Point: The Threat of Globalization

This article presents an argument on the threats of globalization. Like the Industrial
Revolution, the revolution of worldwide corporate dominance threatens the stability and
sovereignty of many nations, as they cope with the onslaught
of multinational corporations seeking cheap labor and new
markets for goods. Sweatshops and other poor working
conditions are manifestations of this trend. In the beginning
of this fair trade movement, such goods were primarily the
province of natural foods stores, including coffee, chocolate
and crafts products. But as awareness of the exportation
brought about by globalization has grown, even mainstream
stores and companies are now taking note.

Thesis: Like the Industrial Revolution, the revolution of worldwide corporate dominance
threatens the stability and sovereignty of many nations, as they cope with the onslaught
of multinational corporations seeking cheap labor and new markets for goods.

Summary: This article presents an argument on the threats of globalization. Like the
Industrial Revolution, the revolution of worldwide corporate dominance threatens the
stability and sovereignty of many nations, as they cope with
the onslaught of multinational corporations seeking cheap
labor and new markets for goods. Sweatshops and other poor
working conditions are manifestations of this trend. In the
beginning of this fair trade movement, such goods were
primarily the province of natural foods stores, including
coffee, chocolate and crafts products. But as awareness of the
exportation brought about by globalization has grown, even
mainstream stores and companies are now taking note.

Like the Industrial Revolution, the revolution of worldwide

corporate dominance threatens the stability and
sovereignty of many nations, as they cope with the
onslaught of multinational corporations seeking cheap labor
and new markets for goods. Sweatshops and other poor
working conditions are manifestations of this trend. Only in the late 1990s did Americans
begin to realize that the purchase of cheap imported goods not only eliminates American
jobs; it also reflects social, environment and economic dislocation among foreign
countries. The cultural and economic hegemony of giant corporations around the world is
causing a backlash of anti-corporate, anti-American sentiment that could threaten both
U.S. security and the very future of free international trade.

Introduction

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In the late 1800s, the Industrial Revolution created a small but incredibly wealthy group
of business leaders in the U.S. The robber barons, as they came to be known, were
primarily the Getty, Rockefeller, and Morgan families, who controlled steel, oil,
railroads, newspapers and other businesses.

They came to wealth largely by plundering cheap natural resources,

with little heed to the environment consequences, and exploiting cheap
labor, including child labor. They raked in $50 or more per hour in
profits, while their laborers were paid 22 cents per hour, a ratio of
more than 200 to one.

Eventually, the U.S. government and workers both fought back against
this corporate domination. Monopoly enterprises were forced to
disband, the government instituted income taxes and labor organized into unions to fight
for better wages and safer working conditions. U.S. corporations were also forced to meet
reasonable environment standards for domestic operations.

At the turn of the twenty-first century, this cycle is repeating itself on a global scale.
Today, the cheap resources, lax environmental regulations and exploited labor belong to
developing countries in Asia, Latin America, South America or Africa.

The Rich Get Unbelievably Rich

Today's robber barons hide behind cloaks of corporate secrecy. Having learned from the
misfortunes of the corporate kings of a century ago, they are generally adept at hiding
their wealth, both from public scrutiny and from the Internal Revenue Service (IRS). The
average CEO of a large American corporation made about $12 million per year in 1998.
With average employees at many such corporations making little more than $30,000 per
year, the modern ratio of CEO-to-employee salaries is often around 400 to one. As
outrageous as this may seem, for many American corporate leaders, it is not nearly good
enough. By exploiting cheap foreign labor, wherein workers may earn little more than a
few dollars per day, or perhaps as much as $8,000 per year, CEOs can increase that ratio
to 1,500 to one. Those few Americans that held substantial amounts of stock didn't
complain during the 1990s, since what was left after upper management skimmed off
millions in salaries, perks and stock options, was usually still enough to maintain stock
prices.

Not surprisingly, given the increasing disparity between costs of production and prices of
goods, multinational corporations can swallow their competition as they become ever
larger. Of the 100 largest economies in the world as of 1999, only 51 were countries. The
other 49 were corporations, including General Motors, DaimlerChrysler, Ford Motor and
Wal-Mart Stores all in the top third, well above countries such as Greece, Poland,
Finland, Portugal, Chile and New Zealand.

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The World Trade Organization

The flagrant greed of corporate leaders has come under increased scrutiny due to the
three-year collapse of the U.S. stock market that began in 2000.

However, the wake-up call for opposition to globalization came in

1999, as protestors from around the world gathered in Seattle
Washington to protest the World Trade Organization's (WTO)
third ministerial meeting. The WTO sets trade rules for its 134-
member nations. The history of the organization is one of ignoring
consumer rights, environmental protections or even local rule as it strives to make the
world a friendly place for multinational auto and oil companies to do business, or for
textile firms and others to exploit cheap manual labor.

In November 1999, even as corporate greed was reaching a crescendo in the U.S. stock
market, about 100,000 protests marched in Seattle in a successful effort to disrupt the
trade conference. Taken by surprise at the magnitude of the protest, police eventually
resorted to riot-style tactics, using tear gas, pepper spray and plastic bullets to disperse
the protestors.

The IMF and World Bank

Other protests have focused on the International Monetary Fund (IMF) and the World
Bank, as in Washington, D.C., in April 2000.

Both of these organizations are holdovers from

reconstruction efforts that followed World War II.
Created in the Bretton Woods Meetings in 1944, the
World Bank was meant to aid in the rebuilding of Europe,
while the IMF was meant to stabilize currency exchange
rates between war-torn Germany and other countries
ravaged during the war. As often occurs with large
bureaucracies, both organizations took on a life of their
own after the rebuilding of Europe. In this case, as tools
to force small developing nations to accede to the demands of industrialized nations.

The two groups arranged for developing countries to receive billions of dollars in loans,
but only if they followed Western-style rules of capitalism and social structures,
including allowing foreign investment by multinational corporations. Countries in Latin
America, including Peru, Chile, Bolivia, Brazil, the Dominican Republic and Argentina,
are still struggling with the effects of these policies on their economies and currency. In
Africa, the situation is often even worse, as multinational investment has meant little in
the way of better living conditions, healthcare or even proper food and shelter in many
countries.

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McDonald's, Nike and Starbucks

Globalization also results in a loss of local culture. In some ways, this

equates to the "one world" utopia that many anti-war activists have
long desired. They just didn't realize that the one world would not be
lead by elected representatives, but rather by corporate scions that
often have little if any concern for the
health and well being of people in the
countries in which they do business.

American and British music is heard everywhere around the

world. American films and television make the world one
giant audience for the latest releases. The world comes together, not in peace and
understanding, but for the orchestrated violence and commercial marketing of Super
Bowl Sunday.

Fighting Back Against Homogenization and Foreign Rule

The 1999 "Battle in Seattle" showed that corporations were being put on notice, just as
the robber barons were at the turn of the twentieth century. In Mexico, the Zapatistas
declare "The world we want is one where many worlds fit."

Much of the resistance toward globalization remains split. On one side are
environmentalists and other activists who favor a more equal playing field between
countries, while still generally supporting free trade. On the other side are labor activists
who often favor more protectionist tactics, such as those who call for tariffs against
foreign steel imports into the U.S., or who continue to rail that the North American Free
Trade Agreement (NAFTA) steals jobs from American workers. Both sides have a
common greater goal of improving conditions for workers, be it at home or abroad, so
that people can earn a living wage and not be forced to struggle to survive, even as their
employers continue to hoard cash in their offshore bank accounts.

Specific Solutions

One effort that seeks to correct the unfair labor conditions typical of globalization is the
introduction of certified "fair trade" goods into American markets. These products have
to be produced under safe and reasonable labor conditions, often with
stable minimum price guarantees. They do not have to be made in
developing countries, as even many American farmers are turning away
from commodities markets that favor middlemen and corporations.
Instead, they are taking stable price guarantees for certified fair trade
goods, typically from organic farm production.

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In the beginning of this fair trade movement, such goods were primarily the province of
natural foods stores, including coffee, chocolate and crafts products. But as awareness of
the exportation brought about by globalization has grown, even mainstream stores and
companies are now taking note. For example, Starbucks stores now sell fair trade
certified coffee.

The largest U.S. clothing retailers, including the Gap, Wal-Mart, Nike, and Tommy
Hilfiger, are also coming under increasing scrutiny for their goods
made with sweatshop or otherwise unfair labor practices in
countries such as Thailand.

Gap stores also have operations in Bahrain, Argentina, Brunei,

Burma, Costa Rica, India, Indonesia, Israel, Korea, Kuwait,
Lesotho, Madagascar, Nepal, Sri Lanka, Turkey and the Ukraine.
Obviously, all it would take is for one such huge company to guarantee fair trade and
labor practices in order to make a difference to thousands, if not millions, of workers in
its supplier countries.

Ponder This

1. What similarities does the author cite between the Industrial Revolution and
globalization?
2. In your opinion, is the CEO-to-employee salary ratio a meaningful indicator of
worker exploitation? Discuss.
3. According to the author, how have the roles of the World Trade Organization and
the International Monetary Fund changed over time? What effect has this change
had on globalization?
4. In your opinion, what are some of the opportunities and challenges of "fair trade"
as a solution to worker exploitation?