Westerners' Rights and Globalization...

[Guest]

...or why the rule of law and globalization are good things, even for Sanukers.

 

 

This is intended to be a subsidiary thread to the ?Westerner?s Rights in Thailand? thread addressing the relationship between (a) Westerner?s rights in Thailand and ( globalization. Suadum said we should discuss it in another thread (?But let's not go on here. Either PM or start a new thread?), and so I am.

 

But having read the recent posts to the Westerner?s Rights in Thailand thread I am wondering if we should have kept this discussion in that thread. The current posts demonstrate the clear and positive tie between (a) rights and the rule of law generally and ( globalization. But let?s see where this goes, and let?s start with the country that Suadum has cited as the shining ?antithesis? to globalization: Malaysia. After that, we can deal with other fictions, such as the claim that globalization has somehow increased poverty and the gap between the rich and the poor.

 

Suadum cites ?Malaysia is an obvious antithesis? to my pro-globalization views, citing it is an example of how going it alone, erecting protectionist barriers and keeping out foreigners has led to economic success. In his words: ?[Malaysia] snubbed the IMF by locking in their currency, the WTO because their biggest employer (Proton) was not yet able to compete on the world stage?[and its wealthier than Thailand]?

 

Let?s take a closer look at this ?obvious antithesis?, Malaysia. Malaysia has grown economically because of foreign economic investment not by shunning it. It is home to many of the largest multi-nationals. Growth in Malaysia is almost entirely driven by exports ? particularly electronics. Because the rule of law exists in Malaysia (here Suadum and I agree), it has been able to attract foreign direct investment (FDI). But the important point here is that Malaysia, despite the rhetoric, has benefited tremendously from globalization: it depends almost entirely on exports, and those exports were only made possible because of investments by foreignors. That is what FDI means.

 

Having put in Malaysia into the proper perspective, let?s now take a look at the example Suadum cites as Malaysia?s protectionist success story: the mighty Proton. He describes the Proton as ?not yet able to compete on the world stage?, arguing that Malaysia?s protectionist policy here is sound because it will ultimately allow the Proton to compete on the world stage. Now pause for a second, and honestly answer the following two questions: How many of us here drive Protons? How many of us think they will ever buy a Proton? Show of hands please.

 

Malaysia will never have a viable automotive industry as long as its protects its home grown product, the Proton, from competition. By contrast, Thailand ? which is certainly much more open than Malaysia in the automotive sector ? has and will continue to have a much more successful and vibrant automotive sector. No one calls Malaysia the ?Detroit of the East?, and they never will as long as Malaysia continues to protect the Proton from competition.

 

The debate over eliminating barriers to open trade in goods and services or allowing foreign ownership of property should not be confused with the debate over capital controls (?snubbed the IMF by locking in their currency?). These two issues are like apples and oranges; or chalk and cheese if you prefer. Although hardly anyone serious now disputes the benefits of eliminating barriers to open trade and goods, there is legitimate debate over capital controls. Jagdish Bhagwati of Columbia University is probably the most renowned serious skeptic of free capital flows, but even he doesn?t for a second doubt the benefits of free trade: ?The case for free trade is overwhelmingly powerful, thanks to both economic logic and the empirical demonstration of the postwar success with outward trade orientation.? Jagdish Bhagwati, The Wind of Hundred Days, ?Free Trade, Yes; Free Capital Flows, Maybe?, p. 22 (2002). Malaysia?s purported snubbing of the IMF by locking in their currency is entirely irrelevant to any debate over eliminating barriers to open trade in goods and services or allowing foreign ownership of property.

 

Mentioning Wal-Mart incites plenty of inflamed rhetoric (Suadum?s selection of a web-site maintained by a US politician who has made a career out of attacking Wal-Mart speaks volumes) that tends to obscure a more important truth: Wal-Mart is controlled by the market. Because it faces fierce competition from other retailers, it has less scope to mark up its prices than, say, a shop in an isolated skiing village does. Even the largest companies are constrained by competition.

 

That is, of course, unless the power of the state is invoked to protect them from competition. And that is what protectionism ? and this entire debate about globalization -is really about: protecting domestic players from international competition. And the sad fact is that in less developed countries ? Thailand is a prime example of this ? the companies that garner such protection are invariably owned by politically connected vested interests that benefit tremendously from such protection.

 

This protectionism not only harms local economies by reducing or eliminating the competition that fuels innovation and forcing consumers to pay higher prices than they would otherwise pay in open markets, but also fuels a vicious cycle of political corruption. Monopolies generate much higher profits than companies operating in freely competing in open markets ? there is a little debate about this. In less developed countries ? often under the guise of state led ?industrial policy? and borrowing flawed policies about about "national champions" from countries such as France - the power of the state is used to maintain monopolies owned by vested and connected local interests. Vested interests use the profits they generate from their monopolies to purchase (bribe) the power of the state to maintain their monopolies. Indeed, they require the extra profits that monopolies provide to fund this policy corruption. And thus the vicious cycle continues.

 

Tying this all back to the original debate, this is why opening the markets, protecting the legal rights of foreigners, is actually in the interest of Thais. It helps break the cycle.

 

Its ironic ? no, sad - that the most vociferous critics of globalization share the same bed with many of the world?s most dangerous despots.

 

Next: does ?globalization further polarizes the haves-have nots?? Not!

[Nervous_Dog]

You know, the one point you and Suadan agree upon, is quite ironic and telling.

 

You both agree Malaysia has a very solid legal base (Thank you UK).

 

And it can't be denied that Malaysia has thrived, you use the good legal system in your arguement as the basis of why it has thrived.

 

Maybe the key to all this is not so much Globalisation, but wether a solid good legal network is more important to a country than it being open to WTO agreements?

 

Additionally, I think small countries like Korea, Malaysia and even Thailand all went against common wisdom ater 1997 and succeeded is that the countries advising them are big western ones.

 

Ecenomics is a curious blend of mathamatics and phsycology I feel at times.

 

And the physcology of the difference between east and west is telling in Malaysia's Vs say South America responces to ecenomic crisises

 

DOG

[MaiLuk]

This is a good topic.

 

One problem I see is that you haven't given a clear definition of "globalization."

 

In the US there are some labor issues that have recently riled up some people. One is the Bush administarations attempt to legalize the status of illegal mexican immigrants in the US. Bush wants to make it easier for mexicans to come to the US and work the "lowend jobs that americans are not willing to do." Yes the way he talks about this is embarassing but thats another story.

 

The other labor issue involves american companies closing up their US shops and re-opening outside the US to take advantage of the far lower labor costs in other countries. Big example is tech companies moving all their software development to India where the indian engineers get about one fifth the salary of US workers. Major savings but alot of tech people in the US are out of work. Bush says things like "We will retrain them for another career." Telephone service call centers are also moving outside the US.

 

I assume the above falls within the definition of globalization. Will the above labor movements help the US in the longterm and how can we know?

 

Next question: The US and other euro countries and some asian countries have the highest per capita incomes. Then you have a country like china with its thousand million workers on a much lower income.

 

If the world truly globalized will china come up to the same per capita as the high end countries? Or will the high end countries come down? If they meet somewhere in the middle that is good for china, not much good for workers in the high end countries, right?

[MaiLuk]

Just an observation comparing thai with US. Here in my medium sized metropolitan area there has to be no less than 100,000 businesses of various sizes. A large percentage are owned by 'foreigners', i.e. people who emigrated here and got a green card or just somehow got their foot onto US soil. Anyone with some money and willing to work can make a go of it and start their own business once they get here. The local economy here is extremely diversified as a result.

 

Thailand is just a ridiculous third world joke in comparison. You cannot show up in thailand and buy a business without jumping through a bunch of hoops and some legal papers that supposedly will keep a leash on your thai partners that you must have by law. And forget about buying any land.

 

Why would these industrious people who come to the US to make a go of it ever want to go to thailand where their hands are tied? They wouldn't. And never will. Thailand will be a tanked economy for a long long time and will not ever be like the western economies in our lifetimes.

[Nervous_Dog]

Mailuck, however, in "Anti-Globalization" Malaysia you can!

 

In fact you can get a 15 years visa from their web site!

 

So - what breeds success - a countries attituda to Globalization, or a countries attitude to encouraging companies and people to thrive?

 

One I feel is Big business oriented, the other Country oriented

 

DOG

[Zorro]

Gadfly

i have provided some links and a small cut and paste re globalisation and inequality and problems for developing countries along with the unsustainablility of ever increasing economic growth.

 

http://www.uwec.edu/geography/Ivogeler/w111/articles/global$.htm

 

I have pasted a small bit of the below link.

http://www.arts.unsw.edu.au/tsw/D62IfYouWantAffluence.html

 

In addition conventional development, which virtually identifies development with growth, is ecologically suicidal. Even the richest countries are blindly committed to development without end, i.e., to the continual and limitless increase in production for sale and in GDP. Their supreme goal is in other words economic growth. However, over the past 40 years an overwhelmingly convincing limits to growth analysis has accumulated, making it abundantly clear that rich countries are producing is consuming at rates that are grossly unsustainable. The result is rapid depletion and destruction of resources ecosystems and social bonds.11

 

Globalisation represents the acceleration and intensification of all of the above, enabled by the elimination of the barriers which previously inhibited the access of corporations and banks to profitable business opportunities. The rules of trade, investment and service provision are being radically altered to remove the capacity of government to preserve and protect the existing jobs, markets, forests, fisheries, water, minerals and public services . It is now becoming illegal for governments to protect their own people from the predatory intent of the corporations. There have already been cases where governments which have tried to block undesirable corporate activity have been charged with "interfering with the freedom of trade" and fined hundreds of millions of dollars. Globalisation is a stunningly brazen and successful grab by the corporate rich for even more of the world?s wealth. The impacts are most devastating on the Third World majority, whose previously protected access to local resources and markets and state assistance is being eliminated as the business is being taken by the corporations. It is no surprise that global inequality and polarisation are rapidly increasing. There is a vast volume of evidence on the devastation globalisation is bringing to the poor majority of the world?s people.12

 

The hypocrisy.

 

Third World participants in the global economy could be forgiven for being confused by the fact that the rich countries do not always play by rules of the neo-liberal agenda. For instance it sets freedom for market forces as supremely important and undermines regulation and protection, yet the most elaborate protective arrangements in the global scene are for the farmers of the rich countries. These have actually increased in the period of more intensified rhetoric about the sanctity of free markets (and in 2001 the US government tried to increase them by another 50%.) Consider also the somewhat puzzling insistance on the complete freedom that must be given to capital to go any where in the world and do anything it likes without any interference from governmental regulation, while at the same time there is not the slightest possibility that labour would ever be given the freedom to move to rich countries without restriction

 

I have pasted just one quote from the below link.

 

http://www.theglobalsite.ac.uk/press/012castles.htm

 

Globalisation and industrial re-structuring led to marginalisation, impoverishment and social exclusion for large numbers of people in both the older industrial countries and the rest of the world, undermining the supposed dichotomy between developed and underdeveloped economies.

[Guest]

Instead of copying and pasting what someone else said, why not giving the issues some real thought, post your own views and then defend them. OK, now let?s walk through the issues you copied from another website.

In addition conventional development, which virtually identifies development with growth, is ecologically suicidal. Even the richest countries are blindly committed to development without end, i.e., to the continual and limitless increase in production for sale and in GDP. Their supreme goal is in other words economic growth. However, over the past 40 years an overwhelmingly convincing limits to growth analysis has accumulated, making it abundantly clear that rich countries are producing is consuming at rates that are grossly unsustainable. The result is rapid depletion and destruction of resources ecosystems and social bonds

Actually the evidence shows that environmental policies improve as a country becomes wealthier. We know from experience that market economies cause far less environment damage than socialist (command) economies. The former Soviet Union was responsible for some of the world?s greatest environmental catastrophes, including the Aral Sea. China has a horrendous environmental record. Compare that with New York?s harbor where species not seen for over 100 years are returning. There was an article in The New Yorker a few years back about how scientists were baffled by a creature that was eating wooden structures in the water until a historian noted that he read similar accounts about problems with wooden piers in New York over hundred years ago. Upon investigation, it was found that the creature that had been eating wooden piers 100 years ago had returned because the water quality had improved to such an extent that could again survive in the waters off of New York. This in the capitalist US.

 

As people become richer, they demand a clean up of the environment. A study of the Czech Republic by Alan Kruegar and Gene Grossman of Princeton University showed that when GDP per head reached US$8,000 local pollution started to improve dramatically. (?Economic Growth and the Environment?, National Bureau of Economic Research Working Paper 4634, Feb 1994). The fact is that state owned enterprises use resources less efficiently than market driven business that have to compete to survive. And if you think about it, the economic logic makes perfect sense. Need an example? Consider the former East Germany, which burned polluting brown coal to generate energy.

 

Highly protected agriculture uses more fertilizer, pesticide and energy than does less protected agriculture. Switzerland, where agriculture is highly protected, uses ten times as much input in chemicals per unit of land than Australia. Why? Australia is naturally better suited to agriculture than Switzerland. Similarly, BSE (mad cow disease) was a direct result of intensive feeding of cattle in the UK, a far less suitable environment for cattle raising than the US or Argentina. The fact is that protectionism generates environmental damage by protecting businesses that would otherwise fail because they are operating where they shouldn?t be.

The rules of trade, investment and service provision are being radically altered to remove the capacity of government to preserve and protect the existing jobs, markets, forests, fisheries, water, minerals and public services .

This is absolute nonsense. Companies don?t have armies; countries do. Even the weakest government can force people to do things that no multinational company could do even in the wildest dreams of its executives: conscript workers, force them to pay taxes and imprison and execute them. The worst tragedies of the last centuries ? Hitler?s Germany, Stalin?s Soviet Union, Mao?s China (the great leap forward that killed tens of millions), Pol Pot?s Cambodia ? were all the work of governments ? you know those organizations that ?preserve and protect the existing jobs, markets, forests, fisheries, water, minerals and public services.? For modern examples consider the Taliban?s Afghanistan, Saddam Hussein?s Iraq, or Robert Mugabe?s Zimbabwe. I am much more worried about the catastrophes of bad governments than I am about the Microsofts and even the Enrons of the world. Enron was apparently rife with fraud, but it didn?t build concentration camps.

 

Now before this mistake in reasoning is made, let me point out the obvious: open markets and globalization are not the antithesis of governments, but they do provide a check on bad governments. And this is a good thing. Open markets reduce the opportunities for corruption. There is now compelling evidence that connected lending (that is, loaning money on the basis of cronyism rather than on a sound economic basis) fuels corruption, and the best way to reduce connected is to open the financial sector to foreign competition. Bad banks cannot survive in open markets competing against international competition, and corrupt governments ? particularly in this part of the world ? depend upon the capital that bad banks provide.

 

And corrupt governments have a pretty poor track record when it comes to protecting the rights of Westerners or even their own people.

[Guest]

My point was is that Malaysia is very highly globalized. No one can seriously deny that, particularly when you look at where most of its income comes from. Hence, Malaysia is not an example of a country thumbing its nose at globalization and thriving. It is an example of a country that is thriving because it is highly globalized.

 

And your comment about the 15 year visa is an excellent example of precisely this point.

[Guest]

Just an observation comparing thai with US. Here in my medium sized metropolitan area there has to be no less than 100,000 businesses of various sizes. A large percentage are owned by 'foreigners', i.e. people who emigrated here and got a green card or just somehow got their foot onto US soil. Anyone with some money and willing to work can make a go of it and start their own business once they get here. The local economy here is extremely diversified as a result.

 

Thailand is just a ridiculous third world joke in comparison. You cannot show up in thailand and buy a business without jumping through a bunch of hoops and some legal papers that supposedly will keep a leash on your thai partners that you must have by law. And forget about buying any land.

The greatest source of wealth in the US is not its natural resources, but its people - virtually all of them immigrants.

 

Perhaps the answer to why some countries are wealthy and thrive while others do not lies in the very comparison you draw between the US and Thailand. If so - and I have no doubt that it does lie in that difference - Thailand does more harm to itself with every protectionist and anti-foreignor measure it takes. When a Thai government denies rights to Westerners or wrongfully expropriates the property of foreigners, it also impoverishes Thailand.

[Hugh_Hoy]

Gadfly1 said:

 

Perhaps the answer to why some countries are wealthy and thrive while others do not lies in the very comparison you draw between the US and Thailand. ..

 

Although not quite "on point", a comparison of Chinese and Japanese acceptance, acquisition, implementation, and advancement of "Western" technology should be adequate to show how cultural and political differences can influence the development or retardation of a country's advancement. Both countries were exposed to European influences at about te same time. Both countries were fiercely independent and nationalistic. However, Japan eagerly accepted and sought technologies and methods from the "new-comers", while the Chinese tore up the Brit-built railroads and melted down the rails and locomotives after British withdrawl. Later, China would only copy finished products, doing little in the way of "imagineering", creating, advancing or pioneering an industry or technology.

 

Japan is altogether different. But even today, China is little more than merely the factory portion of many multinational corporations, with the laboratories, front offices, and sales staffs remaining at home. It has nothing to do with "intelligence", but everything to do with differing cultural/political values and influences.

 

A more modern comparison for stark differences in acceptance of "globalization" is North Korea and South Korea.

Not much need be said about that.

 

Hugh (mak)