariffs will be cut 25% after one year, 50% after 5 years, and 100% after 10 years. This gradual phasing out of tariffs will allow production to shift from one industry to another more slowly. But phasing in free trade also has a cost. It will take years to gain all of the benefits of free trade. This period of transition may be necessary politically, but it does have an important disadvantage.

Infant Industries

It is argued that temporary trade restrictions are required to protect infant industries from foreign competition while they are establishing themselves. Old mature industries argue that they need time to restructure. However, in most cases, these industries simply want permission to continue business as usual. Greater levels of competition will force firms to either become more efficient or to shut down. To many firms, neither of these options are desirable.

Political and Social Issues

Political and social issues make further trade liberalization in both advanced and developing countries difficult. Unemployment is a major concern. To become more efficient and to save on costs, firms are trying to cut down on labor. Many workers are being laid off. As firms grow and GDP increases, the rate of unemployment also increases. The number of newly unemployed due to rationalization will outweigh the number of newly employed due to the growth of firms. This is the so-called “growth without employment increase”. Naturally, workers will lobby against free trade and politicians will become reluctant to liberalize it.

The problem of unequal distribution of welfare gains is another matter that generates concern. On one extreme there are people who want to secure the equality in opportunity, and on the other there are people who want to see the equality in results. From the social stability point of view, there is a need to compromise and decide the appropriate combination between the two. The combination will depend on the values and priorities of each nation and is a matter which politicians will have to resolve.

Politicians may have vested interests in protecting certain industries. They may protect those which receive great social sympathy for the sake of social and political stability

Protectionist policies are sometimes necessary to help countries make the difficult transition to free trade. They're not necessarily intended to prohibit or reduce trade but are sometimes adopted as temporary measures to deal with adjustment costs and give infant industries a chance to modernize and be competitive. Trade agreements must be negotiated to keep trade barriers within reasonable limits, and powerful economies must not retaliate against weaker economies whose trade barriers stay within agreed limits.

Oligopolistic Competition

Free trade, the reduction of transportation cost and the progress of information technology has increased the incidences of oligopolistic competition. More and more multinational corporations are being formed as the number of new mergers, acquisitions, and partnerships between companies increases. Domestic companies in developing countries are more likely to be assimilated by multinationals. Mergers between domestic companies are also being formed to help domestic more oligopolistic. companies compete with multinationals. In this way, the market is becoming In such situation, trade may not be mutually beneficial to all countries involved. Some countries may lose from trade. Oligopolistic competition increase the possibility that workers will suffer. The distribution of value added between capital and labor will tend to move in the unfavorable direction for labor.

Increased Instability in the Regional (and World) Economy

The combination of trade liberalization, capital investment liberalization, and revolution in the information technology increases the instability of the world economy.

Trade liberalization has brought about greater interdependence among nations. Thus, small countries can be adversely affected by the economic shocks elsewhere. Free capital transaction, the quick acquisition of common knowledge through Internet and the financial engineering based on information technology are being blamed to a considerable extent for the Asian financial crisis.

The phenomenon of “herding” is particularly hazardous. Perfect information is not a realistic assumption, and most people and companies act based on limited information. Their sources of information are often secondary and not always reliable. In the case of Asian financial crisis, rating companies provided misleading information. Information exists in an asymmetric way in many cases. All these factors increase the instability of the regional – and world – economy.

Environmental Concerns

Free trade can have environmentally hazardous effects. The rapid industrialization through export promotion policies has increased air and water pollution in many developing countries. The exploitation of natural resources to meet high demand is damaging the different countries’ ecosystems. Also, free trade facilitates the mobility of environmentally harmful commodities. Fifteen of the fast track commodities under AFTA’s CEPT are environmentally harmful. Because economic development is often prioritized over environmental preservation and because the costs of environmental degradation is not factored into the price of products, free trade cannot address this problem. Thus governments must intervene with appropriate policies. These policies may take the form of trade tariffs or non-trade barriers such as the implementation of rules and regulations regarding standards.

Globalization and New Ways of Thinking About Security

Globalization has brought about the expansion of interaction processes, forms of organization, and forms of cooperation between both state and non-state actors. The conditions of interdependence and interpenetration have made national and global security more complicated than ever before. “Security decisions increasingly take place outside the traditional purview of sovereignty. Globalization creates an interpenetration of foreign and domestic issues that national governments must recognize in developing policy.”¹

The traditional approach to security is concerned with the protection of a state’s territorial integrity, political independence and sovereignty against “external” military threats under state control. The current security discourse, however, goes beyond state-centric analysis and military threats and examines the political, economic, social and environmental dimensions of security as well as the many linkages between them. It considers such issues as the plight of children in armed conflict, terrorism, trafficking in arms, narcotics and people, the spread of infectious diseases, and cross-border environmental depredations. This approach, which considers a wide range of human challenges, is known as the non-traditional approach.

The non-traditional approach is a critique of the traditional approach, but it is not necessarily in opposition to state sovereignty and national security. The state remains the central provider of security in ideal circumstances. The approach does, however, suggest that traditional security does not necessarily correlate with all the dimensions of the security of people, and that over-emphasis upon statist security can be detrimental to human security needs. Traditional conceptions of state security are a necessary but not sufficient condition for human survival.²

Non-traditional security does not include all health, welfare and development challenges. These issues become security concerns when they reach crisis point, when they undermine and diminish the survival changes of a significant number of people and when they threaten the stability and integrity of society.³

Non-traditional security issues can blur the lines between internal and external security. Their effects can spill over territorial borders and cause a range of wider security threats and sources of instability or otherwise disrupt international markets. Thus, they are very much an international concern and require international cooperation among a range of actors, including non-state actors.

Global Interest vs. National Interest

The global interest can be understood as the common good of the international community. Environmental protection, freer trade, respect for human rights, peace and security are part of the common good, because they are in the interest of all members of the international community. Thus, there is no clash between the global interest and national interests. What is good for the international community is good for the nations that comprise it.

However, this is not necessarily true the other way around. What nations perceive to be in their national interests may not coincide with what is in the global interest. For example, when nations go to war, they perceive war to be in their national interest. War, however, is not in the global interest.

The global interest is difficult to achieve because nations have a wide array of interests, and some of them are in direct opposition to each other. The distribution of power among states in the international system is uneven, and some states have greater capacity to achieve their ends. Some gain at the expense of others. This arrangement could potentially lead to instability and conflict.

Nations can choose to align their policies with the global interest, or they can chose to pursue their interests single-mindedly. It is up to the state whether it wants to compromise or not. If the state chooses to ignore the global interest in pursuit of its national interest, then conflict will inevitable arise. Disregarding the global interest in pursuing national interests, however, can only be detrimental to the nation.

____________________
¹ Philippe Legrain, Open World: The Truth About Globalisation, Abacus, Great Britain, 2002
² Victor D. Cha, “Globalization and the Study of International Security”, Journal of Peace Research, Vol. 37, No. 3. (May, 2000), pp. 391-403
³ Ramesh Thakur, “Non-traditional security in Asia Introduction,” in Broadening Asia's Security Discourse and Agenda: Political, Social, and Environmental Perspectives eds. Edward Newman and Ramesh Thakur (New York: United Nations University Press, 2004)
⁴ Ibid.

The exceedingly close race that Hillary Clinton ran against Barack Obama showed that America is responsive to the idea of a woman in the White House. The Republicans took that idea and ran with it in the completely wrong direction. They gave us Sarah Palin.

While I admit that the idea of a woman as commander-in-chief of the most powerful country in the world appeals to me as a woman, that's not why Hillary Clinton was my candidate. Simply put, Hillary's got the chops to be president. I felt she was the best person for the job, and the fact that she's a woman was merely incidental.

I marvel at the McCain campaign's audacity in changing the rules of this election's gender debate by putting forth a vice-presidential candidate who is Hillary Clinton's complete anti-thesis. Didn't they think we would notice?

“…While the Republicans would have us believe that Palin can simply stand in for Hillary Clinton, there is nothing interchangeable about these politicians. We began this history-making election with one kind of woman and have ended up being asked to accept her polar opposite. Clinton's brand of femininity is the kind that remains slightly unpalatable in America. It is based on competence, political confidence and an assumption of authority that upends comfortable roles for men and women. It's a kind of power that has nothing to do with the flirtatious or the girly, nothing to do with the traditionally feminine. It is authority that is threatening because it so closely and calmly resembles the kind of power that the rest of the guys on a presidential stage never question their right to wield.” (Salon.com)

The farcical comparison was captured perfectly by SNL:

Tina Fey as Sarah Palin: Just look at how far we've come. Hillary Clinton, who came so close to the White House. And me, Sarah Palin, who is even closer. Can you believe it, Hillary?
Amy Poehler as Hillary Clinton: I can not.
Tina Fey as Sarah Palin: It's truly amazing and I think women everywhere can agree, that no matter your politics, it's time for a woman to make it to the White House.
Amy Poehler as Hillary Clinton: No. Mine! It's supposed to be mine! I need to say something. I didn't want a woman to be President. I wanted to be President and I just happen to be a woman. And I don't want to hear you compare your road to the White House to my road to the White House. I scratched and clawed through mud and barbed wire and you just glided in on a dog sled wearing your pageant sash and your Tina Fey glasses.

Feminist writer Rebecca Traister explains why the pro-woman rhetoric surrounding Sarah Palin's nomination is a grotesque bastardization of everything feminism has stood for:

What Palin so seductively represents… is a form of feminine power that is utterly digestible to those who have no intellectual or political use for actual women. It's like some dystopian future … feminism without any feminists.

Palin's femininity is one that is recognizable to most women: She's the kind of broad who speaks on behalf of other broads but appears not to like them very much. The kind of woman who… achieves her power by doing everything modern women believed they did not have to do: presenting herself as maternal and sexual, sucking up to men, evincing an absolute lack of native ambition, instead emphasizing her luck as the recipient of strong male support and approval. It works because these stances do not upset antiquated gender norms. So when the moment comes, when tolerance for and interest in female power have been forcibly expanded by Clinton, a woman more willing to throw elbows and defy gender expectations but who falls short of the goal, Palin is there, tapped as a supposedly perfect substitute by powerful men who appreciate her charms.

In a similar vein, Emily Bazelon talks about why watching Palin is agony for women.

When Sarah Palin made her debut at the Republican National Convention, I knew absolutely nothing about her. I saw an attractive, charming woman who appeared to be strong, confident and competent. She seemed dedicated and eager to serve. Her speech, taken in and of itself, was very compelling. Her criticism of Obama made me go, “Oh snap!” She was feisty. I liked that.

Post-RNC examination of her record as mayor and governor made her considerably less impressive. And then we got a taste of Sarah unscripted. Her succeeding interviews (Hello, Charlie Gibson and Katie Couric) completely ruined her me. Her performance at the vice-presidential debate proved that she can speak in complete sentences, but not that she understands anything about foreign policy.

Jon Meacham sums up the Palin Problem nicely:

A key argument for Palin, in essence, is this: Washington and Wall Street are serving their own interests rather than those of the broad whole of the country, and the moment requires a vice president who will, Cincinnatus-like, help a new president come to the rescue. The problem with the argument is that Cincinnatus knew things. Palin sometimes seems an odd combination of Chauncey Gardiner from “Being There” and Marge from “Fargo.”

Is this an elitist point of view? Perhaps, though it seems only reasonable and patriotic to hold candidates for high office to high standards. Elitism in this sense is not about educational or class credentials, not about where you went to school or whether you use “summer” as a verb. It is, rather, about the pursuit of excellence no matter where you started out in life. Jackson, Lincoln, Truman, Eisenhower, Johnson, Nixon, Ford, Carter, Reagan and Clinton were born to ordinary families, but they spent their lives doing extraordinary things, demonstrating an interest in, and a curiosity about, the world around them. This is much less evident in Palin's case.

But while she's not the most qualified candidate for vice-president, she is certainly the most entertaining. She's like a bright shiny object that's been tossed in the middle of the presidential race and everyone is scrambling for her. Since she first captured mainstream media attention she's become an instant celebrity who inspires a tabloid-like fascination in people.

My interest in Sarah Palin ranges from political to ideological to personal to sartorial to grammatical. Sometimes listening to her speak is like getting a root canal in the part of my brain where English resides, but the masochist in me can't wait to hear what she'll say next. I'm particularly fond of her poetry:

“On Good and Evil”

It is obvious to me
Who the good guys are in this one
And who the bad guys are.
The bad guys are the ones
Who say Israel is a stinking corpse,
And should be wiped off
The face of the earth.

That's not a good guy.
(To K. Couric, CBS News, Sept. 25, 2008)