Combating Globalization: Confronting the Impact of Neoliberal Free Trade Policies

By Richard D. Vogel

II. Rising Inequality: The War on Working People
The term globalization is a euphemism for the economic policies of neoliberalism and free trade that drive the megatrends ravaging the world today. Globalization in this essay refers specifically to the domination of the world economy by transnational capitalism through state-sponsored policies that subordinate the broad interests of communities and nations to the interests of the owners of capital.

The primary economic drivers of globalization are:

the capture of emerging CONSUMER and CAPITAL MARKETS to insure the continued accumulation of capital through sales revenue and interest income
access to cheap RAW MATERIALS and LABOR to increase the rate of capital accumulation on the production of goods and services
It is capitalism's relentless quest for cheap labor that impacts working people directly and drives the megatrend of rising inequality on both national and global levels. The creation of wealth by human labor, whether the worker is employed in agriculture, manufacturing, or service, is the sustaining activity of all societies and the division of that wealth between the workers and the owners of capital is the essence of class struggle.

To understand and combat globalization, it must be kept foremost in mind that it has been through consolidation of political power at every level of government from local to international that capital has attained its domination of working people in the modern world.

The following discussion focuses on the megatrend of increasing inequality in North America, but the same tendency is growing in both developed and developing countries around the world.



Rising Inequality

Chart 1 depicts the ongoing history of growing inequality in North America:



The Gini coefficient on the vertical axis of chart 1 is the most commonly used measure of income inequality within a nation (http://hdr.undp.org/docs/statistics/understanding/resources/HDR_2003_2_2_global_income_inequality.pdf). A low Gini coefficient indicates more equal income distribution while a high Gini coefficient indicates a more unequal allocation. 0 represents perfect equality (where every person has the same income) and 1 corresponds to perfect inequality (where one person receives all of the income in a society). The income measure used to calculate the Gini coefficients in chart 1 is disposable household income adjusted for household size.

The chart illustrates the trend of inequality that has been on the rise in the USA since the mid-1970s. By the mid-2000s the average household income of the richest 10% of the population was $93,000 per year while that of the poorest 10% was $5,800. The USA is the country with the highest inequality level and poverty rate in all of the counties monitored by the Organization for Economic Co-Operation and Development (OECD) except Mexico and Turkey (www.oecd.org). Since the mid-1980s the distribution of earnings in the USA has widened by 20%.

Accumulated wealth in the USA is allocated even more unequally than income. Currently the top 1% of the population controls 25-33% of the total wealth in the nation, while the top 10% holds 71%. Redistribution of income by government through taxation and the provision of social services in the USA is the lowest in all of the countries monitored by the OECD except South Korea.

The inequality trend in Canada has had a distinctly different history from that of the US. Chart 1 shows that inequality actually decreased from the mid-70s to the mid-90s, and then increased significantly throughout the last decade, mirroring the trend in the USA. The last 10 years has also seen dramatic increases in poverty rates across Canada.

The impact of growing income inequality on working people in both the US and Canada has been heightened by dramatic tax cuts for the wealthy and corresponding declines in social services and social benefits paid in both nations.

The sharp upturn in income inequality in North America is a direct outcome of economic liberalization policies like the North American Free Trade Agreement (NAFTA) that will be examined in detail in the following analysis (The impact of NAFTA on workers in Mexico in contrast to the trends in the US and Canada will be the subject of a subsequent essay.)..

The War of Attrition against Working People

The decline in the fortunes of working people in North America (and worldwide) is a direct result of capital's relentless pursuit of cheap labor markets, a primary driver of globalization. Map 1 charts the history of the war of attrition that capitalism, led by US corporations, has waged against labor in North America in order to maintain high rates of capital accumulation for stockholders:








Working people in the USA have been steadily losing ground since the end of World War II. The Taft-Hartley Act of 1947 in addition to severely restricting the legal rights and grassroots activities that built strong unions prompted states to pass right-to-work legislation (http://www.auburn.edu/~johnspm/gloss/right-to-work) and thereby provided the means for businesses to relocate rather than negotiate with labor unions. The lightest arrows on Map 1 follow the subsequent runaway shop movement of the 1950s and 1960s.

During this period, many manufacturing and heavy industries, supported and subsidized by local, state, and federal agencies, moved their operations from Midwestern cities like Chicago, Buffalo, Cleveland, Detroit, Pittsburgh, and Milwaukee to cities in the South like Atlanta, Birmingham, Houston, and Dallas/Fort Worth where industries not only avoided closed union shops but also profited from a work force stratified along racial lines. The weak unions that did exist in the American South were either de jureor de facto segregated institutions that supported sliding wage and benefit scales which pitted white against Black and Mexican-American labor. Historically, the unions of the Deep South served the interests of capital far more than they did those of working people.

The American South did not remain the final destination of US capital for long. The termination in the mid-1960s of the bilateral Bracero Program that had been implemented during World War II to make Mexican labor available to US agriculture and the subsequent mass deportation of braceros, coupled with the widespread dislocation of workers in the weakened Mexican economy, produced a reserve industrial army for US capitalism just south of the international border.

Industrialists of the North quickly took advantage of this cheap labor market. The mid-tone arrows on map 1 mark the extensive migration of US light manufacturing and assembly firms to the maquiladoras that were established in northern Mexico under the auspices of the Border Industrialization Program (BIP) that was drafted by representatives of US capitalism and ratified by both governments in 1965. To this day, consumer goods and assembly parts produced in the maquila sweatshops continue to flood northern markets and undermine the position of workers in the Midwestern states, Canada, and even the Deep South.

The thin black arrows on map 1 represent the expansion of maquiladora manufacturing to the interior of Mexico under NAFTA and into Central America and the Caribbean under the Central American Free Trade Agreement-Dominican Republic (CAFTA-DR). US capitalism is currently developing new offshoring initiatives under the Security and Prosperity Partnership (SPP) and has not given up on the Free Trade Agreement of the Americas (FTAA) which is aimed at exploiting labor markets in all of the nations of the hemispheric South.

The wide black arrows on map 1 symbolize the ultimate threat to all labor in the Americas--the massive offshoring of manufacturing, service, and professional jobs to the Far Eastern Pacific Rim and Southern Asia. This last strategic move by capitalism--the epitome of globalization--pits all workers in the Americas, blue-collar, white-collar, and even professionals, against the poorest and most oppressed workers on the planet.

If the trend of increasing globalization continues unchallenged, the final destination of ever more production, including the crucial North American auto industry which is currently expanding operations the America South and Mexico, could ultimately be the Far East.

The broken black line on map 1 represents another major trend that has undercut labor in the North--the massive onshoring of Mexican, Central American, and Caribbean workers to bolster capitalism in the USA and Canada. Although the practice of onshoring labor from the South dates back to the US conquest of Mexico in the 19th century, the first official US policy was the Bracero Agreement recounted above. After the termination of that bilateral agreement, the onshore manpower demand of northern capitalism was accommodated by a de facto gatekeeper policy on the southern US border that allowed the influx of migrant labor during periods of high demand and impeded migration during economic downturns.

As part of a strategy to meet the current economic crisis of capitalism, powerful sectors of the US business community want to adopt an official guest worker program to legalize the exploitation of labor from the hemispheric South while avoiding any social liabilities for workers or their families. Any such agenda must be recognized as nothing more than a program of transient servitude that undermines the position of all working people in North America and must be vigorously opposed (see Transient Servitude: The U.S. Guest Worker Program for Exploiting Mexican and Central American Labor at http://www.monthlyreview.org/0107vogel.htm).

Globalization what on earth is that?

lets start with this article that ifound in the internet the link i'll post it in other entrys so here is the article.
Globalization what on earth is this about?
well the article that I found about this topic talks about the the whole concept of globalization and says that the best example of globalization it’s that today we can find a McDonalds living with wild animals in the middle of Africa what could be more “ GLOBALIZATION THAN THAT”?
The article also says that for better or worse globalization it’s a reality that touches our lives in ways that we can’t ever imagine, an example of that its that in some countries even the money it’s made in other countries or today we can find a sort of tequila made in Japan ! And the worst thing it’s that this tequila is being sold inside Mexico it can’t be called tequila because of the “denominacion de origen” but the sold it under the name of “licor de agave” can you imagine that? Japanese people are selling us tequila.
Well another point it’s that at least in theory globalization will make our economies more wealthier and “rich” however in the past few years a lot of globalifobic groups are being created but the man who post the article says that no once of these groups are serious and even worst they don’t really understand what globalization really is and he describe them like a group of young people idealistic people that don’t have a lot to do.
Well he not only criticizes Young people he also said that globalization term was first coined in the 1980’s but the concept it’s much older, even centuries ago there were already international traders he argues that without globalization America has never been discovered. But back in the great depression time nations drew back into their shell on realizing that international markets also could deliver misery in the form of unemployment and this is one of the main arguments of the globalifobic groups. The article also said that the raise of internet in the past years and also telecommunications have boosted the globalization effect and argues that this is a very good thing for consumers because the emergence of new markets and companies makes the competition between them mor hard and this fact increases quality levels or decreases prices in order to compete, so in a long term the utility of the society will increase and yes there’s obviously bad thing about the globalization but there’s more good things and in the long term will show all his potential its early to see the overall of the globalization effect.
Pablo soria

A critical to music video from ska-p

“los hijos bastardos de la globalizacion”
Well searching on the internet I found this song about the bad things of the globalization this particular song has become the Spanish anti-globalization groups it’s from ska-p an Spanish group more or less anarchic but it’s interesting because offers a look into what these groups thinks about globalization so first here I post the letter in Spanish:
Comienza mi jornada cuando sale el solTengo 12 años, vivo en la desolación acá en otra dimensiónMis pequeñas manos son la producción de miles de juguetescon los que podrán jugar allá niños como yoVíctimas reales de un juego demencialla economía de mercado busca carne fácil de explotarLa macro producción que nos ofrece bienestarson millones de niños de esclavos, son niños esclavos, condenadosNO SÉ LO QUE ES GLOBALIZACIÓNNO SÉ LO QUE SON DERECHOS HUMANOSSOLO SOY UN ESLABÓN, UNA PIEZA MÁS DE UN PUZZLE MACABRONO SÉ LO QUE ES GLOBALIZACIÓNNO SÉ LO QUE SON DERECHOS HUMANOSSOLO SOY UN ESLABÓN, LA IRA DE TU DIOS.Con indiferencia les puedes contemplarcomo máquinas robotizadas produciendo sin parares un claro ejemplo más de cual es el dios que hay que adorarel fin justificará los medios ante el dios dinero, dios dineroNO SÉ LO QUE ES GLOBALIZACIÓN...Condenados, explotados¿Te escondes? díme por qué! ¿te avergüenzas? díme por qué!Cómo cambiaría completamente la situaciónsi fuese a tu hijo a quien dedicase ésta canciónno tiene amparo, a nadie le interesaal bolsillo, a los beneficios de la empresaEn occidente su llanto no se sienteel sufrimiento y la apatía no se venlas leyes son dictadas por la gran empresaCondenados, explotadosSon hijos bastardos de la globalizaciónTe importa a ti, me importa a mí, son hijos bastardos de la globalizaciónTe importa a ti, me importa a mi, ejércitos de esclavos de la puta globalizaciónProsigue mi jornada, ya se pone el solTengo 12 años, vivo en la desolación acá en otra dimensión.
Well first of all we can look that it’s clearly enough that it’s a very radical point of view and the link between globalization and market economy it’s very clear too, but the more important thing it’s the child employment and the obvious link with globalization well from my point of view even if well ok I give them that as true (it’s not necessary true but well ) arises the old dilemma: ok it’s true ther’s child employment in certain countries most of them are very poor and survive because of the “maquila” industry (we are one of them)well these countries like Vietnam china indonesia Filipinas for example could survive without the salaries of the maquila? Could china increase in this magnitude his GDP? Or could Vietnamese people survive the post war times without this income? Well it’s very interesting think about these subject so will be good if you post your opinion. you can also see the video in this urrl http://www.youtube.com/watch?v=h0_v3PqvuPY

Conference in mexico

hey chek out this video i found it in youtube and its a debate about globalization and if this its good or not for the world.

Internet globalization and marketing

Internet has come to complete the computerization process that is being developed for decades, giving birth to a new era, the Digital. The digital revolution has allowed for a single channel. we can send text, picture and sound at the speed of light. But the biggest revolution the Internet has brought, especially with its popularity in recent years, which has finished removing the last frontiers of communication. This has meant that the culture of different countries are equal and converge towards a common culture, a mass culture.
As a result of this revolution, the newspapers and the gorements had lost the monopoly of information, today every pearson can report to all over the world, every institution, business, cultural or political, has its own media. Today, in the era of Internt, each of us can become a vehicle of information.
in this context rise a new tool for the companies a tool that apels to a mass culture here is an article that talks aboput international marketing that is an other concecuence of the globalization the article show some numbers like that only 6% of the companies in the survey will reduce his online marketing budget this fact tell us that online marketing seems to be very effective at least from the businesses point of view besides this 62% of the companies will increase the same budget for the next year.
The most popular thing for the online marketing are search engines banners and mails Google reports that the advertising in his portal have increase in 40 % in the last 2 years but a recent study from an international consultant shows that in the near future the most powerful marketing tools on the internet will be the social nets as face book or hi5 and a new tool developed in the past 2 years youtube the article predicts very well that YouTube will be use for political issues and now in the past presidential elections in the US and even in the midterm elections on Mexico we all reedy see that.

in the near future online marketing will be a powerful tool in the future as personal experience in the past Mexican election (midterm) when you go into YouTube’s site like in the Google site in the right side of the window you can see political advertisement so the online marketing it’s not a Sci-Fi picture it’s a reality and for better or worst it’s alredy here inda will stay more than enytig because of the low price and fast time lunching and more important than that the volume of people that you can touch, the most viwed youtube’s video its about 7 million visitors and it’s about the 80% of the population of our capital city and guess what it’s for free.

here is the link for two article one talks about internet and globalization and the other one talks about the marketing in the internet:

-http://www.noticias.com/articulo/14-05-2005/jose-perez-bermudez/internet-y-globalizacion-informacion-4h8c.html

-http://www.marketingnews.es/Noticias/Tendencias/20090129005

Globalisation is Good - Johan Norberg on Globalization

Globalization and Poverty in Mexico

"Incomes fared relatively poorly in the parts of Mexico that experienced little of the effects of globalization when compared to the so-called high exposure states of northern Mexico whose export-oriented industries have been magnets for foreign investors."

With all the talk these days about globalization and its discontents, the tendency is to focus on the alleged damage suffered by people with the greatest exposure to its most common manifestations, such as lower trade barriers and relaxed rules for foreign investment. But what about people who have been largely bypassed by globalization?

In Mexico, it appears that people living in areas with the least exposure to globalization -- regions that are not attracting foreign investment and are lacking in industries that serve international markets -- are lagging behind those residing in regions that have felt its full force. In Globalization, Labor Income, and Poverty in Mexico (NBER Working Paper No. 11027) NBER Research Associate Gordon Hanson asserts that in the 1990s, incomes fared relatively poorly in parts of Mexico that experienced little of the effects of globalization when compared to the so-called "high exposure" states of northern Mexico whose export-oriented industries have been magnets for foreign investors.

Hanson finds that average labor earnings decreased by 10 percent for "low exposure" states, which are located mainly in the south, relative to high exposure states. In addition, during the 1990s, the low exposure areas saw a comparative increase in workers who could not earn enough to keep their families out of poverty. "This is further evidence that during Mexico's globalization decade individuals born in states with high-exposure to globalization have done relatively well in terms of their labor earnings," he states.

Hanson acknowledges that incomes traditionally have been higher in the northern states than in the south. However, prior to the mid-1980s, when Mexico began dropping barriers to trade and investment, income differences between the two regions were actually narrowing. "The process of income convergence in Mexico came to a halt in 1985, coinciding with the onset of trade liberalization," he writes. "Since 1985, regional incomes have diverged in the country. The pattern of income growth I uncover does not appear to have been evident in the early 1980s or before."

The benefits of liberalization also helped northern states weather economic crisis. While incomes in both regions suffered during the peso collapse of the mid-1990s, Hanson finds that "the deterioration was much less severe" in the northern tier, as it occurred during the banking crisis and a subsequent nationwide downturn in economic activity.

Mexico has become a popular tableau for the study of the effects of globalization. According to Hanson, that's because the country has been so aggressive at opening up its economy to the rest of the world. Mexico started in 1985 by unilaterally cutting tariffs and eliminating other restrictions on trade. It then acted in 1989 to end many restrictions on foreign investment, and culminated the liberalization process in 1994 with the signing of the North American Free Trade Agreement (NAFTA). Hanson observes that, "partly as a result of these policy changes, the share of international trade in Mexico's GDP has nearly tripled, rising from 11 percent in 1980 to 32 percent in 2002."

Hanson notes that there could be several interpretations of his findings. One is the simple fact that when barriers to trade and investment fall, incomes will rise in areas that are most adept at participating in the global economy.

---

But Hanson says that others may view the income growth in the north and its relative stagnation in the south as unrelated to globalization. For example, some observers might associate the income gains in the northern states with the privatization and deregulation of Mexican industry and the reform of Mexico's land-tenure system. Hanson says that these changes actually should be of more benefit to the less unionized and more agrarian southern states and ultimately do not offer an alternative explanation for his findings.

Still, Hanson reports that while there is much evidence that globalization, or, in the south, the lack thereof, has a strong association with income levels, he observes that one has to be cautious about forcefully stating cause and effect. "In the end, we can only say that I find suggestive evidence that globalization has increased relative incomes in Mexican states that are more exposed to global markets," he writes.

Also, if this is in fact the case, Hanson points out that it's still not clear how governments should respond to such a connection. "The policy implications are un

clear," Hanson concludes, "as I leave unanswered the question of how one goes about increasing regional exposure.

-- Matthew Davis