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Globalization: Progress Or

Profiteering?
Globalizarea: evoluie sau
abuz?
By Lisa Smith
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Globalization is the tendency of investment funds and businesses to move


beyond domestic and national markets to other markets around the globe,
allowing them to become interconnected with different markets. Proponents of
globalization say that it helps developing nations "catch up" to industrialized
nations much faster, through increased employment and technological
advances, and Asian economies are often highlighted as examples of
globalization's success.
Critics of globalization say that it weakens national sovereignty and allows rich
nations to ship domestic jobs overseas, where labor is much cheaper. What is
the real story on globalization? It largely depends on your personal
perspective. In this article, we'll examine the issue from both sides.
SEE: Economics Basics
The View from the Penthouse
For business leaders and members of the economic elite, globalization is
good. Cheaper labor overseas enables them to build production facilities in
locations where labor and healthcare costs are low, and then sell the finished

goods in locations where wages are high. (For related reading, see What Is
International Trade?)
Profits soar due to the greatly reduced wages for workers, and Wall Street
rewards the big profit gains with higher stock prices. The CEOs of global
companies also get credit for the profits. Their rewards are usually generous
compensation packages, in which company stock and stock options figure
prominently. Institutional investors and wealthy individuals also take home the
big gains when stock prices increase.
The View from the Street
But globalization doesn't only affect CEOs and high-net-worth individuals.
Competition for jobs stretches far beyond the immediate area in a global
marketplace. From technology call centers in India, to automobile
manufacturing plants in China, globalization means that workers must
compete with job applicants from around the world.
Some of these changes arose because of the North American Free Trade
Agreement (NAFTA). NAFTA sent the jobs of U.S. autoworkers to Mexico, a
developing country, where wages are significantly lower than those in the U.S.
A few years later, some of those same jobs were relocated to third-world
countries in East Asia, where wages are even lower.
In both cases, the auto manufacturers expected U.S. consumers to continue
buying those products at U.S. prices. While critics of globalization decry the
loss of jobs that globalization can entail for developed countries, those who
support globalization argue that the employment and technology that is
brought to developing countries helps those populations toward
industrialization and the possibility of increased standards of living.
The View from the Middle Ground
In the globalization battleground, outsourcing is a double-edged sword.
On the one hand, low wages in foreign countries enable retailers to sell
clothing, cars and other goods at reduced rates in western nations where
shopping has become an ingrained part of the culture. This allows companies
to increase their profit margins.

At the same time, shoppers save money when they buy these goods, causing
some supporters of globalization to argue that while sending jobs overseas
tends to lower wages, it may also lower prices at the same time.
Lower-income workers also enjoy some of the benefits of stock price
appreciation. Many workers have mutual funds holdings, particularly in
their 401(k) plans. When companies outsource jobs and get rewarded with
rising share prices, mutual funds with those shares also increase in value.
The Effects of Globalization
The ever-increasing flow of cross-border traffic in terms of money, information,
people and technology isn't going to stop.
Some argue that it is a classic situation of the rich get richer while the poor get
poorer. While global standards of living have risen overall as industrialization
takes root in third-world countries, they have fallen in developed countries.
Today, the gap between rich and poor countries is expanding, as is the gap
between the rich and poor within these countries.
Homogenization of the world is another result, with the same coffee shop on
every corner and the same big-box retailers in seemingly every city in every
country. So, while globalization does promote contact and exchange between
cultures, it also tends to make them more similar to one another. At the market
level, linked global financial markets propel local issues into international
problems, such as meltdowns in Southeast Asia and the 1998 Russian debt
default.
What Lies Ahead?
Deviation from the status quo on this issue is likely to be minimal. The massive
outsourcing of U.S. manufacturing jobs that began decades ago continues
today. White collar jobs, such as call center workers, medical technicians and
accountants have also joined the outsource parade, leaving many to argue
that those profiting from the arrangement have little incentive to change it,
while those most impacted by it are virtually powerless.
Politicians have latched onto the idea of the disappearing middle class as a
political issue, but none of their income redistribution schemes are likely to

have any immediate substantial impact. (For related reading, see Losing The
Middle Class.)
The Bottom Line
Public scrutiny of CEO compensation has encouraged business leaders to
begin to see that a rising tide doesn't necessarily lift all boats. In many cases,
low-wage workers get hurt the most because they don't have transferable
skills. The concept of retraining workers is on the radar, but it's easier said
than done and decades too late for the American manufacturing industry. (To
learn more, see Evaluating Executive Compensation.)
Until a better solution is found, education, flexibility and adaptability are the
keys to survival. So far, the only answer that politicians and business leaders
agree on is the value of an educated, flexible, adaptable workforce. (At the
individual level, you can take action on this issue if you Invest In Yourself With
A College Education.)

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REDDIT

in an ideal world, we'd all be equal. but we're not. chinese people take jobs in
factories because it's a better life than working on a farm and struggling not to
starve to death. so without chinese companies making products for us, the chinese
people would be worse off.
the real question is, how do we get to a point where we are all equal, where it
doesn't matter where you're born, and everyone has the same opportunity? free
trade and capitalism are probably the best ways to get there. just look at the
progress the average chinese person has made under quasi-capitalism and compare
that to decades in a communist economy.

It's been more than a century since globalization started. Prior to


1914, many people believed that globalization would keep the world
from going to war because it would be against the economic
interests of every nation to mess with global trade. The second part
of that turned out to be true, but of course it wasn't enough to stop
war.
Anyway, it's pretty clear who benefits from globalization and who
doesn't if we're talking about common consumer products. Workers
in American factories do not benefit, and pretty much everybody
else does benefit. Of course, it's not that simple and neither part of
the previous statement is an absolute truth.
However, I don't understand how you could say the wealthy are the
only benefactors of globalization. Cheap consumer products help the
poor raise their standard of living.

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[]LowReady 2 puncte 1 an n urm

The second part of that turned out to be true, but of course it wasn't
enough to stop war.
But global conflict and violence have both declined quite a bit in
general. It hasn't stopped warfare but there's still also a whole lot
of protectionism going on, even in advanced economies.
Workers in American factories do not benefit, and pretty much
everybody else does benefit.
True, but at the same time those American workers now have more
purchasing power with their dollar even if they aren't paid as much
to work in a factory. You pointed this out later but its important to
keep in mind that gross salary is only relevant in context. If factory
workers get paid more and have job security but can buy less with
their dollars then what has really been accomplished other
than really harming anyone who isn't a protected factory worker?

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[]noelsusman 2 puncte 1 an n urm

But global conflict and violence have both declined quite a bit in
general.
That's true, but WWI and WWII clearly showed that nations will act
against their own economic interests when it comes to war.
Personally, I think mutually assured destruction is what keeps the
major world powers from committing to an all-out war.
Anyway, that's not very relevant to OP's question, just an
interesting aside.
Your second point is true and is part of what I was alluding to when
I said it's not that simple. I didn't want to get into a fully fleshed out
discussion on the effects of globalization because OP's assertion that
open borders for consumer products only benefit the wealthy is too
absurd to use as a starting point.

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[]LowReady 2 puncte 1 an n urm

That's true, but WWI and WWII clearly showed that nations will act
against their own economic interests when it comes to war.
Personally, I think mutually assured destruction is what keeps the
major world powers from committing to an all-out war.
I partially agree. There is definitely a known correlation between
arms proliferation and a general decrease in violence but I disagree
that nations were acting against their own economic interest,
particularly in WWII. The soviets and the fascists were clearly at
odds with each other but were also establishing hegemony (which
the soviets continued to do) which was then against everyone else's
economic interests. Do you disagree?

OP's assertion that open borders for consumer products only benefit
the wealthy is too absurd to use as a starting point.
I have no clue how after having been proven wrong, Ludditism is
more ubiquitous than ever. Protectionism helps oneclass: those in
power. It doesn't help the workers or the people they associate with.

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[]noelsusman 1 punct 1 an n urm

I stand by my assertion about WWI, but you're right, WWII was a


very different war. Germany, Italy, and Japan each had strong
economic interests in going to war. Each wanted to establish a vast
empire which would bring them immense wealth and resources.
None of the Allies really wanted to go to war, generally speaking,
but they were forced into it by Germany's invasion of Poland,
France, and the Soviet Union as well as Japan's attack on Pearl
Harbor (Italy was not strong enough to be truly relevant).

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[]LowReady 6 puncte 1 an n urm*

Good for who?


Is working 14 hours in a factory to feed your kids better than 2/4 of
them starving to death?
Is being poor and having access to a cell phone while the rich are
richer worse than being poor without a cell phone and the rich arent
quite as rich?
It's important to examine the facts and not just some feelings about
things being vaguely "better" and "worse".

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[]Tlibri 2 puncte 1 an n urm

For particular economic systems, globalization allows for wealth to


be transferred from one society to another. The receiving society
gains overall improvement and a higher standard of living,
as /u/noelsusman mentioned. The other society gains incentive for
increasing production, leading to economic improvement and
employment of their citizens (which theoretically increasing their
standards of living).
Of course if items are being produced outside of America, then the
American economy has little need to producing those items. This is
no guarantee of unemployment, only that certain areas of
production will diminish. Historically in America, we have replaced
those areas of production with alternatives which were needed; this
led to the expansion of the service industry, that now represents a
majority of our GDP.
Also adding inflation is not necessarily a result of globalization or
outsourcing, but has multiple causes rooted in activities in the
economic system that compound upon each other.
The issue of your question may not be that the wealthy benefit more
from globalization, but rather they are less harmed when economic
issues arise.

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[]meem09 2 puncte 1 an n urm

Maybe take a look at world-systems theory by wallerstein and some


others.
Very basic overview: The world can be sub-divided into corecountries (USA, Canada, Europe and some others), semi-peripehery
(Brazil, China, India, Mexico and some others) and periphery (Big
parts of Asia, nearly all of Africa, South America and so on). The
world system is set up in a way that the core exploits all the others
while the semi-periphery exploits the periphery. So the economy in

the periphery consists of all the stuff core states want, but don't wnt
to produce themselves (f.e. because the process involves health
risks). The semi-periphery works as a kind of political buffer for the
core states. There are some economic reasons for this, but at the
base of the idea is IMHO that the semi-periphery is the carrot
dangling in front of the periphery states. If there was only core and
periphery, the periphery would realize that they are exploited and
would try to rise up, because it seems impossible to make the jump
from say Liberia to the US. But if you do this for us, you will get this
and this and you will move up to the semi-periphery... It is possible
for states to do that, but of course there always has to be a
periphery.
There is a lot more to the theory. The way these analyses are build
is very interesting. They take a very long term view and I think that
way of seeing the world is unique, at least in International
Relations...
Edit: "rise up" may be the wrong term. The periphery states will try
to change the system...

Question : What is globalization?


Answer : Princess Diana's death
Question : How come?
Answer :
An English princess with an Egyptian boyfriend crashes in a French tunnel, driving a
German car with a Dutch engine, driven by a Belgian who was high on Scottish
whiskey, followed closely by Italian Paparazzi, on Japanese motorcycles, treated by
an American doctor, using Brazilian medicines! And this is sent to you by a Canadian,
using Bill Gates' technology which he got from the Japanese.
And you are probably reading this on one of the IBM clones that use Philippine-made
chips, and Korean made monitors, assembled by Bangladeshi workers in a Singapore
plant, transported by lorries driven by Indians, hijacked by Indonesians and finally
sold to you by a Chinese!

The word "globalization" is a very recent term, only establishing its current meaning in the 1970s,
which "emerged from the intersection of four interrelated sets of 'communities of practice':
academics, journalists, publishers/editors, and librarians".[8] In 2000, the International Monetary
Fund (IMF) identified four basic aspects of
globalization: trade and transactions, capital and investment movements, migration and
movement of people, and the dissemination of knowledge.[9] Further, environmental challenges
such as global warming, cross-boundarywater and air pollution, and over-fishing of the ocean are
linked with globalization.[10] Globalizing processes affect and are affected
bybusiness and work organization, economics, socio-cultural resources, and the natural
environment. Academic literature commonly subdivides globalization into three major
ares: economic globalization, cultural globalization and political globalization