The world isn't as flat as Friedman thinks.

[Dinner]

I just finished reading the book "The World is Flat" by Thomas L. Friedman in which Friedman spells out the driving forces for globalization and how just about everything can be done cheaper, better, faster in India or China. I agree that as a general principle free trade is a positive thing and that there are a whole lot of really poor people (even highly educated but relatively poor people) around the world who can undercut the 1st world on price so, yes, the first world had better keep innovating or where going to watch many of our best paying jobs go over seas. What I don't agree with him about is that the first world most certainly does not have to go along with unqualified free trade, that unrestricted free trade likely isn't in our best interests (though generally free trade is as long as there are some qualifications) and globalization is not going to "work its way into virtually every field" as Friedman contends. In fact there are many fields which will remain free from any direct impacts on globalization.

Take my own career as a Geologist. I suppose certain parts of the report writing could be farmed out to India but the field work will always have to be done locally as well the lab work. In fact most of our clients will insist on the report writing to be over seen by a registered Professional Geologist in the state of California so it will be hard to even outsource that one aspect of this job. Anything to do with manufacturing can be moved overseas and even some services jobs can be moved overseas (like accounting or computer programing) but that leaves an aweful lot of services jobs which pay well and which can't be moved out of country (think medical, management, marketing, trasportation, etc...) as well as virtually every low paying service jobs. Manfuacturing will have a tough time and will need to keep inovating or die in the globalized economy but that's less then 20% of the total US economy so I'm still not seeing globalization effecting EVERYTHING.

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?

Simple, the current way globalization is structured does help everyone by lowering prices and it does level the playing field by helping businesses draw talent/materials/capital/manpower from all over the world but it also does bring about a race to the bottom. The 1st world must keep lowering its worker protections and environmental laws in order to compete against the 3rd world on price. Sure, this improves conditions in the 3rd world and over time it improves the world average but I'm more concerned about my personal piece of the pie and my nation's piece of the pie. That's selfish and narrow minded but then again those are traits a good capitalist needs. Personally, I would go with a qualified free trade agreement which was designed to push people up without dragging outselves down. How do we do that?

The first thing we do is sign a free trade agreement with the rest of the first world where we all agree on a set of strong worker protections, social protections, child labor laws, environmental laws, and what ever else we feel we need to create a more just society, then we tarrif everyone else out. I can hear you crying "That's not free trade! That's protectionism and it won't work!" but give me a second and I will explain the other steps. Next we agree to end all subsidies such as the wasteful farm subsidies and we agree to let in any country which meets our labor & environmental laws plus who is a democracy and who protects the civil and human rights of their citizens. There would now be an over powering economic reason for countries to become more democratic and to protect the rights of the little guy. To not do so means totally being cut out of most of the world's major markets but complying means free trade. Gee, we seem to have taken the worst edges off of the rush to the bottom and we've added in an excellent reason for dictatorships and one party states (*cough* China *cough*) to democritize or see their export sectors crash.

I think that would be far better then Friedman's flat world.

[SlowwHand]

I think he's an idiot.

Quality, speed of manufacture, low cost.
Pick 2.

[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. 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.

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

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.

[SlowwHand]

I just put it more succinctly than GePap. He's eloquent though, so...

[Whoha]

thats half-assed protectionism and it won't work!"

[Dinner]

The point wouldn't be to have protectionism. The point would be to punish, via denial of trade, those nations which don't enact our levels of worker protections and environmental protections as well as respect human rights and democracy. Instead of us lowering our standards they'd have to raise their standards if they want in on the market.

As it stands currently we're the ones who have to keep slashing our protections in order to compete against a one party state with terrible human rights abuses and 1.3 billion people willing to work cheap. Let's have free trade but free trade with democracies and progressive nations. If other's want a piece of our markets (meaning the entire 1st world's markets) then they have to adopt 1st world protections. We'd have raised the bottom which everyone is racing to.

[MORON]

Raising standards don't make that much sense when people are living on the edge of starvation. (compared to the west) While the wages are low, it should be noted that undeveloped countries' productivity isn't so great.

It makes some sense to push things like envrionmental protection laws as it does effect all of us. Things like worker protection laws are fundamentally economic considerations and should not be forced. I don't see a need to force a wage-work environment trade when the market can sort it out with the labor supply curve. When the workers are paid enough, things like a good work environment would naturally exist with a worker demand pull.

As for pressuring dictatorships, I don't see it as having too much effect since dictators care about their individual power over national wealth.

[Whoha]

Originally posted by Oerdin
The point wouldn't be to have protectionism. The point would be to punish, via denial of trade, those nations which don't enact our levels of worker protections and environmental protections as well as respect human rights and democracy. Instead of us lowering our standards they'd have to raise their standards if they want in on the market.

Businesses are going there to make use of their lowered standards, and has admitted as much. without that, you're pretty much shutting them down.

As it stands currently we're the ones who have to keep slashing our protections in order to compete against a one party state with terrible human rights abuses and 1.3 billion people willing to work cheap. Let's have free trade but free trade with democracies and progressive nations. If other's want a piece of our markets (meaning the entire 1st world's markets) then they have to adopt 1st world protections. We'd have raised the bottom which everyone is racing to.

Another item to consider, is how to determine whether or not these rules are being followed. since you are loathe to use the P word, would you really follow through on any threat?

[Kuciwalker]

Friedman is an idiot.

[mactbone]

I read a great review of the book.

Some choice quotes:

So I tried not to think about it. But when I heard the book was actually coming out, I started to worry. Among other things, I knew I would be asked to write the review. The usual ratio of Friedman criticism is 2:1, i.e., two human words to make sense of each single word of Friedmanese. Friedman is such a genius of literary incompetence that even his most innocent passages invite feature-length essays. I'll give you an example, drawn at random from The World Is Flat. On page 174, Friedman is describing a flight he took on Southwest Airlines from Baltimore to Hartford, Connecticut. (Friedman never forgets to name the company or the brand name; if he had written The Metamorphosis, Gregor Samsa would have awoken from uneasy dreams in a Sealy Posturepedic.) Here's what he says:

I stomped off, went through security, bought a Cinnabon, and glumly sat at the back of the B line, waiting to be herded on board so that I could hunt for space in the overhead bins.

Forget the Cinnabon. Name me a herd animal that hunts. Name me one.

Let's speak Friedmanese for a moment and examine just a few of the notches on these antlers (Friedman, incidentally, measures the flattening of the world in notches, i.e. "The flattening process had to go another notch"; I'm not sure where the notches go in the flat plane, but there they are.) Flattener #1 is actually two flatteners, the collapse of the Berlin Wall and the spread of the Windows operating system. In a Friedman book, the reader naturally seizes up in dread the instant a suggestive word like "Windows" is introduced; you wince, knowing what's coming, the same way you do when Leslie Nielsen orders a Black Russian. And Friedman doesn't disappoint. His description of the early 90s:

The walls had fallen down and the Windows had opened, making the world much flatter than it had ever been—but the age of seamless global communication had not yet dawned.

How the **** do you open a window in a fallen wall? More to the point, why would you open a window in a fallen wall? Or did the walls somehow fall in such a way that they left the windows floating in place to be opened?

Four hundred and 73 pages of this, folks. Is there no God?

[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?

I would never trust my vendors with my line item fill rate, that's why I have mutliple vendors and make as much as I can in house.

[Barnabas]

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?

I would never trust my vendors with my line item fill rate, that's why I have mutliple vendors and make as much as I can in house.

The issue is, if the USA tells Brazil or Argentina or Australia, we are keeping our farm subsidies, screw you, then the USA shouldnt complain.

Dont you think it is an unfair situation? free market for our exports, but not for yours.

[Japher]

yes I think it's unfair

it's a damned if you do damned if you don't situation

[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

[VetLegion]

The teory of comparative advantage says, literally, that one is better off under all and any conditions.

Your partner subsidises?
Trade with him.

Your partner does dumping?
Trade with him.

Your partner doesn't respect labour laws?
Trade with him.

Your partner is a dictatorship?
Trade with him.

Your partner stinks and pollutes?
Trade with him.


I suggest a pen, a paper and the wikipedia article. It is quite revealing to read about mr. Ricardo's conclusion and check it yourself. Output rises and with it consumption (living standards) rise too.