The Unglobal Economy.

There are many who believe that globalization is not global at all, and that free trade has everything to do with making profits for the rich, not sharing wealth with the poor

One argument against globalization is that the world's corporations are involved in some vast conspiracy, which has the aim of controlling everything. To do this, they are not raising the living standards of the poor, but lowering the living standards of the well-off. There is, in the words of the labour movement, a "race to the bottom."

However, it seems unlikely there is a formal conspiracy: no evil group of plotters hiding in some luxury mountain resort manipulating the world's commerce to satisfy their own greed. Rather, businesses tend to copy what other businesses have done successfully. So, when companies independent of each other make similar strategic moves, the result can look like a conspiracy--even though it's not one.

Nevertheless, since the signing of the North American Free Trade Agreement (NAFTA), there has been a steady decline in the quality of public services in Canada. This has happened during a period of high economic growth. More Canadians have slipped into the ranks of those living in poverty, while a smaller number have seen their incomes rise dramatically. According to Statistics Canada:

* The richest 20% of Canadians increased their wealth by 39% between 1984 and 1999. But the poorest 20% saw little change in their finances;

* By 1999, the richest 10% of Canadians had a net worth (total assets such as residences, stocks, and savings minus debts such as mortgages, car loans, and student loans) of $703,500. The poorest 10% had a negative net worth with debts of about $2,100;

* Half of all families held 94% of all the wealth in the country, leaving the other half with only 6%; and,

* Being poor in 1999 was worse than in 1984 because funding for social housing, health care, and education was cut back.

The poor in other parts of the world are in even worse shape.

The maquiladoras are zones in Mexico where factories attract economic migrants from the south. For many, they have jobs for the first time in their lives, but their living conditions are awful. Most workers there still make about $1 an hour for a 48-hour week, and huge numbers subsist in sprawling shack cities with no running water or electricity. Critics say that because these conditions are enough of an improvement to attract workers is no justification for such worker exploitation. In Cambodia, women often work 100-plus hours a week in factories making clothes and get paid $90 a month. But, they'd rather do this than work at their only alternative - as a prostitute.

It was in the 1990s that the North/South divide was marked by what critics see as unconscionable corporate greed. Brand name corporations moved their production offshore to take advantage of cheap labour conditions and lax environmental regulations. As Maude Barlow and Tony Clarke write in their 2001 book, Global Showdown: How the New Activists are Fighting Global Corporate Rule, "... numerous footwear, clothing, and toy manufacturers profited from brutally exploitive and dangerous working conditions for both women and men, particularly in Asia and Central and Latin America." The authors point to such footwear companies as Nike, Reebok, and Adidas; clothing manufacturers including The Gap, Levi Strauss, Liz Claiborne, and Disney; and retail giants such as Wal-Mart, Kmart, and JCPenney; as well as many toy makers. In many cases, the authors say, companies such as these set up sweatshop factories in areas where they are allowed to operate outside the labour and environmental laws of the host country.

Disney is one example of enormous income inequity: According to anti-sweatshop activist Charlie Kernaghan, Disney Chief Executive Officer Michael Eisner earns $9,783 an hour, while a worker making Disney tee-shirts in Haiti makes 28 cents an hour. From that, he estimates that it would take a Haitian worker 16.8 years to earn what Mr. Eisner earns in an hour.

One thing that's undeniable is that globalization also represents a concentration of capital that is beginning to dwarf the sovereignty of the nation state. The top 200 global corporations are so big that their combined sales are greater than all but nine of the world's 191 sovereign nations. Of the 100 largest economies in the world, 52 are now transnational corporations. Wal-Mart is bigger than 163 countries. The Time Warner-America Online empire has a market value greater than the economy of Australia.

On the individual level, there are 447 very rich people whose combined wealth is greater than the income of half the world's population - three billion people. The three richest people have assets that exceed the combined gross domestic products of 48 countries.

At the same time, 89 countries have lower per capita incomes than they did a decade or more ago. About 80 countries have per capita incomes lower than they were 30 years ago. While a billion people in the world exist on less than a dollar a day, the world's 200 richest people doubled their wealth in the last four years of the 20th century; they own more than the poorest billion people. In 1960, the incomes of the top one-fifth were 30 times larger than those of the bottom one-fifth. Now, the income gap is 74 times.

According to World Bank president James Wolfensohn in September 2000, "... 20% of the world controls 80% of the GDP (gross domestic product); [and of] a $30 trillion (U.S.) economy, $24 trillion is in the developed countries."

The gulf between rich and poor is expected to continue to increase. By 2025, there will be two billion more people in the world, and 97% of them will be born in the developing world.

This widening gap is seen by some as a sign of global political strain; those at the bottom of the economic ladder seeing the rich moving higher up might start to object. Of course, they've done that already at the "Battle of Seattle" and numerous other anti-globalization demonstrations.

Activists ask, if it's beneficial for goods and capital to move around the globe without restriction, then why isn't it all right for labour to do the same thing? But, there are few opportunities in rich countries for the masses of poor people who have no education. This makes the world economy a gated community to those outside it, not a global village, as one observer explained.

And, when migrant workers do move to where the jobs are, why aren't they protected from unfair working conditions, just as some industries are protected from unfair competition (through domestic subsidies and import tariffs)?

About 200,000 migrant workers come to Canada every year to work as low-wage cleaners, seamstresses, nannies, and seasonal farm workers. But, as Naomi Klein pointed out in a Globe and Mail article in November 2000, Ottawa flatly refused to ratify the International Convention on the Protection of the Rights of All Migrant Workers and Members of their Families, which would protect them from discrimination.

The idea that free markets will lead to a narrowing of the economic gap between rich and poor seems to be flawed. The World Development Report shows that real per capita incomes for the richest one-third of countries rose by an annual 1.9% between 1970 and 1995, the middle third went up by only 0.7%, and the bottom third showed no increase at all.

But, what about foreign investment that introduces technologies, know-how, and financial capital? It rose from 4% to 12% of world GDP from 1980 to 1997, but foreign investment is not necessarily third-world investment. In 1997, about 70% went from one rich country to another, eight developing countries received about 20%, and the rest was divided among more than 100 poor nations. According to the World Bank, the truly poor countries received less than 7% of the foreign direct investment to all developing countries in 1992-98.

Free-trade critics say the transnational corporations have only one aim, and that's to make money for their shareholders.

Even Canada's Finance Minister Paul Martin, in a London speech, described globalization as an unfulfilled promise for millions of people. Poor countries, he said, are being excluded from growing trade flows. They are being ignored by capital from abroad. They aren't getting a chance to share in new technologies, creating a digital divide. And, he warned that globalization can only be sustained if it can be shown that it works for people as well as markets.

One thing rich countries, including Canada, are starting to do is delay loan repayment by poor countries. As of January 2001, Finance Minister Paul Martin put payments on hold for about $700 million owed the federal government by 11 of the poorest countries. Britain has eliminated about $2 billion worth of debts of 20 countries.

Nicholas Stern, chief economist of the World Bank, says that forgiving loans to the poorest countries isn't enough. He thinks the poorest countries will continue to face obstacles in participating in the projected economic growth in the next decade. In an article in The Globe and Mail in January 2001, Mr. Stern wrote that, "For many of them, a combination of their own shortcomings and powerful trade barriers in industrial countries will prevent them from enjoying this boom." He adds that the high trade barriers established by industrial countries block poor countries from selling their exports in lucrative markets. The result is that, "... Protectionism costs developing countries more than they receive in official aid each year."

He continues to explain that all but the most efficient agricultural producers, for example, in developing countries are barred from entering industrial-country markets, while "more inefficient producers in industrial countries maintain their market share. When tariffs are reduced, as in the case of many fruits, vegetables and cut flowers from Africa, developing countries become very successful. If protection in agriculture is lowered, many of the poorest countries could expand their exports, too."

Poor countries need to work from within as well, he says, making economic reforms that will strengthen investor confidence and improve transportation, communications, and financial services, with the help of industrial countries.

As David Crane, a columnist at The Toronto Star sees it, the world's wealthy countries, including Canada, have to do a lot more to help the world's poor. They can do that by boosting foreign aid as well as providing poor countries with better access to our markets for products in which they have an advantage, such as clothing, textiles, and food.

"Globalization has many meanings," he writes. "One has to be that a world in which so much wealth in the rich countries co-exists with so much poverty in the poor countries is not sustainable."

FACT FILE

At the current rate of economic growth, it will be 60 years before Mexico doubles its per capita income and ends its extreme poverty, according to the governor of the Bank of Mexico.

With one-third of the world's workforce unemployed or underemployed, at least 500 million new jobs will be needed over the next decade to accommodate new arrivals in the job market and help reduce global unemployment by half, according to the International Labour Office, a UN affiliate.

In December 2000, the World Trade Organization said that Canada, with its tariffs on textiles, agriculture, food, and clothing, hasn't opened its borders much to goods from poor Countries.

In 2000, OECD countries spent more than $300 billion on their own agricultural subsidies - roughly the total Gross National Product for all of sub-Saharan Africa.

SUGGESTED ACTIVITIES:

1. In her column in The Globe and Mail in April 2001, Margaret Wente says the "protests of privileged First World kids have done some good. Even Nike, the archenemy of the anti-sweatshop movement, has at last agreed to labour-monitoring of its Third World factories." Report on what Nike is doing, and find out if other corporations who use Third World labour are doing the same.

2. Some free-trade supporters say that, if protesters in Quebec City were serious, they would have been on the other side of the chain-link security finance negotiating side agreements on labour, democracy, and environmental standards. Discuss this view.

3. World Bank President James Wolfensohn has said that "the governance of corporations will become as important as the governance of countries in the global economy. "Make a list of rules that you think responsible corporations should operate by.

4. Use some of the statistics in this article to make graphic representations of the disparity of wealth between the rich and the poor.

Websites

Department of Finance - http://www.fin.gc.ca

Fair Trade - http://www.
fairtraderesource.org/

Initiative Against Economic
Globalization - http://inpeg.
org/

Public Citizen Global Trade
Watch - http://www.
tradewatch.org/

RELATED ARTICLE: GUARANTEES NEEDED

In April 2001, a delegation of Canadian church leaders described the North American Free Trade Agreement (NAFTA) as a "monstrous fraud" that has made life worse for Mexico's poor. It's been calculated that 75% of Mexico's population now lives in poverty, up from 49% in 1981. The senior clergy from the Roman Catholic, United, Anglican, and Presbyterian churches said that since NAFTA was implemented, more Mexicans are suffering from malnutrition and preventable disease. And, the Sierra Club says total pollution has doubled in Mexico since NAFTA was introduced.

While Mexican President Vicente Fox thinks free trade and foreign investment will eventually improve the standard of living for the 40 million poor people in Mexico who make up 40% of the population, the church leaders are doubtful. They say that free trade has flooded Mexican markets with cheaper grains, beans, and other food products, forcing many farmers to leave their land and move to find factory jobs. They also say that any plans to extend free trade - to all 34 countries of the Americas, for example - should include guarantees, not in NAFTA, to make sure that poor people also benefit. In a letter to Prime Minister Jean Chretien, the clerics wrote: "Any economic-integration agreement that perpetuates the same destructive impacts we have witnessed in Mexico is not only indefensible and unacceptable but unconscionable."

RELATED ARTICLE: CHILD LABOUR

In March 2001 a terrible thing happened in a school in southeast China: an explosion killed at least 42 people, mostly children between eight and 11, and injured 27.

The tragedy was the result of continuing child labour: students were forced to make fireworks in class, normally working a half day, to help pay school expenses. A year earlier another explosion in a fireworks factory, about 50 kilometres from the school, killed 35 people, including 17 children. The children earned 12 cents a day fitting fuses to firecrackers.