globalisation not so hot, say people
there’s a recent FT/Harris poll that suggests not every one is so sold on the benefits of globalisation. Turns out the ungrateful masses aren’t keen on rising wage inequality either….
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16 Responses to “globalisation not so hot, say people”
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July 26th, 2007 at 9:25 am
There was a sort of fair game plan as in the way Adam Smith observed it but now everything is hay-wire. Maybe the biggest factor is that we are pitting our labour against an unlimited supply of labour.
House price inflation is a bummer, especially when combined with immigration of wealthy people who pick off the nice houses up out of the smog.
It seems to be a given that we can’t just plonk along living simply and having fun; instead we are in some sort of stampede where we have to “make our way in the world” and “grow the economy”. Perhaps we need to look at need satisfaction, our quest for more and more may be counter productive ( are we tramping on each others toes)?.
Apart from cheaper cars and consumer goods I don’t feel better off, although no unemployment is a big plus…
Annoyingly nobody in power (or any position of influence) seems to be looking at the big picture ie where will it all end and why… will we just equalise out with a population of 30 million (mostly from high population countries?)… politicians and business leaders don’t care as long as they are riding the wave and there is no unemployment on their watch.
Idealy a population should work and have time down… thats what they would have done in the Northern winters…. before electric lights.
jh
July 26th, 2007 at 10:51 am
“Maybe the biggest factor is that we are pitting our labour against an unlimited supply of labour.”
It’s not so much that it’s ‘unlimited’ but that we are competing against countries in which lpeople (AKA labour) aren’t unionised, face government repression if they organise for better conditions or higher wages and where health and safety and environmental standards are a joke.
Adam Smith noted this could be a problem, citing low wages in Poland, but claimed that high transport costs for goods and poor communications would prevent capital moving far afield (the famous ‘invisible hand’). This worked pretty well in 1776, but technology has made the invisible hand redundant.
July 26th, 2007 at 11:43 am
“The invisible hand also kills” and it cannot see what it is doing (it is a hand, not an eye) nor prepare for the future (it has no brain).
With those limitations it works better than other methods, for dealing with the immediate and reacting to and manipulating the things it can touch.
When it is protected from its environment it gets a lot less efficient. Right now the market is being “protected” from the systemic weaknesses in the US and it is fumbling and failing.
respectfully
BJ
July 26th, 2007 at 2:40 pm
Sam Buchanan.
That wouldn’t be such a problem if business/political leaders had some vision rather than acting like sheep in attempt to outdo (copy) what everyone else is doing. Businesses should be like this.
http://www.economist.com/world/britain/displaystory.cfm?story_id=94814 45
Globalization would certainly be better if workers had a stake in the success of their firms, which would not only benefit them financially, but would also promote substantial productivity growth.
http://europa.eu/rapid/pressReleasesAction.do?reference=IP/02/1039&for mat=HTML&aged=0&language=EN&guiLanguage=en
The current form of the world’s financial system favours the large corporate enterprises as it allows them to hide their structural deficiencies and their operational inefficiency through excessive extensive of credit leading to a “boom” and then the contraction of the money supply through hiking up interest rates at the end of the “boom” business cycle in order to contain inflation.
My arguments are here about that topic is here. My “tag” there is JamesE BTW.
http://tvhe.wordpress.com/2007/07/24/monetary-policy-aussie-vs-nz/#com ments
July 26th, 2007 at 5:03 pm
I made a comment, but it got stuck in the spam filter Frog. Can you please upload it? Thanks.
July 27th, 2007 at 2:23 pm
The first thing that needs to be reversed is the ludicrous legal precedent that grants corporations personhood e.g. all the rights of individual persons without the accompanying responsibilities and obligations. A good analysis is found here. It has the perverse effect of insulating corporate descision makers from being accountable for the actions that they commit on behalf of institutions that they “serve.”
http://findarticles.com/p/articles/mi_m1038/is_n4_v34/ai_10999249/pg_6
Watch this DVD
http://www.thecorporation.com/index.cfm?page_id=312
July 27th, 2007 at 8:12 pm
The key point is that globalisation narrows differences between formally rich and poor countries, whilst increasing differences within each country due to the fact that star performers are now in a much bigger pool.
So hundreds of millions of people are lifted out of poverty thanks to globalisation, yet the Green party wants to hinder this process because it thinks there is domestic political capital to be made from encouraging and indulging people’s feelings of envy.
That’s shrewd.
Contemptible, but shrewd.
jh,
- “It seems to be a given that we can’t just plonk along living simply and having fun; instead we are in some sort of stampede where we have to make our way in the world and grow the economy. Perhaps we need to look at need satisfaction, our quest for more and more may be counter productive ( are we tramping on each others toes)?.”
Nobody is stopping you. You have that freedom.
Just remember that if you choose to spend every afternoon on the beach you have no right to plead poverty and plunder those who make different choices. Fair enough?
- “Apart from cheaper cars and consumer goods I don’t feel better off”
Classic.
- “Idealy a population should work and have time down; thats what they would have done in the Northern winters; before electric lights.”
Yes. Of course people also led short, hard lives and died young in those days. D’ya think the two could be related?
Sam Buchanan,
- “It’s not so much that it is unlimited but that we are competing against countries in which people (AKA labour) aren’t unionised, face government repression if they organise for better conditions or higher wages and where health and safety and environmental standards are a joke.”
Rubbish.
Wages around the world correlate with productivity. End of story. As productivity rises, so do wages. It’s happening in China. It’s happening in India. If the average wage in some third-world country is a fraction of what it is in New Zealand it’s simply because their productivity is so poor and not because of anti-union legislation or suchlike. You’re not competing against someone earning a tenth of your salary; your competing against someone earning a tenth of your salary and producing less than a tenth of your output.
The vast majority of foreign investments goes to expensive first-world destinations such as Europe and the USA. Only a modest percentage goes to poor countries. Why do you think that is? Why, if you think filthy profits are just waiting to be earned on the backs of oppressed poor people everywhere, do you think that most business investments are in the already rich countries?
treehugger,
- “The current form of the world’s financial system favours the large corporate enterprises as it allows them to hide their structural deficiencies and their operational inefficiency through excessive extensive of credit leading to a “boom” and then the contraction of the money supply through hiking up interest rates at the end of the “boom” business cycle in order to contain inflation.”
Could you explain exactly what you are talking about?
July 28th, 2007 at 10:51 am
Moulwarp.
Idealy a population should work and have time down; thats what they would have done in the Northern winters; before electric lights.�
“Yes. Of course people also led short, hard lives and died young in those days. D’ya think the two could be related?”
You’re implying that the current form of globalisation is responsible for the peoples increased life expectancies that people enjoy. That is patently untrue. It has very little to do with it.
“However most of these improvements have been due to shared infrastructure (clean water and sewage), control of infectious disease through vigilance, social organisation, basic medicines and vaccines (many of which are now cheap generics), improved education regarding nutrition, access to public health services, and the organisation of these services in support of safe childbirth and motherhood.” These socially provided services were commen before the modern form of globalisation was instituted. In fact we’ve seen a substantial degeneration of these services since the neoliberal reforms of the 1980s and 1990s.
“Wages around the world correlate with productivity. End of story.”
Correlation does not imply causation. Increased productivity may justify to the owners of capital that they should be happy about increasing wages and has the secondary benefit of minimizing the chance of inflation in the greater economy, but it isn’t the cause. Not by a long shot.
The increase in wages reflects increase in value of labour as a consequence of scarcity allowing labour to have an improved bargaining position or of artificial scarcity imposed by militant labour unions.
“….your competing against someone earning a tenth of your salary and producing less than a tenth of your output.” Riiight.
“The vast majority of foreign investments goes to expensive first-world destinations such as Europe and the USA. Only a modest percentage goes to poor countries. Why do you think that is?”
There are investments and there are investments. The reason why rich countries attract such a high percentage of investment is due to the fact that they are high value assets with a complementary high return on investment. i.e ports, energy infrastructure, airports, high tech, and other industries that require the highly skilled and educated workforce that the West can provide.
The investments that the poor countries attract are low value, low return production industries, but are still able to attract Western corporates thanks to their less than stringent labour and environmental laws and due to large population sizes and low development, the scarcity value of labour in those countries is low, but that is slowly changing much to the distress of American and European corporates.
http://www.inthesetimes.com/article/3017/fights_over_chinese_labor_ref orm/
For such a dedicated and passionate proponent for capitalism you reveal a comical level of naivate and ignorance on the subject.
“Could you explain exactly what you are talking about?”
Sorry didn’t explain it particularly clearly. Was a bit of a mess to be honest.
My contention is this.
Big businesses are more able to take advantage of the security and predictability of the Central Banks than small enterprises due to their ability to provide collateral and their superior economies of scale.
At the beginning of a business cycle they’re able to take advantage of the government/Bank’s attempt at stimulating economic activity through the extension of large amounts of cheap credit. The easy availability of credit has the accompanying result of increasing consumer confidance who take on far too much debt to be sustainable in the naive view that things will only continue as they are or even improve.
The problem is that Central Banks are responsible for extension of too much credit due to political expediancy and finance institutions exaberate the problem as they are able to leverage/hedge excessively as their degree of risk is much reduced thanks to the predictability and protection offered by the Central Banks.
The reason why private banks love Central Banks is interest rates increase their profit margins so they have every incentive to loan out as much money as they can during a boom cycle in the full knowledge that Central Banks will hike interest rates in order to suppress inflation. Either way they win. They know that they’re in no danger as Central Banks were designed to prevent bank runs.
Best demonstrated with reference to reality.
“So who is the smart money and what are they doing? The charts above unambiguously show that US businesses (the smart money) are actually paying down debt. Commercial and Industrial loans have been falling since the end of 2000. Looks like the smart money once again bailed out before the dumb money. They started cutting back on loans in 2000, while consumers waited till 2001. What is remarkable is first the consumer never cut back as much as business did. Secondly even though they did cut back the ratio of consumer installment credit to personal income has gone from dangerous levels to insane levels.”
http://tacticalinvestor.com/contrarian6.html
July 28th, 2007 at 1:14 pm
know what yous saying fwwog,
with that fall out stuff from the free trade global crule,
you can not even ring them up to get the power back on fwwog,
hat why ACT went defunct dancing down the stairs fwwog,
globalisation,
July 28th, 2007 at 4:58 pm
jh >>Perhaps we need to look at need satisfaction. m >> Nobody is stopping you. You have that freedom.
The first step to excercising that freedom is to remove yourself from the subtle and invasive octopus of spin, advertising and product placement. Get rid of your TV, radio and newspapers. Better still, replace them with devices that are largely out of reach of the manipulation industry: internet, books, MP3 player for music without ads.
jh >> “Apart from cheaper cars and consumer goods I don’t feel better off�
m >> Classic.
At least jh knows the difference between pleasure and happiness, m seems to think more stuff = more happy.
jh >> “Idealy a population should work and have time down; thats what they would have done in the Northern winters; before electric lights.�
m >> Yes. Of course people also led short, hard lives and died young in those days. D’ya think the two could be related?
I suspect that the correlation coefficient would be very weak between electric lighting and longer lives. Perchance m is confusing electric lighting with improved sanitation.
m >> your competing against someone earning a tenth of your salary and producing less than a tenth of your output.
As one of the few remaining employees of GL Bowrons I can say from personal experience that that is CR#P! Just ask the redundant managers from Skellerup, Donaghy’s, Feltex.
m >> The vast majority of foreign investments goes to expensive first-world destinations such as Europe and the USA.
Three simple reasons
1. Most of this foreign investment is in Treasury bills and stocks of the companies that are making profits from relocating to low wage countries.
2. The remaining foreign investment is in the industries with the biggest tax breaks.
3. You don’t have to invest as much to build a facility in countries that have no environmental standards, low construction wages and no safety standards. Bhopal for instance.
m to ST >> Could you explain exactly what you are talking about? Sleepy gave a good response. The best proof of this: Which division of FoMoCo has been most profitable over the past 5 years? Light trucks - second, FordCredit - first.
July 28th, 2007 at 8:46 pm
Not so keen on globalisation, eh? Maybe this is one good reason for nations round the world to condone the use of tasers. they’re a good method for controlling those rioting mobs in the streets…. (watch this space, or….?)
aladin
July 29th, 2007 at 1:39 pm
aladin
“Maybe this is one good reason for nations round the world to condone the use of tasers. they’re a good method for controlling those rioting mobs in the streets…. (watch this space, or….?)”
This space is already being watched mate.
“VERHEYDEN-HILLIARD: They currently have police department officers, who are assigned on long-term assignments to pretend to be political activists. To pretend to be part of protest groups. And to carry out these actions, in acknowledgment from the police, is that this is being done in the absence of allegations of criminal activity.”
http://www.pbs.org/now/transcript/transcript310_full.html
“Over the weekend, Police Minister Annette King floated the idea of introducing UK-style Anti-Social Behaviour Orders in New Zealand “as a way to overcome Bill of Rights problems with banning individuals and gang patches in public”. For those who don’t know, Anti-Social Behaviour Orders (ASBOs) are court orders, obtainable by a wide range of bodies against people who acted “in a manner that caused or was likely to cause harassment, alarm or distress to one or more persons not of the same household”, and barring people from being in certain places or doing certain things.”
http://www.getfrank.co.nz/the-explosion.html
“The New Zealand High Court review process on who or what can be considered a terrorist or a terrorist group will be by-passed under a new law proposed by the Labour-led Government.
The Terrorism Suppression Amendment Bill, if passed by Parliament, will see New Zealand follow the United States of America and Australia in empowering a nation’s political leader (the Prime Minister in New Zealand’s case) to decide who is a terrorist. It also automatically adds to New Zealand’s official terrorist organisations list those the United Nations’ Security Council recommends. ”
http://www.scoop.co.nz/stories/HL0706/S00368.htm
“One former police superintendent claims that if the new law had been around during the 1981 Springbok tour, clashes would have been worse.
“It would have been far more difficult, there would have been far more damage, far more injury, and there would have been many more years of healing required by the public,” says former Police Superintendent Lindsay Hunter.”
http://tvnz.co.nz/view/page/423466/55813
Remember the Red Squad from the 1981 Springbok Tour?
Hmm. Wonder if the middle classes are pissed, because their standard of living is being eroded by the capraciousness of the big corporations and their mates in the Central Banks.
Chinese Yuan. Check
http://www.economist.com/finance/displaystory.cfm?story_id=9184053
Japanese Yen. Check
http://www.economist.com/finance/displaystory.cfm?story_id=8679006
U.S. Dollar. Check
http://tacticalinvestor.com/contrarian6.html
July 30th, 2007 at 11:55 am
“Wages around the world correlate with productivity. End of story. As productivity rises, so do wages. It’s happening in China.”
Any evidence for this? I’d be interested to know why shoe manufacturing workers in India are so unproductive compared with the remaining few machinists in the rich world who do the same job.
Also interesting that you suggest that supply and demand for labour has nothing to do with wage costs.
“So hundreds of millions of people are lifted out of poverty thanks to globalisation,”
Any evidence for this? Most of the people getting out of poverty in recent decades have been in China and to a much lesser extent, India. Both have taken the traditional economic development path of protectionism, closed economies, local investment and only opening up markets when you are in a position of strength.
July 30th, 2007 at 12:30 pm
Mouldwarp Says:
July 27th, 2007 at 8:12 pm
jh,
- “It seems to be a given that we can’t just plonk along living simply and having fun; instead we are in some sort of stampede where we have to make our way in the world and grow the economy. Perhaps we need to look at need satisfaction, our quest for more and more may be counter productive ( are we tramping on each others toes)?.�
Nobody is stopping you. You have that freedom.
”””””””””””””””””””””””””””””””
“The isolation and silence are magic,” Wolfrum says. “When you’re hiking, all alone, and it’s getting dark, you imagine things. It’s like a fairy tale sometimes. The nature makes you feel like a child again.”
Up the road in Queenstown, nature is in full flight.
Queenstown advertises itself as “The Adventure Capital of the World,” where you can bungy jump, heli-ski, jet-boat, or sky-dive. The confines of the modest town can no longer accommodate the throng of thrill-seekers. Soaring mountains still fringe the lake, but condos are creeping along the shore, a snake of traffic clogs the road into town, and Louis Vuitton has set up shop along with Global Culture, a clothes store.
If your idea of a holiday is a seething mass of cars and people, topped off by a cacophony of helicopters, Queenstown may be for you. Otherwise, it serves only as a warning of the perils of overdevelopment.
“Queenstown used to be nice, but it’s a mess, now,” Verduyn says, as we continue our trip down the Upper Clutha. “We don’t want to get like that.”
He points out a bunker-like private dwelling atop a bluff, and shakes his head.
“It was a disaster to put that building in there,” he says. “People from all over the world are coming here seeking a wilderness, a sanctuary. The worst-case scenario is that we damage the environment, which brings people to New Zealand in the first place.”
http://www.boston.com/travel/articles/2004/11/07/new_zealand_at_a_cros sroads/
July 30th, 2007 at 3:49 pm
Mouldwarp Says:
July 27th, 2007 at 8:12 pm
“Apart from cheaper cars and consumer goods I don’t feel better off�
Classic.
”””””””””””””””””’
For myself, I”m a home, garden and environment person; I can dispense with the garden gnomes from the Warehouse.
”””””””””””””””””””
- “Idealy a population should work and have time down; thats what they would have done in the Northern winters; before electric lights.�
Yes. Of course people also led short, hard lives and died young in those days. D’ya think the two could be related?
“”"”"”"”"”"”"”"”””
You’re right to a degree, but my Great Grandmother had a more fullfilling life than most modern mums, (although I’m not sure if her experience was typical), and the beautiful, uncrowded environment played a big part (I think)…. The key is to get the balance right.
jh
August 3rd, 2007 at 9:50 pm
Hi SleepyTreeHugger,
thanks for that information.
aladin