3.18.04

3.18.04 Globalization -- Over?

For the flight to St. Louis, I picked up a copy of the March Harper's Magazine. As I was reading "The Collapse of Globalism" by John Ralston Saul, I had one of those light-bulb-over-the-head experiences.

I had never thought of "globalism" as just one in a long line of grand economic theories, destined to endure for only a few decades. Like Communism or Keynesianism.

Like many people, I thought that technology and the interdependency of a global economy would make warring nations a thing of the past. I always thought of it as the Clintonian "let's all stop fighting and get rich" philosophy -- very practical. Only benighted little nations like Rwanda or Serbia would be too stupid to join up. I figured the agony of outsourcing jobs to other nations was an inevitable "rebalancing" and that things like fair wages and good working conditions in those countries were delayed, but would follow.

But Saul argues that we've simply handed the world over to big multi-national corporations. Their interests, we've discovered, are not very public spirited. The rich have gotten richer. And the poor are joining al-Qaeda. Amid an unprecedented increase in the money supply, nation-states (including this one) have no money to provide public services or to maintain deteriorating infrastructures.

Privatization of public utilities has not improved service or lowered costs for consumers. It has simply guaranteed revenues to the new owners and led to a collapse of investment in infrastructure.

Deregulation has only destabilized industries like the airlines, who have to pay for $100 million dollar planes from $100 tickets -- a tough business model.

Merger-mania (aka consolidation):

As for the romance of Gigantism -- of corporate size as a criterion for industrial success -- it was beginning to look pretty silly. Endless mergers had led to high levels of unserviceable debt and bankruptcy. It was as if size had replaced thought. As if it were a male thing.
It was all beginning to resemble the seventeenth- and eighteenth-century speculation markets -- ...the Dutch tulip-bulb frenzy. The larger the corporations grew, the slower and more directionless they became -- enormous management structures frightened of serious investment and risk. They resembled out-of-control bureaucracies.

Corporate ineptitude. Apparently giant, deregulated, self-interested companies wind up being no more competent than big government. It's hard to know just when incompetence and out-of-control management opens the door to outright corruption.

While Saul argues that Globalization is over, the mentality still permeates our thinking. We see that things aren't right out there but we aren't sure why. The Bushites tell us just to be patient -- leave it to the big corporations to save us all (and don't get all silly over Haliburton). Kerry is accused of waffling for wanting to re-examine our free trade agreements. This article convinced me that he is only being a responsible public servant.

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