Monkey’s in action

My mind is astounded as I trace the evolution of my intellectual growth this semester as represented through my blogging accounts. IN my first few blogs it seems as though I was still trying to truly grasp the essence of what precisely globalization is. In these blogs I had yet to be influenced by in depth class discussions, research, and book analysis. Gross assumptions were made as I formed uneducated claims to the nature of globalization. However as the semester progressed so did my blogging capabilities. I made “Images of globalization” which was my voice thread and a great improvement over my first image based writing “globalization: economic colonization?” Then with the advent of my completion of “What did Friedman mean”, my analysis of “The World is Flat” my eyes were opened to just how many aspects of globalization there are. This revelation fueled my curiosity and sent me delving into research. I formulated my globalization questions with a blog and then set out to find the answers in “IN Defense of Globalization”. I blogged about chapters 1, 7, 8, 10, and 15 which, I feel covered the wide spectrum of globalization elements. As with Friedman, Bhagwati further fueled my curiosity and sent me deeper into research. Both writers were knowledgeable on globalization however, I felt as though they were some what vague as to globalizations effects on politics. I was desperately trying to formulate a thesis on how Globalization was affecting politics and found an essay by Giddens to be the key to tying Friedman’s ideas together and expanding on them. This culminated into my blog “The phasing out of government” and its spin off influenced by my political science class “Globalization and government”. These latter blogs incorporated knowledge gained throughout the semester. They seem more scholarly containing factual evidence and research based theses, and revealed knowledge gained in all aspects of globalization gained throughout a semester of class discussions and research.

In chapter 15 Bhagwati addresses the rapid speed in which globalization is engulfing the world and attempts to find how rapidly a smooth transition to globalization should be. He states that to minimize the downturns of globalization from too rapid of growth that “governance will have both domestic and international dimensions”. He asses the domestic governance for globalization to be lead by interest groups from an era of vast civil society growth. These interest groups will advocate against the negative specks of globalization on a domestic level which, will in turn attract the attention of international organizations which, will be able to orchestrate an international solution to the problem. Tis method of governance is assigned to checking globalizations negativities from too rapid of growth because, they will be more effective than governments impeded by “marginalized groups”.

In chapter 10 Bhagwati explores the economical aspects of globalization by discussing the fear of “A race to the bottom” in terms of labor standards. As in almost every chapter Bhagwati again takes a pro-globalization stance as he reveals in the following a belief that globalization is an improvement for labor ” Trade has actually helped the workers, not just harmed them insignificantly, by moderating the decline that was instead caused by technical change that economized on the use of unskilled labor”. He goes on to disprove that trade between richer nations with poorer nations will decrease wages in the richer nation. Bhagwati disproves this notion by citing the theory of ladders where as when poorer countries industrialize due to trade they do not depress the richer countries wages because the emerging poor nation curves the exports of the developing country under it on the ladder. Throughout the chapter he affirms that globalization constitutes a race to the top for labor standards with its promotions of competition and free trade.

Through chapter 7 Bhagwati discusses globalization in relation to culture. He explores the nativist stance of globalization as a threat to indigenous culture, but affirms his belief that “economic globalization is a culturally enriching process”. With the example of McDonalds in France Bhagwati argues that globalization isn’t out to destroy native cultures. In the example he brings up the idea that when you are marketing your product you want to relate it to the customer. In this sense multi-national companies are going to want to appeal to the native cultures in an effort to increase profits, as in the case with McDonalds in France. This idea attests to globalization improving culture where the new ideas are spread through cultures yet the beneficial aspects of the old culture will remain intact. Bhagwati then goes on to point out that culture is inevitably changed as ideas are spread in an almost creative destruction manner as seen in the following “Cultures will certainly change over time, as invention, organizational innovation, political change such as democratization, and globalization on many dimensions occur. Throughout the chapter Bhagwati has an optimistic outlook for globalizations affects on culture showing the benefits of the new replacing the old in the same manner creative destruction Is beneficial to economic advancement.

In chapter 8 Bhagwati discusses the political ramifications of globalization as he calls into question the soverignty of nations in continually globalizing world. He reveals the main theme of the chapter in the following “Integration into the world economy via trade could constrain the freedom of domestic action”. Bhagwati builds on his statment that globalization ruducess poverty from chapter five by adding financial affluence leads to democracy. He argues that globalization increases affluence through open markets which spur increased spending and lower prices; then goes on to argue the more open the market is the more it will harbor democracy. Ghagwati also points out that where globalization promotes democracy through open markets it also constrains it by reducing the soverignty of nations. In the globalized world soverignty is reduced by the interdependence of nations, rendering nations unable to make whatever decisions they want without taking into consideration the nations they are interdependent on. Bhagwati refers to this as a paradox which he assesess throughout the chapter. Ultimatly, my take on his conclusion is that Globalization spreads a watered down version of democracy.

As the idea of creative destruction from Joseph Shumpeter’s “Business Cycles” is outlined throughout chapter 15 one can find many similarities between this idea of change in the economy between creative destruction and the current phenomenon of Globalization. Shumpeter’s idea of creative destruction is used to describe the tumultuous ups and downs and progress of a capitalist economy. This is attributed to entrepreneurs innovating and changing the market despite resistance from already in place business practices, which eventually themselves become common place as profits go down due to mergers etc. Creative destruction was derived from the economic changes throughout the industrial revolution however; the same concept applies to globalization and is a good model for revealing the changes taking place from globalization. As creative destruction continues in the United States by means of Globalization the U.S. will only further benefit due to its global role as a leader of innovation and its ability to reap profits from investing capital in other nations. The great growth of the United States economy over the last century can be attributed to creative destruction and is only prospering more as globalization has become a catalyst for innovation and change in the economy.

            Creative destruction occurs as entrepreneurs drawn by the incentive of high initial profit margins create new inventive and innovative ways to change the market in terms of providing new goods and services in more efficient ways shaking loose the traditional constituents. As a result of entrepreneurs breaking into the market the innovative ways and reaping high initial profits “Powerful elements of society resist major innovations, because they tend to wreak havoc on existing arrangements. As a result, the history of capitalism is studded with violent bursts and catastrophes.” (Pg. 4 Ch. 15) Eventually however, as the entrepreneurs innovate and organize more their methods surpass these resistant elements due to overwhelming efficiency. Then like the very constituents that had resisted their innovations the entrepreneurs will attempt to stave off any competition “To preserve his high profit for as long as possible, through patents, further innovation, secret processes and advertising” (Pg. 5 Ch. 15). Shumpeter describes this economic process as creative destruction to describe how new creative processes destroy the old elements of the economy that they replace. These elements are destroyed due to “The extreme difficulty of changing traditional ways of doing things…the destructive part of creative destruction” (Pg 257 Ch. 15) and in the long term result in higher income, GDP, and standards of living. Made possible due to the efficient nature of the innovations which have to constantly become more efficient to maintain profit margins as other entrepreneurs try to break into the market as seen here “Cutthroat competition, discrimination, and the evils of unregulated enterprise But, the real story was one of consolidation, efficient administration, and sound finance” (Pg. 263 Ch. 15)

            As globalization breaks down barriers to trade it encourages global markets to innovate destroying old independent style economies and flattening the world. Creative destruction is a good model for Globalization because it reveals how “Recurring innovation propels the economy, which exists in a state of constant tumult…new firms drive innovation.” (Pg. 4 Ch. 15) As old economic practices resist the flattening of barriers to trade and innovation caused by globalization they prove it to be creatively destructive. Similar to economic patterns during the industrial revolution “Entrenched interests fought tenaciously against mechanization and the factory system…they petitioned for regulations outlawing factories” (Pg. 257 Ch. 15) entrenched interests of today fight globalization by putting up tariffs to protect jobs and petition against outsourcing. Globalization like all capitalistic destruction created “mutual dependence all around” (Pg. 262 Ch. 15) and “drove national economies forward and the long term progress far outweighed short term pain” (Pg. 266 Ch 15). Friedman described in “The world is Flat” the short term pains of globalization  in terms of job relocation and the dot com burst in the stock market but, then went on to describe the culmination of Globalization innovations into widespread economic bursts around 2004 describing this period as “while I was sleeping”. One can see how this description of globalization lies in resemblance to the following on creative destruction “Improvement, dislocation and absorption, copying, following, and competing as prices fell, the real avalanche of products came” (Pg. 259 Ch. 15)

            For creative destruction to take place it requires innovation and investment of capital. During the past century creative destruction was made possible in the United States by American ingenuity and investment of capital in the U.S. from Europe as seen here “Huge amounts of money flowed into the United States from Britain and Europe” (Pg. 263 Ch. 15) In this new era of creative destruction America’s economy will prosper even more due to Americas ability to be the one investing capital into foreign nations and globalization making it possible for America to reap both the financial and economic benefits of doing so “Raising the overall standard of living and bringing fortunes for entrepreneurs” (Pg 257 Ch 15). Also due to this ability to redirect capital into foreign investment America’s economy has made a shift to the service sector. This shift allows the American economy to be a global leader in innovation and invention turning out new and more efficient services to cope with the globalizing world. These attributes of the American economy puts the United States in a position to prosper even more so from globalization in terms of increased standards o f living than it had during the last century.

            Creative destruction entails profit seeking entrepreneurs making innovative niches in the market generating efficiency in attempts go keep new found profit margins in light of competitor entrepreneurs and requires innovation and investment in capital to take place. This is a good model of globalization because it sheds light on and shows many resemblances to the current economic changes occurring due to globalization. Creative destruction in the form of globalization will be even more beneficial in the long term to the U.S. economy than industrialization was in the last century due to shifts to the service sector allowing for innovative advancement and its ability to redirect capital into not only domestic investment but also foreign investment. U.S. dissention to globalization is not beneficial to its economy and won’t be able to last long for after all “Capitalism is in essence a process of economic change. In the absence of change capitalist society cannot exist”.

In a political analysis of european governments, the U.K. and France in particular, I have found that the effects of globalization on these countries are leading to movements for decentralization of power and privatization of government owned buisnesses. Both, France and the U.K. are Unitary governments with regional provinces that do not share soverignty with the federal government. However, in the years since globalization has been changing the political and economical landscape of the world a new theme of decentralization can be seen. Decentralization occurs when the central government cedes unsoverigned power to regional constituents. In the U.K. the central government in London has been allotting more and more power to make regional decisions to its four provinces Scotland, Whales, England, and Northern Ireland. The same phenomenon can be seen in France where, the central government has been granting more and more regional autonomy to its 32 provinces. The power granted to these regional constituents can be taken back by the central government in Unitary systems because no changes to the constitution have been made. This theme of more power on the regional level can be seen throughout europe in both federal and Unitary systems and can for the most part be attributed to globalization with its empowering of the individual and breaking of political barriers. As Globalization has been challenging the central power of government systems throughout europe it has also been challenging the socialistic traditions of these systems. Throughout Europe and especially in France the government has a socialist setup where the government owns many buisnesses and aspects of the economy. Since the creation of the new global market place buisinesses have to remain globally competitive and efficient it is no longer economical for the government to prop up national companies with federal money if these companies cannot remain competitive. Therefore, it has become a great burden for governments to own large parts of the economy. As a result governments throughout europe have been selling government run industries to privatized companies.

In an attempt to understand globalizations affects on politics I reasearched the subject and found that by intermingling the concepts Friedman displays in his “The World is Flat” with Anthony Giddens’s essay “Globalisation” a central theme of Government being replaced by international organizations can be achieved. In my research I have discovered the forces of globalization rendered government institutions as we know them inefficient in terms of regulating the economy in this new global era. Political resistance to globalization in the forms of tariffs, job protection, trade regulations, and wealth distribution has become inhibitive of globalizing economies. These political defenses make the economy, which government was set up to regulate, inefficient. Due to the rise of organizations to combat economic problems on the global scale governments set up as nation-states are losing sovereignty and the ability to affectively manage these aspects of their domain. Or as Giddens so plainly sates in his essay “Nations have lost most of the sovereignty they once had, and politicians have lost most of their capability to influence events. It isn’t surprising that no one respects political leaders any more, or has much interest in what they have to say.” (Giddens 236)

Globalization and the forces that are rendering our current forms of government inefficient seem to be a current global phenomenon rapidly accelerating, which enables, encourages and advances connections between both individuals and groups worldwide, allowing for the exchange of cultural, technological and political ideas and their applications. Giddens reveals the abrupt nature of this phenomenon by stating here “It has come from nowhere to be almost everywhere.” (Giddens 236) With his book “The World is Flat” Friedman adamantly argues that the current forces of globalization have turned the world flat. This notion of a flat world refers to how barriers in trade, opportunities, and personal contributions to society are being eliminated, thus creating a level playing field, or a flattening world. Friedman argues that the world was flattened by a series of events that eliminated political and physical barriers which previously got in the way of equal opportunities and the best person for a job getting that job. Political barriers seem to inhibit the flattening process through governmental control, and regulations either through ineffective governmental systems or through corruption. The very start of this flattening process which, Friedman pegs as the first flattener seems to be the elimination of the largest political barrier of the 20^th century. This barrier was the Berlin wall which, prior to its destruction on 11/9/89 symbolized the dividing of the world between communist and capitalist countries. The taking away of this shroud of communism decentralized power in the world increasing connections, trade and economic reliance between countries. Previously the world had been split into two with reliance on two main superpowers, but now every country could be a global player, and people in previously communist countries were freed from governmental controls and regulation.

A common theme of my research seemed to be how the globalizing of economic markets are a main driving force in rendering governments inefficient. This concept is expressed here by Giddens “Economic influences are certainly among the driving forces, especially the global financial system.” (Giddens 239) The first concern with most governments when faced with a globalizing economy is job loss. To combat this issue in order to maintain political popularity most government officials will raise high tariffs to protect local industry. In doing so often times this will have a negative effect on the local economy as well as the global economy. An example of this occurrence would be the point of Indiana vs. India which Friedman brings up in his book. In this situation the state of Indiana hired a high tech Indian firm to replace its state computer system, contracting out because the job was too big for local firms. This contract saved the state of Illinois millions of dollars because of the low rate the Indian firm was able to operate at however, in a political maneuver politicians revoked the contract and at a greater price, with less results hired multiple Illinois firms to do the job in order to preserve local jobs. This sort of government intervention has high cost to the consumer and the producer and is no longer conducive to a productive economy in the global market. In the global age you can no longer put up barriers to maintain old jobs, retraining has to be done and transitions to jobs of the global market need to be made for as Giddens states “The global marketplace, they say, is much more developed than even two or three decades ago, and is indifferent to national borders.” (Giddens 236) The same situation occurred when Bush was running for president in 2000. In a political maneuver to get votes in Pennsylvania Bush promised to raise the steel tariff to an unprecedented amount. Because, of the global economy caused by globalization America has been able to make a comparative advantage in the service sector rendering heavy industry an unprofitable venture in this country. Due to this economic shift in America and America’s ability to trade profitably with countries who have an advantage in the steel industry Bush’s political maneuver was so costly to the American economy that it would have been cheaper for American consumers to pay each one of those steel workers their full salary to sit at home instead of put up the tariff. It is this misinterpretation of the globalized economy that has rendered government a shell institution at regulating the economy.

China is a prime example of how governmental controls and regulations can be a barrier from this new flattening world, as prior to China’s induction into the World Trade Organization it was largely unable to reap the benefits of, or participate in, this new globalized world. Since this political barrier was removed the two billion citizens of China are now able to compete and contribute to the global market. For countries like India the political barriers keeping them from competing in this flat world came in the form of corrupt government. In the book Friedman refers to corruption as the initial political barrier to a flat world in India as people had to pay bribes to officials to operate business. Whereas, in economics a non-restrictive government can help your economy, the same is true for helping a flattening world. The fewer political barriers and, the more power are decentralized to the people, the flatter the world will become. Due to globalization many international organizations and treaties have formed to capacitate global trade and economic regulation. Examples of government losing sovereignty to and be replaced by international organizations are the world bank, the United Nations, the world trade organization, as well as many others. These organizations are brought about as a result of globalization and the inefficiencies of government to handle these new global markets.

Globalization has severely changed the manner in which nations interact with and trade with one another. The creation of a globalized market and the ensuing international organizations have rendered government entrenched in its old methods of regulating the economy under the nation state method inefficient at regulating the economy. As Giddens states “the incapacities of our institutions. We need to reconstruct those we have or create new ones, in ways appropriate to the global age.” (Giddens 242)

Bagwhati addressed the sentiments opposed to globalization in the first chapter of his book “In Defense of Globaliazation”. He attributes most anit-globalization elements to be a a fear of the inequities involved in the spreading of capitalism and the increasing strenth of multinattional corporations as his theme argument. Many other arguments against globalization such as “social ills” and “environmental deterioration” Bahgwati dismisses as fears based on false hoods. In the “North-South Divide” section of chapter 1 hagwati sheds light on an interesting concept of most anti-globalization protests coming form the more affluent nations of the Northen hemisphere. This comcept lays claim to the emracing of globalization by less affluent developing nations, using globalization as a kcket onto the world stage, and the developed nations fighting globalization, as a force unraveling thier strangle hold on the worlds markets. Bhagwati lays clamto many valid argumnts in his first chapter on anti-globalization and seems to come to the conclusion that anti-globalization on the large scale stems from the affluent and those fearing the inequities incorporated with the spread of capitalism, which some define globalization as, and the rise fo multinational corporations.