Globalization Has Benefitted Corporations but Hurt Workers

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Author: Robert McGarvey
Editor: Sarah Armstrong
Date: 2016
Publisher: Gale, a Cengage Company
Series: At Issue
Document Type: Viewpoint essay
Length: 913 words
Content Level: (Level 3)
Lexile Measure: 1090L

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Robert McGarvey, "The Corruption of Globalization," Troy Media, October 20, 2014, Copyright © 2014 Troy Media Marketplace. All rights reserved. Reproduced with permission.

Robert McGarvey is an economic historian, cofounder of the Genuine Wealth Institute, and author of The Creative Revolution, which discusses economics and modern capitalism.

International trade treaties of the last century were designed to create a profitable future for both corporations and global citizens. However, globalization initiatives and free trade agreements have harmed societies but continue to benefit corporations, whose reach and power extend beyond international borders and into politics, holding sway over issues they deem threatening to their own interests.

Cordell Hull, the crusty U.S. Secretary of State during the Second World War was very clear about the causes of war: "Unhampered trade dovetailed with peace, high tariffs, trade barriers, and unfair economic competition, with war".

He, for one, was determined to reform the global economy at war's end.

As the tide slowly turned against Nazi Germany in the autumn of 1943, Hull and other world leaders began to turn their attention to the future. In July of '44, almost a year before the end of hostilities, the Allied nations (minus the Soviets) gathered together at Bretton Woods in New Hampshire to design a new and better world.

Brazilian representative Arthur de Souza Costa spoke for many when in his opening address, he outlined the lofty goals of the conference: It (Bretton Woods Conference) "is inspired by a single ideal—that happiness be distributed throughout the face of the earth."

Globalization Began with High Ideals

The principal architects of the Conference, British economist John Maynard Keynes and Cordell Hull, wrestled with problems that had plagued the global economy for ages: protectionism versus free trade, universalism versus regionalism, non-discrimination versus preferential arrangements.

They were also inspired with a bold vision 'to reconcile liberal international trade policies with high levels of domestic employment and growth'. Their larger goal: 'to devise an international system benefiting not just the world community as a whole, but each of its parts.'

The monetary and currency accords that were adopted at Bretton Woods helped launch a 'freer trading' post war world. As a result, globalization got off to a pretty good start.

While 'free trade' deals have created a borderless world for corporations, their goods and their money, globalization has basically hung workers of the world out to dry.

The Treaty of Paris (1951) established the European Coal and Steel Community, and in the process set an important standard in European cooperation. This was soon followed by the Treaty of Rome (1957), which established the European Atomic Energy Community.

With the success of these early supranational agreements, the road was cleared for more globalization initiatives, which accelerated the development of the European Economic Community, set the stage for the North American Free Trade Accords (NAFTA) and laid the foundations for the founding of the World Trade Organization.

It is a measure of how far we have fallen from those lofty ideals that—70 years later—globalization is increasingly labelled as a corporate boondoggle, a 'race to the bottom' for wages and working conditions, and an open license for environmental degradation.

While 'free trade' deals have created a borderless world for corporations, their goods and their money, globalization has basically hung workers of the world out to dry.

Globalization's 'creative destruction' has impacted everyone. Whole sectors of the Western economy have vanished as globalization centralizes industrial production in low-wage nations like China or Bangladesh. Meanwhile, globalization gets blamed for stagnant middle class wages, high levels of unemployment and everything from the European financial crisis to the need for fiscal austerity.

What happened to globalization and its high ideals?

You can draw a line in the historical sand, almost pinpoint the date when globalization ceased being broadly popular and became crudely self-serving.

Ironically, it was the fall of Soviet communism that tipped the balance.

With the tumbling of the Berlin Wall, the 'evil empire' of the Soviet Union disappeared, and with it went the need to strengthen the Free World, to tie globalization's outcomes to improving the lot of the general population.

In fact, the Free World as an idea was dropped altogether, when it became popular to believe the End of History had cemented liberal capitalism as the undisputed champion in the historical sweepstakes. From that point onward, it was no longer necessary to consciously raise the poor: victorious capitalism would do the job automatically if we just left it alone.

In the 1990's, the Washington Consensus and the IMF (International Monetary Fund) launched a new era, with its new idea of 'market purity' applying a new set of rules to globalization. From that point onward, corporations gained the upper hand. They could (and did) sue governments that threatened their free market interests by strengthening workers' rights, setting environmental standards or raising taxes.

Globalization Led to Corporatism "Unchained"

The result was corporatism 'unchained', a development that launched globalization on the road to its present condition.

We've lost a lot in the process, including the moral high ground. Westerners, for instance, no longer criticize the communist government of China for its flagrant human rights abuses. Why? Because we are all now party to those abuses through our involvement in the globalized economy.

Globalization is an unstoppable force, but if we are to share equally in its benefits, we need to recover some of the original idealism and create a more just and progressive global system.

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Gale Document Number: GALE|EJ3010462236