The world isn't as flat as Friedman thinks.

[civman2000]

Then of course there is Friedman's whole "globalization is unstoppable and inevitable" theme which sounds nice but I'm not sure it's true.If the US, EU, and Japan suddenly decided to form a free trade agreement with each other and to not let any other country in unless they passed and enforced first world style labor laws, environmental protection laws, child labor laws, etc... then we'd likely see globalization get hit on the head with a brick. After all the US, EU, and Japan account for some where between two thirds and three quarters of the world economy. Why should we consider doing that you ask?

You might be right that if that happened, globalization might be stopped. But that's a very far-fetched scenario. All it shows is that it is conceivable that globalization could be stopped, not that it is at all likely or realistic.

[Blaupanzer]

Reading the book. It is indeed filled with garbled metaphors and unevaluated (possibly unedited) phrases that are almost surreal in their inability to interrelate. However, his point is that global economics are here to stay and that a great levelling between the first and third worlds will occur. (I know, I know. How do you "level" a flat world? Why would you? Forget the unfortunate phraseology.) I suspect 'the west as market and the south as producers' economy will collapse on itself if other changes do not also occur. For example, the US cannot run huge trade deficits forever. Now that Bush has run up the Federal debt, the Government has no leverage to bail us out when the trade deficit begins to run the other way.
Because of national currencies, the world isn't anywhere near as "flat" as Friedman thinks. We'll see if the rest of the book convinces me otherwise.

[Kidlicious]

I'm waiting to see what happens after globalization.

[lord of the mark]

[QUOTE] Originally posted by GePap
I think Friedman is wrong for a variety of reasons

Free Trade, the Market, these things are tools, not aims. They are means to an end, not ends in and off themselves. And I don;t think free trade solves all ills. What happens to those states that can't compete with the mass savings of China, or intellectually with India? They get savaged. "

What does that mean get savaged? That they cant sell into 3rd party markets to compete with China and India/ Possibly true, but how does protecting their own markets avoid that? Are you saying developed countries should limit imports from China and India to help the smaller LDCs?

Or are you saying that poor countries own internal industries will be overwhelmed by imports from China and India? I suggest this is where Ricardo comes in - they will have comparative advantage in SOMETHING, or they wont be able to pay for any imports anyway. The only real question is sector vs sector. Now we used to have dev literature telling us that balanced development was preferred, and that focusing on exports "deindustrialized" a country. But the countries that attempted to maintain autarchy generally failed, and those that engaged vigourously in trade succeeded. Of course engaging vigourously in trade didnt always mean being laissez faire - many attempted to "pick winners" The econ literature would suggest this didnt either hurt or help much, IIUC. You dont have to be 100% laissez faire, but you must have an open economy. And that flattens the world, IIUC Friedman.



"Its not like tens of millions of people can retrcuture their lives to serve some amrphopus global market, specially in places were most people still have to grow their food for a living. "

If they are subsistence farmers, of course they are not very likly to have to restructure their lives. Theyre also likely to live in abject poverty, however.

And amorphous or not, everyone whos
buying or selling something on the market is exposed to fluctuations in price - the only question is how much the local market is influenced by the world market.


"Sometimes protectionism is necessary i order tog ive internal systems time to mature before being thrown into the market willy nilly."

protection as a way of growing infant industries has distinctly mixed success.


"Besides, how can the world be "flat" as Friedman says, when people can't move anywhere they want?


That to me is the great fault of "international trade", in a trully free market, labor should have the same mobility as capital and resources. I contend that it does not. People are stuck while corporations and capital are allowed to move to where its most convinient for them. That is a huge inequality that will create warped outcomes."

Movement of labor has many of the same impacts as movement of capital. ie it lowers wages in high wage markets, raises them in low wage markets, increases returns to capital in capital surplus areas, etc. It probably does effect outcomes as between low wage countries that have social systems favorable to growth, vs those that do no. Thus is capital can move, this favors China, but disfavors, say, folks from Sudan or Haiti. If labor moved freely, this would favor, say Haitians, who would work in US factories, vs say Chinese. Im not sure how big a difference that would make though, in relative outcomes.

[lord of the mark]

Originally posted by Japher
The problem with cutting subsidies is that you will be giving an edge to a rather untried and untrusted source.

If we cut farm subsidies, and we rely on a some thrid world to make up for the supply, what happens when they fail to meet the demand or the environmental or social requirements you are putting on them?

OMG, a cotton famine!!! We will sufffer a great cotton t shirt shortage, due to our failure to protect the domestic cotton industry!!!!

Or the sugar shortage!! cause of course there only a handful of countries that can grow cane sugar, all of them likely to cut production at the drop of a hat!

Cmon.

[BlackCat]

Originally posted by mactbone
I read a great review of the book.

Some choice quotes:

What a pile of BS. I haven't read the book, but this review could actually make me do it - usually, when a reviewer attacks the person instead of the content, the content is interesting.

[lord of the mark]

Originally posted by Arrian
The other issue is that our farmers and manufacturers have to comply with costly workplace (OSHA, etc) and environmental regulations, whereas farmers & factories in the 3rd world do not.

I'm not signing "woe is us" I'm just saying that if you're shooting for the proverbial level playing field, well, there are a lot of hurdles.

-Arrian

We arent introducing regs as a favor for 3rd world countries. We are doing so, presumably, cause they provide a social benefit to us. If some third world country places a lower value on life and health, doesnt it make sense for the most dirty and dangerous industries to go there? We're better off, and they are better off.

[Az]

If some third world country places a lower value on life and health,

We're better off, and they are better off.

*scratches head*

[Whoha]

if they are better off for having gained this dangerous and dirty industry, then how are we better off for having lost it?

is this dangerous and dirty industry less so because of our restrictions?

has only its profit margin gone up as a result of the move?

[Whoha]

Originally posted by lord of the mark
Movement of labor has many of the same impacts as movement of capital. ie it lowers wages in high wage markets, raises them in low wage markets, increases returns to capital in capital surplus areas, etc. It probably does effect outcomes as between low wage countries that have social systems favorable to growth, vs those that do no. Thus is capital can move, this favors China, but disfavors, say, folks from Sudan or Haiti. If labor moved freely, this would favor, say Haitians, who would work in US factories, vs say Chinese. Im not sure how big a difference that would make though, in relative outcomes.

Would the Haitians be working in slave labor conditions inside the US? That answer is no so China would still have the advantage, in addition to the fact that companies that want to do business in China had better build their product in China, among other things.

[BlackCat]

They are better off because it 's better than what they have - just as it was in the socalled 1'st world when we had it. They actually are even better off because their transition time will be shorter than ours.

[lord of the mark]

Originally posted by Az

If some third world country places a lower value on life and health,

We're better off, and they are better off.

*scratches head*

lets say, for ex, that adopting industrial process x makes a country more competitive in some industry and adds $100 per year to workers incomes. But it causes every worker to get sick for 1 week each year - the illness is life threatening, or intensely unpleasant, but robs him of one weeks wages. Now in some LDC a weeks wages is, say $50, so the average worker is net better off if the process is adopted. In a developed country, the worker is net worse off. So it may be that everyone is better off (GIVEN the inequality in wages) if the process is shifted to a third world country.

Basically what Im suggesting is that health, clean environment, etc are goods whose demand is driven by income. If Ive got food, clothes, and shelter, I may be willing to forego additional consumer goods to get a cleaner environment. If I have inadequate food clothes and shelter, I might be willing to accept a dirtier environment in exchange for those. Unless the form of pollution is one that directly impacts on availability of food, clothing, shelter, etc.

This is not an argument for having NO concern for the environment in LDC's. Its merely an argument that having somewhat different standards may be rational, and in mutual best interests.

[lord of the mark]

Originally posted by Whoha
if they are better off for having gained this dangerous and dirty industry, then how are we better off for having lost it?

is this dangerous and dirty industry less so because of our restrictions?

has only its profit margin gone up as a result of the move?

We're better off cause we no longer have the danger and the dirt, and at our income levels thats a good tradeoff. If its NOT a good tradeoff, than the we may have the wrong enviro regs.

[lord of the mark]

Originally posted by Whoha


Would the Haitians be working in slave labor conditions inside the US? That answer is no so China would still have the advantage, in addition to the fact that companies that want to do business in China had better build their product in China, among other things.

except that plenty of economic activity, including a fair amount of manufacturing, takes place in the US (and Europe, and Japan) as it is, and lowering the cost of labor in the US would impact this at the margin.

[Az]

Basically what Im suggesting is that health, clean environment, etc are goods whose demand is driven by income.

what I am suggesting that this is an evil attitude.