November 17, 2000
A Year After the “Battle in Seattle,” the Myths About Globalization Endure
By Richard D. McCormick
As we approach the anniversary of the shouts heard ’round the world – the cries of protestors outside the Seattle meeting of the World Trade Organization – it’s time to clarify something: World trade benefits poor people.
Alan Greenspan thinks so. And the president of Nigeria thinks so, too.
A couple of weeks ago, Federal Reserve Chairman Greenspan told a Mexico City audience that “we should not hesitate to remind our fellow citizens of the manifest of net benefits of free trade.” Benefits, he noted, “that accrue not only to all trading partners, but to some of the least fortunate within those trading societies.”
Earlier this fall, Nigerian President Olusegun Obasanjo told an interviewer during the United Nations summit of world leaders: “We are all living in the same house. Let those who are living in the super-luxurious rooms pay a bit of attention to those who are living where the pipes are leaking, or we’ll all be badly affected.”
I have since met Mr. Obasanjo, and I can assure you he was not saying “stop globalization.” He was saying “share globalization.”
Indeed, globalization is not a dirty word. But thanks to the protesters in Seattle and elsewhere, globalization has become the victim of some ridiculous myths.
Taking my cues from Messrs. Greenspan and Obasanjo, I hereby refute those myths:
Myth #1: Globalization is some kind of “conspiracy” by big companies against smaller countries.
It’s really consumers who are calling the shots, by voting with their money for the products and services they want and need. Those products are made more affordable as factories rise and tariffs fall, all around the globe.
Countries still make the rules. But more and more of them are choosing rules that favor trade, because of the good it does.
Myth #2: Globalization is concentrating market power in the hands of a few large corporations.
In a recent Harvard Business Review, two professors report that the oil, chemical, auto and computer industries are less concentrated today than 50 years ago.
Globalization puts market power in the hands of people.
Myth #3: Globalization’s ‘evil tool’ is information technology.
Information technology is what makes the free flow of knowledge and ideas work for people. It wasn’t tanks that broke down the Berlin Wall. It was ideas, shared by phone calls and faxes and TV.
In my travels around the world, I’ve seen people yearning for connections to relatives, schools, hospitals, employers.
Not once have I seen anyone in a developing country place his or her first telephone call to Wal-Mart, for a piece of American pop culture!
Myth #4: Globalization is ‘companies without rules.’
Businesses are asking for rules: rules and agreements among the governments and alliances of the world, enabling businesses to meet peoples’ needs for goods and services while accommodating the needs for privacy, property rights, environmental protection, fair workplaces and safe investments.
Businesses want rules that make it possible to serve people, not impossible.
The alternative is what the protestors claim to fear: anarchy, and the rule of the jungle.
Myth #5: Globalization takes away jobs.
For developed countries like the United States, continuing to raise peoples’ standard of living means we’re going to have to keep raising their job skills.
Some of the more labor-intensive work is gravitating to the developing world—building their economies, and the demand for our goods and services.
But it’s really only a very small percentage of developed-world jobs that compete with developing-world jobs. (And when jobs are displaced, we should provide training for new jobs.)
Myth #6: Globalization undermines cultural diversity.
Check the Internet for blankets, jewelry, art or food. You’ll see quickly that globalization expands diversity.
It creates a worldwide market for dances, dramas, religions, and other shared interests.
There is no average consumer today, but thousands of niche markets, all flourishing worldwide.
Myth #7: Globalization lowers labor standards, turning developing nations’ workers into ‘slaves.’
A recent study found that foreign corporations pay more than the average wage in every country in which they operate. In Turkey, for example, foreign companies pay 24 percent more than the national average.
Companies are not shifting production to countries with low labor and environmental standards. They’re going where freedom and the rule of law provide stability.
And if there’s an exception to that, we have an International Labor Organization to deal with it.
Myth #8: Globalization is destroying the environment.
It is the countries which have embraced globalization – the industrialized democracies – that have done the most to protect the environment.
I’m all for preserving precious places. But I’m not for keeping people in poverty to protect their scenery, especially when I know they’ll destroy that scenery for firewood and inefficient farm fields.
Myth #9: Globalization means multinational corporations will flourish at the expense of smaller companies and consumers.
There are 60,000 multinational corporations, including many from developing countries.
As global companies move into local markets, local companies move into global markets. Free trade makes market access easier for everyone –
especially small businesses, which are quicker to adopt new technologies.
The big winners are consumers: Price increases for global products like cars, computers and stereos, are smaller than for local products and services, like haircuts and houses.
Myth #10: Globalization widens the gap between rich and poor.
In the 1950s, the people of Hong Kong, Singapore, Taiwan and South Korea lived in typical developing-country poverty. But as other developing nations closed their doors to global markets, these four took the opposite approach. Today, they have some of the best living conditions and incomes in the world.
The United Nations Human Development Index, which measures education, income and life expectancy around the world, shows steady improvement.
Even so, the gap between the world’s rich and poor is increasing. This is something we must all address. But the cause is not
globalization, it is population growth, AIDS and restrictive governments.
Globalization is not one of the problems, but the best solution to all that ails the world today.
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McCormick, of Denver, is chairman of the U.S. Council for International Business and president-elect of the International Chamber of Commerce.
