Courses Wayne State University College of Lifelong Learning Interdisciplinary Studies Program Times' Harvest courses, Winter 2001     ( http://www.cll.wayne.edu/isp/drbowen/thw01) Times' Harvest Advanced Seminar (online)     AGS 3360, Section 990, Call Number 90510, 4 credits Times' Harvest Advanced Directed Study (online)     AGS 3340, Section 981, Call Number 90508, 4 credits	Instructor
	David R. Bowen 2311 A/AB Wayne State University Detroit, MI 48202	Daytime tel: (313) 577-1498 Evening tel: (248) 549-8518 FAX: (313) 577-8585 Home Page:     http://www.cll.wayne.edu/isp/drbowen Email: d.r.bowen@wayne.edu

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Last updated: 2/9/01
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Globalization

1. Two globalization stories from New York Times on Sunday 1/7/01
   1. France has prosecuted and convicted a French citizen, a Parisian bachelor named Amnon Chemouil, for a crime abroad that is not a crime in the country in which the acts were carried out - using a child prostitute in the Thailand resort town Pattaya, near the capital, Bangkok. The child was 11 years old, procured by her aunt for $20. Chemouil was incriminated by the Swiss citizen, Viktor Michel, who introduced him to such extremely young prostitutes. Michel was pressured by the Swiss police during an investigation into a pedophile ring, and the Swiss police reported their findings, and a videotape recorded by Michel, to the French police. At Chemouil's trial, his own copy of the videotape was played, and the girl, by now 18, testified. Several NGOs (Non-Governmental Organizations) helped in the prosecution, among them UNICEF and End Child Prostitution in Asian Tourism. Chemouil was sentenced to seven years in prison.
   2. In France, as in many European countries, web sites that carry Nazi-related hate pages, sell related goods, or deny the existence of the holocaust, are illegal. Such sites are not illegal in the US, and many such sites are relocating to the US to escape prosecution. A French judge has ordered the US search site Yahoo to remove links to Nazi-hate web sites, and to stop listing related goods on its online auctions. Yahoo is seeking a decision from a US court that the French orders are unenforceable in the US, which would allow French citizens to continue accessing such sites on Yahoo. In other cases, other countries could object to the overwhelming use of English on the web, in those countries, or to carrying information about human rights abuses in those countries. William F. Schultz,  executive director of US operations for Amnesty International, the human rights action group, is quoted as saying, "There has been virtually no development in the last five years that has been any more important to the success of the human rights movement that the growth of the web." Amnesty International has used the web to get information into China on the Universal Declaration of Human Rights and on Chinese violations of human rights. In other cases, human rights activists have used the web to organize.
2. What is globalization? Unlike the two items above, what is meant by "globalization today seems to be mainly economic globalization. Mail telephone calls, email, educational exchanges, the number of international agencies, the number of cooperative projects between national governments, and travel are all increasing rapidly, and could be included in globalization, but those do not seem to be what is meant. More things that are international but not counted as part of "globalization" could be added to this list. Economic globalization can be divided into several parts, as below.
   1. International buying and selling, or import and export. In the US and other Western countries it is getting easier all of the time to buy goods from other countries - not just the staples like Europe and Canada, but Haiti, Thailand, Australia and Korea. They sell us our own goods, but often cheaper, but also their own ethnic food, supplies, art and crafts. The days are long past when no one would dare park a foreign car in the lot at Ford or GM or the UAW.
      
      The goal for goods has been "free trade." that is, ideally there should be no economic barriers to goods from one country entering another. This is far from the actual case, but one by one the tariffs and restrictions are falling.
      
      While US workers complain of low wages and unsafe conditions for workers abroad selling products to the US, many countries that have opened themselves to foreign investment have rapidly rising per-capita incomes. Globalization is improving the lives of many, around the world. One recent development over the past ten years has been the rise of "micro loans" of a hundred dollars or less, to enable rural people, especially women, to start small businesses, pay back the loans, hire their neighbors, and start circles of economic development. One common business for a woman is to buy a cell phone in a rural area that does not have modern communications, and sell time on it. The loan gets paid back, users can improve their lives, and hopefully more local businesses will start up. Local farmers, for example, do not have to sell to local markets, but can learn the prices at the distant big-city markets, and bargain for prices fairly. These financing for these very small-scale businesses often comes from outside the country, but may be managed locally.
   2. International investment. The level of international investment is rising quickly. Private investments now are much larger than all types of international governmental spending, for example foreign aid and military aid - combined. And private investment can move in and out of a country much more quickly than government funds can. Partly this rise in private international investment is happening because communications has gotten much better and cheaper because of the Internet and other computer networks. This is what Emmanuel Mesthene wrote about in the book Technological Change / Its Impact on Man and Society that I mentioned last week; when one aspect of technology improves rapidly, it can cause related values to rise to the top of the priority list. Another factor in the increase is what Thomas Friedman in the Lexus and the Olive Tree calls the "democratization of finance." Investments such as real estate, Initial Public Offerings and many types of bonds used to be restricted to large customers. this was because they were large investments, and it was too much trouble to deal with the large number of small investors that would be required to sell off these large investments. Okay, maybe there was a certain amount of snobbishness or worse in it as well. But now it is common for a financial services firm to buy those large investments, divide them up itself, and sell shares in their ownership. One reason that this has become popular is that, with the rise of computers, it is now much easier to manage large numbers of small investors - to figure out who they are, how much of a share each has bought, how much each one is owed, to mail out the checks, and so on. Another reason is that, with so many transactions, the total brought in by the transaction fees is larger, even if the individual transaction fees may be less. One effect of this has been to open up investment to many more people, and to increase the total funds invested. Private movement of capital swamps governmental.
      
      Another consequence of opening investment up to "amateurs" is that the new investors are relatively uninformed, and so make decisions more on impressions and rumors than on hard fundamental analysis. These new investors can get enthusiastic very quickly, and pour money in to a country, and then get jittery just as quickly, and pull their money out. This can leave the residents fat and happy on the upswing, but squeezed on the downturn, and it can all happen very quickly. The importance of rumors is increased when the country itself is not what it appears to be. In Indonesia, for example, Suharto's son owned a car factory that appeared not to be competitive - it made terrible cars. However, there was an under-the-table deal that the son controlled auto imports. Or, perhaps an approval is needed for exports, with stated criteria, but it really takes a bribe. If things are not what they seem to be, these days we say that the country is not "transparent." In a country that is not transparent, the effect of rumors is exaggerated, because people do not know what is really going on behind the scenes.
      
      Many countries want to allow investors in, but make it difficult for investors to pull their money out. This would be done through "currency controls" - regulations that govern how money is moved into and out of the country. Of course, even a rumor of restrictive currency controls is enough to scare investors, and then they pull their money out really quickly. So some countries are unhappy with this situation, but at this point there is no real alternative system, that promises the same benefits through investment.
      
      Another problem can be competition. Many countries would like to have, for example, an aviation or electronics industry. In order to help get one started, they may try restrict outside competitors while the domestic industry start up. There have been two problems with this approach. First, the companies that are restricted from competing in this country tend to try to get even. Historically, this just leads to a lowering of the level of trade and a lower standard of living for everybody, but mostly for those living in the country imposing the restrictions. The second problem is that being free from competition usually makes people lazy, not competitive. You need to see who is better than you are, and be trying to sell to the same people in order to understand what people like better about the other products. If other countries are restricted from competing, they will often withhold their latest technology - there is not benefit to the would-be importer.
   3. So it seems now that, in order to prosper, countries must be honest, let their citizens make their own decisions, and try to be the best that they can be. To many, it seems as if the fundamental forces of globalization are going in the right direction.
   4. There are criticisms of globalization, of course. Rapid economic change can have unfortunate environmental impacts, and expose residents to strong economic forces. There are some claims that the WTO (World Trade Organization) and other NGOs (Non Governmental Organizations) have too much power to make agreements, for which they are not accountable. Some of these opponents call for the abolition of certain NGOs, but that would hardly stop globalization, and it is also unclear as to what system, if any, would take its place. Opponents of globalization often seem to want to stop international trade, but that would most likely cause an world-wide economic slowdown, if not recession.