A rchive Date
[ 23-07-2003 ]
Category
[ International Relations ]
sub-Categoy
[ Globalisation ]
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[http://www.chron.com/cs/CDA/story.hts/editorial/outlook/2006960
Problem with globalization? Think can of tuna
By DICK FOWLER
July 22, 2003, 7:03PM
I woke up on the morning of July 14, poured my coffee through foggy eyes and headed for the front yard for the newspaper. Bingo, the Chronicle headline on Page One blared out: "Brewing Poverty" and the word globalization. This lept out at me, like my dog Nitro does when I head for his empty bowl. I was fully awake now. After reading the article and feeling very sympathetic for the poor coffee growers in Nicaragua, I scratched my head and began to wonder if anyone today really understands the word globalization. I think not.
The best way to understand globalization is to reduce it to a simple but true story. Many moons ago, before the word globalization was vogue, an economics professor at the University of Houston assigned our class a project. Each of us was to go to the grocery store and select any packaged item we desired, and then bring it to class. Being somewhat of a laggard, I picked the smallest thing I could find -- a can of tuna fish. Whatever the professor had in mind, something this small had to be easy pickings, I figured.
The semester project was to dissect and verify what it took to get that product (in my case the can of tuna fish) to market. Easy, you say? Not quite. It was one of the hardest projects I completed during my college years. What it taught me was the essential nature of world trade and the importance of globalization.
The label on the tuna can was from a paper mill in Canada. The ink on the label was from India. The waxy coating on the label was paraffin, which came from a refinery in Mexico. The tin can itself was from ore mined in Venezuela and was coated and pressed in Detroit. The origin of the tuna fish itself was a bit more trying, and this uncertainty cost me the A+ I had hoped to earn on my semester grade. It was probably caught in the Pacific Ocean off the coast of Central America, but there was no way to be sure where the actual fish had been hooked. (I did find out the tuna boat was registered in Panama and belonged to Americans.)
Whew! Imagine that it took this global effort just to put a can of tuna on the grocery shelf.
Globalization, which simply means to make something worldwide in scope or application, has been with us a long time. In today's terms, it more specifically refers to free and open trade between countries, without tariffs, import or export duties, embargoes or restrictive taxes. This keeps the prices down for the end consumer, promotes new markets and, in most cases, creates jobs somewhere. Our problems are not with global trade, but with the economic method necessary to make it work.
Capitalism, which most Americans believe in and few can deny built us into the great nation we are today, is a volatile system of economics that can be extremely rough on those low on the ladder, or those who are unable to change. It works on the simple premise that what is produced in goods and services is determined by market forces (consumers). We call this demand. The quantity of supply (product available) and the force of demand establish the price. The higher the price and lower the cost to produce products means more profits, hence wealth to the producer. If demand drops, or when competition enters the market, prices fall and the producer can lose everything.
This is why American companies gravitate to wherever they can produce the cheapest, and why they often move offshore. This creates jobs in countries where there were none, and eliminates employment where there once was.
Socialism is the other economic extreme. In this system it is the government or a collective body and not market forces that decides what is produced and at what prices. As we saw in the collapse of communism, and in many other bankrupt foreign countries around the globe, socialism may seem fair and equitable, but it simply does not work economically. It takes away all human initiative and eliminates wealth accumulation, vital items in economic growth and new innovations. Without the individual profit motive, economic socialism is doomed to failure.
Government in America has regulated the negative aspects of capitalism in an effort to contain the harshness it can bring. Minimum wages and eight-hour workdays are prime examples, since unbridled capitalism invites human greed that would shamelessly work children at 10 cents an hour for 12 hours a day, as they once did in our history. Despite government regulations, cases such as Enron still raise their ugly head. The regulatory balancing of human greed is difficult but necessary.
Global capitalism has hurt America as well as the coffee growers in Nicaragua. For example, American high-tech companies have gone to India, Russia and even Latin America seeking cheaper wages and displaced thousands of skilled laborers (programmers, computer assembly line workers, etc.) here. The benefits are cheaper prices for software and computers, and often survival of the company itself. (Remember, if the company collapses, there are no jobs created at home or abroad.) Unemployment means fewer coffee drinkers and lower coffee prices. Juan Valdez goes on suffering despite globalization.
The effects of global capitalism on poverty can be minimized, but not until the World Trade Organization reins in the spread of raw capitalism. If international trade guidelines were established, such as standard minimum wages, eight-hour work days, prohibition against the use of child labor and so on, the playing field would level itself out. Yes, we may pay a little bit more for the can of tuna. In the end, though, more would benefit and fewer would lose in this global world that grows smaller and smaller every day.
Sigh. My economics teacher would roll over in his grave if he read my simplification of this problem.
Now a retired consultant in Houston, Fowler was for many years on the front line of globalization. He served as adviser to Jorge Manuel Dingo, the first vice president of Costa Rica under the Nobel Peace Prize winner Oscar Arias, in an attempt to bring American investment to the country. His firm, Foreign Investment Group, worked with the World Bank and others to promote global trade.
 World Fact Book (CIA]
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