Pros and Cons of Globalization
This essay forms part of a series, discussing Urban Development.
Dharavi: I explore the Pros and Cons of Slum Living in Mumbai, India and come to an unexpected ultimate conclusion.
Economics of Poverty: How to solve the issues, arisen in this hub.
Is Development always good?: The motivations of development and exploring the line into overdevelopment.
Do you think Globalization is a positive element to modern society?
An interesting and jovial look at the Pros and Cons of Globalization
Images to Provoke Thought
Globalisation is one of the most controversial things that are happening today. As corporations become more and more trans-national, it seems as if a lot of misery is being caused, and as if this process is a force for bad. But is it?
Globalisation refers to how companies are ever-more frequently making their products Less Economically Developed Countries (LEDCs), and then sell them to people in those more so (MEDCs), in order to utilise the lower costs of labour and greater abundance of raw materials. There are generally less labour-protection laws in LEDCs so it is easier to handle workers in cheaper ways, ways that would not be considered acceptable in many MEDCs. Cheaper production costs mean cheaper products, which mean more people buy your products, which means larger profits. It makes sense for the companies. And if this were not happening,millions of people in other countries would not have a job, or at least, have a worse job. This is because if there were better jobs available, people would obviously ignore the jobs these Trans-National Corporations (or TNCs) were offering them, and opt for better jobs. Is it a bad, or immoral, thing for any company to offer somebody a job, providing they tell them the job conditions, pay, and what they will be subjected to? By doing so, TNCs often secure workers in LEDCs higher wages. Added to this, people in MEDCs get their products for much cheaper, and furthermore, if it is cheaper to manufacture, it is easier to experiment with new ways of manufacturing/producing. Innovation can only always be a good thing, as it leads to technological (and other forms of) progress, which in the long run always makes our world a better place. Innovation is further encouraged by the incredible speeds at which information and ideas can now be preserved, recorded, analysed, taken account of, and shared. This, too, is globalisation of a sort. In the past, one had to be a genius to make a scientific, or ideological, breakthrough. Now, those rare genii are not needed, for one person can build upon the last’s small idea, and the next person upon that one, till suddenly a radical new theory is formed.
However, there is a flip-side to this argument. For a start, globalisation, by definition, requires people to make regular, long-distance trips across the globe. This increase in flying is hardly good for global warming. As well as this, for those in LEDCs to have jobs, people in MEDCs must lose them – and, TNCs are often changing production sites to find those who will accept the lowest pay, meaning workers in MEDCs or LEDCs, along with their governments, can never know if they can rely on the TNC-offered jobs being reliable. Furthermore, many factories employing workers in LEDCs are dishonest about working conditions or wages before contracting workers, employ people below the LEDC’s minimum wage, or employ workers in conditions that constitute a serious health risk, without adequate precautions. This is both immoral and illegal. People also complain that their traditional cultures are disappearing, and that the TNCs make it impossible for small, local companies to start up due to overly fierce competition. Moreover, we must consider that an increasingly inter-connected world opens the global economy up for more and bigger financial crises.
The increase to global warming I cannot argue against. It is a major drawback to globalisation. Global warming is one of the biggest issues of the modern day and will destroy us if we do not deal with it radically and decisively, on a global scale, in the very near future. But, though it is pressing on us right now, it is still a long-term or at least medium-term issue. Globalisation isnow: it is a short-term issue. Anyway, there are ways round this problem. Global warming is caused by a whole range of issues, and lighting or boilers are just as big in their problems as aviation. Furthermore, geo-engineering and carbon-trapping technologies can help reclaim carbon to be stored underneath the Earth’s surface. Equally, prototype planes have recently been built by Boeing that can be run on bio-fuels: though they emit carbon dioxide, bio-fuels are theoretically carbon neutral, since the carbon dioxide they emit they have already absorbed from the atmosphere while being grown (though practically, they’re not quite so wonderful, since this discounts the environmental costs of treating them). And other fuels, such as hydrogen cells, may be found viable in the future. But this is not an essay on global warming.
To the second point, that of MEDC workers losing their jobs to LEDC workers, I can argue against. Just think: who would be in a worse position, were they without the job the TNC offers: the worker in an MEDC, with a place to live, some savings, an education, and a certainty of being able to put bread on the table owing to a reliable and generous benefits system, or the one in the LEDC, living in poverty, without an education, living on the streets, without any benefits? It is sad workers in MEDCs must lose their jobs, but (though it sounds cruel) the workers in LEDCs are more worthy. Also, these jobs are rarely skilled-labour jobs, so workers in MEDCs cannot profess in the main to be much better than anybody else of a reasonable standard and character. This argument also goes against that, that it is unfair that TNCs continually move around and make people redundant, always seeking those who will accept the lowest pay. This is quite unfair on those being made redundant. However, as a result of always employing those who will accept the lowest pay, they are always employing those who need the work the most, and always providing jobs in the countries which are most backward and where jobs are needed most (excepting those truly backward countries where infrastructure is virtually non-existent, so as to make it infeasible to base operations there).
As to the third point, I find I cannot argue against that one either. Contractual dishonesty is rightfully illegal everywhere. It is completely unfair and immoral to offer anybody a contract without explaining the full terms of the job to them, and this must be stamped down upon by governments. However, while truly regrettable, and a problem frequently associated with globalisation, globalisation does not necessarily lead to contractual dishonesty. Globalisation refers to how companies are ever-more frequently making their products Less Economically Developed Countries (LEDCs), and then sell them to people in those more so (MEDCs), in order to utilise the lower costs of labour and greater abundance of raw materials. This problem here is not globalisation; it is criminality. I think that there is nothing wrong with moving factory locations from rich to poor countries, but contractual dishonesty is not a part of, nor necessitated, by that. It is perfectly possible, and moral, for companies to move operations to another country, but even in an LEDC no company would be allowed to employ anybody without explaining the terms to them. So this is not a globalisation issue.
For the fourth problem: it will sound harsh, but, surely, if cultures are disappearing, it just proves really that they are inferior or unneeded. For example, the Welsh language is desperately trying to be preserved. But is it really needed? Is there really any point, when I’m sure practically every Welsh speaker also speaks English, and often speaks English better. People in India haven’t stopped working in the fields, as they would have done in their native culture, for nothing. It pays better to work in factories, or else working in the fields has become uncompetitive. You don’t see people in villages in the Amazon wearing T-shirts with American brands on them without reason. They’re more efficiently made than the native clothing, and often the designs are found more appealing. It’s sad, but cultures don’t die out for nothing. And, after all, what is so great about cultural diversity anyway? If people want to be part of a uniform culture – well, let them. For one thing, it will increase the ease with which multiculturalism can be implemented. Sure, it’s interesting to learn about ways other people lived – important, when they are still living that way, so we can understand their ways of life properly – but is it really useful or necessary in any way to preserve those ways, if those living them are no longer interested?
The fourth argument against TNCs: that they provide too fierce competition against small, local start-up companies in the LEDCs and so do not actually contribute to the economy at all. On the contrary, the opposite is true. Although TNCs often employ many workers in LEDCs, they rarely have many stores in these places, as due to the extreme poverty often found there, nobody can afford to by TNCs’ wares for the prices TNCs would like; Nike only sells its products to the USA, the UK, Australia, Austria, Slovenia, Belgium, the Czech Republic, Denmark, Germany, Spain, Finland, France, Greece, Hungary, Ireland, Italy, Luxembourg, the Netherlands, Norway, Poland, Portugal, Switzerland and Sweden. Also, the TNCs are making it easier for small, local companies to start up as they re supplying more jobs, meaning people have more money. Having more money makes it easier to consider starting a business of your own, and also, as it means you can buy other people’s wares easier, makes it easier for others to consider starting companies of their own.
It is true that having a more inter-connected world leads to a greater likelihood of more, worse global financial crises, and also having to trust other countries to be responsible with their economic policies. But we will also bounce back quicker from global disasters, as other countries’ growth will benefit ours as well, and we will have bigger booms in the meantime. We must also remember that economics is still very much a new science, and that with each recession we are finding new and better ways to avoid future ones. Furthermore, with an economy based mainly on consumption, as ours is, the risk is decreased somewhat.
Of course, the majority of this essay so far has been focused on the morality and correctness of TNCs’ actions during the globalisation process. I believe these are sound. But is the process of economic globalisation, in itself, a good thing? Even when the workers know what lies in store for them, jobs TNCs offer are often in the slums, opening up big possibilities of natural disasters such as fires, devastating floods or epidemics caused by poor sanitation and densely packed housing. I believe there is nothing wrong with TNCs offering such jobs if they inform the workers of these risks. But, if it weren’t for globalisation, these workers might be working out in the fields, without the threat of fire, disease, or flood. Of course, people only take jobs TNCs offer because they are better than the job they already have, if they do have one. But, even if workers individually decide they have better prospects in the slums rather than farming (most LEDC economies are largely based around agriculture pre-industrialising), we could say that globalisation is making their lives worse. Sure, they may be getting better wages, and they may want to take the risk – but we could say that globalisation has encouraged them to move to a place poorly sanitised, with huge risk of natural disasters such as fires and floods, and so therefore is having a negative impact upon LEDCs.
But then again, we must think this through. TNCs usually choose Newly Industrialising Countries (NICs) or LEDCs for their factories, as they at least have some infrastructure, wages are still very low – and there are usually large numbers of unemployed. This, I find, is the crucial point. Some job is always better than no job at all. NICs and LEDCs almost always have large unemployment because companies in them are only now starting to take advantage of new technologies that vastly slim the amount of labourers needed for any given task, rendering many people unemployed. For instance, in our industrial revolution, threshers simplified farming hugely and forced many people into the cities to find work. You could say that TNCs are speeding up the industrialisation process in LEDCs and NICs. This may be true, but LEDCs and NICs would have got to this stage anyway.
And there is another point. I have in the last paragraph compared the industrialisation process of many LEDCs to the Western industrial revolution. We can easily take the comparison further. We know that before our industrial revolution, our economy was almost all based around the primary sector – harvesting of raw materials, agriculture, mining, etc.. Then, during the industrial revolution, possibilities in manufacturing widened hugely with the introduction of economies of scale, factories, and the fact that even if you couldn’t find a customer in the immediate neighbourhood, you could transport your product out. Combined with the farming revolution, meaning that thousands in the countryside no longer had a job, this meant our workers went speedily to the secondary sector. Towards the end and after the industrial revolution, our economy has gradually shifted to services. It did this out of need. You cannot have a strong secondary sector without a strong tertiary sector. It is difficult to produce products if there is no-one to sell it on, and it is far safer to manufacture and transport if you have insurance. Trade is made far easier by a strong finance sector. All these jobs are highly-skilled jobs, and more highly-skilled jobs – scientists, artists, philosophers, musicians, authors and the like – were opening up due to the intellectual revolution happening at around the same time. This meant far more teachers were needed. Equally, the medical revolution meant jobs vastly increased in healthcare. Our services-based economy sprang up because of many reasons. A services-based economy is vastly more preferential than a manufacturing- or raw materials-based economy. Services-based economies are not nearly so vulnerable to outside attack. If China decided to stop buying from Germany, Germany’s GDP would plummet, as Germany’s GDP is lead by exports. The UK would probably not be nearly so badly hit, as, in effect, with a services-based economy, the main country the UK is selling to is the UK. Also, in services-based economies, wages are much higher and working conditions far better. This is because jobs based in the tertiary sector are highly-skilled jobs. Skilled workers have to study for a long time before starting work, so companies have to employ them with decent wages or the workers will not be able to repay the debts from all the time they have not been earning money. Furthermore, there is a clear difference in ability between some skilled workers and others. A company is always going to want the best skilled workers. This means, to attract them, it has to offer better wages and working conditions than other companies. Companies have to compete for workers, so wages and working conditions are kept high. Competition can happen in the secondary sector, but to a lesser extent, as there is a large supply of unskilled workers, and there is little difference in ability from one unskilled worker to the next. Moreover, services are perhaps better as they are less menial, physical jobs.
That was a very long last paragraph. Summarised, LEDCs and NICs will (hopefully) eventually come out of their industrial revolutions and phase to services-based economies. This will lead to better wages, working conditions, and quality of life. You see, you could say that TNCs are speeding up the industrialisation process, by building new factories, attracting new workers to the cities faster than they would have come if there had been no TNCs. But, I think in the long term, if there is anything in that, it will eventually turn out for the good, as after industrialisation comes a services-based economy. So, once again, globalisation, in speeding up industrialisation, is doing LEDCs and NICs a service.
To conclude this essay, I believe globalisation is a good thing. The morality of TNCs’ actions I believe is sound, as they are essentially moving jobs from MEDC-workers to LEDC- and NIC-workers, who need them more, and creating more jobs in LEDC and NIC workers. It is true it probably does not have great impacts on the environment, but there are many ways of dealing with global warming – we just need to have the right amount of will-power and determination. It is true many companies employ workers below the minimum wage, and in atrocious conditions – but that is not a globalisation issue. It is true globalisation opens us up to more global disasters – but only if we are reckless; and besides, it opens us up to profit from other countries in the meantime and have stronger booms as well. Many cultures may be dying as a result of globalisation, but these are outdated anyway. And, finally, it does matter that TNCs may be one of the biggest causes of the slums in LEDCs and NICs. But the slums are just a product of a massively speeded-up industrial revolution – and, as it is speeded up by the TNCs, LEDCs and NICs will come out of it quicker, into a services-based economy, which will be ultimately for the good. TNCs, directly and indirectly, in themselves and the process they are causing, are good. Globalisation is good.
How To Solve This
- Economics of Poverty
Exploring the ways in which we can solve the issues arisen within this hub.