Name:________________________________________________ Period: ___________________
GLOBALIZATION Socratic Seminar Prep Work
1. Read ALL pages
2. Annotate (highlight, underline, circle, write notes) two paragraphs from EACH article (5 articles)
3. Answer these questions and note which page(s) numbers helped you answer them (this will
help with evidence support during the Socratic Seminar).
a. What is globalization?
b. Make a T Chart. List 3 pros of Globalization on one side and 3 cons on the other.
c. How does globalization affect you on a personal level? Provide examples and explain.
d. Does globalization ultimately help or hurt the world? Use two pieces of evidence from the
packet to support your answer.
e. How is globalization in Asia affecting American middle class? Explain.
f. Take a look at the political cartoons/images in your packet (back pages). Choose two
images and write a brief summary of your interpretation for each.
1
4. Create FIVE questions of your own (using Bloom’s Question Stems worksheet to help)
to bring to the seminar. Write the questions below:
1._________________________________
_________________________________
_________________________________
2._________________________________
_________________________________
_________________________________
3._________________________________
_________________________________
_________________________________
4._________________________________
_________________________________
_________________________________
5._________________________________
_________________________________
_________________________________
2
Globalization: Pros and Cons
MARCH 26, 2014 BY NICK GIBSON
Globalization is one of the 21st century’s most important political topics. You might
have heard the term globalization used before, whether in an economics lecture or
in a political debate.
As the world grows more connected through the Internet and greater international
trade, globalization is becoming more important – and more controversial – than at
any other point in history.
In this blog post, we look at the benefits, the downsides, and the interesting realities
of globalization. Whether you’re an economics expert or someone with an interest in
the future of the world, you’ll gain a well-rounded understanding of the pros and
cons of globalization.
What is globalization?
What exactly is globalization? Simply put, globalization is the process of changing to
an integrated world from an isolated one. Globalization can be summed up as a longterm change towards greater international cooperation in economics, politics, idea,
cultural values, and the exchange of knowledge.
Globalization has largely been made possible by advances in technology, particularly
the Internet. As the world grows more connected, people in all nations achieve a far
greater level of interdependence in activities such as trade, communications, travel,
and political policy.
It’s easy to assume that globalization is an entirely modern phenomenon driven by
inventions like the telegraph or the Internet. In many ways, globalization has been
taking place for centuries. From the Silk Road, which spanned from Europe all the
way to East Asia, to the invention of steamships and railroads, humans have
engaged in cultural exchange and international trade for centuries.
In the 20th century, this international exchange and trade was made far easier by
the invention of airlines and road vehicles. What was once a slow process became a
far simpler one. In the late 20th century, the invention of digital communications
tools like the Internet made modern globalization a reality.
While globalization covers a wide range of topics, ranging from cultural values and
information to economics and international trade, most modern discussion of the
pros and cons of globalization is focused on economics and culture.
What are the core features of globalization?
From an economic perspective, globalization has truly changed the world. The core
features of globalization are increased free trade between nations, easier movement
of capital between borders, and a massive increase in foreign investment.
3
This has resulted in growth for both small businesses and multinational companies,
which can now access new markets across the world. It’s also resulted in increased
transport and communication between countries and continents.
What are the key benefits of globalization?
There are many pros and cons of globalization, ranging from economic benefits to a
freer, more equal labor market. Let’s start by looking at the most discussed benefit
of globalization: free trade.
Free trade reduces the barriers that once stood between nations trading freely with
one another. When companies in different nations don’t face any barriers to trade in
the form of import or export restrictions, they can engage in free trade.
An example of a free trade agreement is the North American Free Trade Agreement
(NAFTA), which allows Mexico, Canada, and the United States to exchange products
and services without significant import and export restrictions.
Free trade has numerous benefits for economies and consumers. Consumers enjoy a
greater choice of goods and services, since foreign companies can easily offer their
products for sale. They also benefit from lower overall prices for goods, as a greater
variety of goods for sale increases competition and drives prices down.
Manufacturers in countries with free trade agreements also benefit from free trade
in the form of a larger export market. Rather than being able to export to just a few
countries, exporters can now sell their goods to wholesalers and consumers in a
large variety of counties.
Free trade also allows nations and economies to specialize, producing higher quality
goods at better prices. If a country, for example, has large oil reserves but little land
that’s suitable for farming, it can focus on oil production while importing fresh food
from abroad.
Another key benefit of globalization is the free movement of labor. In a globalized
world, workers can more easily move from one country to another to market their
skills to employers and contribute to the economy.
In many cases, free movement of labor allows economies to fix ‘gaps’ that exist in
their labor markets. For example, the United Kingdom has hired nurses from India
to fill positions in its public hospitals that were previously empty due to local labor
shortages. Companies can also hire workers in foreign countries to work for them
using online tools and telecommunications. Learn more about the theory and
decisions behind this in our Business Process Outsourcing course.
The benefits of free movement of labor also work in the other direction. If a country
has too few jobs and too many workers, people can easily move to markets in which
the job market is better. An excellent example of free movement between countries
can be seen in the European Union, particularly the Schengen Area.
4
What are the downsides of globalization?
While many features of globalization have been beneficial, others have resulted in
problems for certain economies and countries. Each of the benefits of globalization,
from free trade to the free movement of labor, can also be a downside for specific
countries and economies.
One of the biggest downsides of globalization is the harm it can cause to economies
at an early stage of development. Free trade forces all countries to compete using an
even playing field, which critics claim puts smaller, less developed countries behind
their more developed counterparts.
Some economists believe that free trade is only possible if industries in developing
countries are allowed to grow under a certain level of economic protection. This is
known as the Paradox of Free Trade, and it is a core argument among economists.
Another downside of globalization is the phenomenon known as ‘labor drain.’ Since
globalization allows workers to easily move from one country to another, countries
with limited job opportunities often find it difficult to encourage skilled workers to
stay in their countries. You can learn more about how labor drain relates to the
current economic climate in our course, Capitalism in Crisis: The Global Economic
Crisis Explained.
This is particularly problematic in countries with extensive publicly-funded higher
education systems. After receiving training in their home countries, many people
emigrate and spend their professional career in a more lucrative economy at the
expense of their home country.
Globalization can also have a significant negative impact on taxation. Since many
companies are able to trade with one country while being based in another, large
corporations often exploit tax havens such as Luxembourg, Switzerland, and Hong
Kong to avoid paying taxes in the countries where they generate their profits.
This can often hurt consumers in the form of higher taxes on consumer products
and property. Since countries often have little control over where big companies
register to avoid tax, they are often forced to raise other taxes in order to make up
for lost revenues due to corporate tax avoidance.
Many economists and environmentalists have criticized globalization due to its
environmental impact. Learn about the environmental effects of globalization in
Energy Economics and the Environment.
Finally, globalization has had a cultural impact on many countries that have been
subject to large-scale immigration. Many critics of globalization feel that the free
movement of labor has resulted in the weakening of specific cultures in favor of
greater economic and cultural hegemony.
Copyright © 2015 · Epik Theme on Genesis Framework · WordPress
5
The Noble Feat of Nike
Johan Norberg—The Spectator, 13 June 2003
Johan Norberg, an advocate of globalization, uses the example of Nike in Vietnam to demonstrate the benefits of
globalization. According to Norberg, in Vietnam Nike pays its workers three times higher than the minimum wage
earned in state-owned enterprises, provides its workers free or subsidized meals, education, and training, as well
as medical services. The rise in their living standard has given Nike workers more incentive to invest more in their
children's education instead of sending them to work on farms at an early age. Furthermore, he argues,
multinational companies such as Nike and Coca-Cola have brought to developing countries "new machinery,
better technology, new management skills and production ideas, a larger market and the education of their
workers."Even though multinational corporations have made Vietnam more capitalist, says Norberg, the
Communist government there is in fact welcoming them. - YaleGlobal
Nike. It means victory. It also means a type of expensive gym shoe. In the minds of the antiglobalization movement, it stands for both at once. Nike stands for the victory of a Western footwear
company over the poor and dispossessed. Spongy, smelly, hungered after by kids across the world, Nike
is the symbol of the unacceptable triumph of global capital.
A Nike is a shoe that simultaneously kicks people out of jobs in the West, and tramples on the poor in
the Third World. Sold for 100 times more than the wages of the peons who make them, Nike shoes are
hate-objects more potent, in the eyes of the protesters at this week's G8 riots, than McDonald's
hamburgers. If you want to be trendy these days, you don't wear Nikes; you boycott them.
So I was interested to hear someone not only praising Nike sweatshops, but also claiming that Nike is
an example of a good and responsible business. That someone was the ruling Communist party of
Vietnam.
Today Nike has almost four times more workers in Vietnam than in the United States. I travelled to Ho
Chi Minh to examine the effects of multinational corporations on poor countries. Nike being the most
notorious multinational villain, and Vietnam being a dictatorship with a documented lack of free
speech, the operation is supposed to be a classic of conscience-free capitalist oppression.
In truth the work does look tough, and the conditions grim, if we compare Vietnamese factories with
what we have back home. But that's not the comparison these workers make. They compare the work at
Nike with the way they lived before, or the way their parents or neighbors still work. And the facts are
revealing. The average pay at a Nike factory close to Ho Chi Minh is $54 a month, almost three times
the minimum wage for a state-owned enterprise.
Ten years ago, when Nike was established in Vietnam, the workers had to walk to the factories, often for
many miles. After three years on Nike wages, they could afford bicycles. Another three years later, they
could afford scooters, so they all take the scooters to work (and if you go there, beware; they haven't
really decided on which side of the road to drive). Today, the first workers can afford to buy a car.
But when I talk to a young Vietnamese woman, Tsi-Chi, at the factory, it is not the wages she is most
happy about. Sure, she makes five times more than she did, she earns more than her husband, and she
can now afford to build an extension to her house. But the most important thing, she says, is that she
doesn't have to work outdoors on a farm any more. For me, a Swede with only three months of summer,
this sounds bizarre. Surely working conditions under the blue sky must be superior to those in a
sweatshop? But then I am naively Eurocentric. Farming means 10 to 14 hours a day in the burning sun
6
or the intensive rain, in rice fields with water up to your ankles and insects in your face. Even a Swede
would prefer working nine to five in a clean, air-conditioned factory.
Furthermore, the Nike job comes with a regular wage, with free or subsidized meals, free medical
services and training and education. The most persistent demand Nike hears from the workers is for an
expansion of the factories so that their relatives can be offered a job as well.
These facts make Nike sound more like Santa Claus than Scrooge. But corporations such as Nike don't
bring these benefits and wages because they are generous. It is not altruism that is at work here; it is
globalization. With their investments in poor countries, multinationals bring new machinery, better
technology, new management skills and production ideas, a larger market and the education of their
workers. That is exactly what raises productivity. And if you increase productivity - the amount a
worker can produce - you can also increase his wage.
Nike is not the accidental good guy. On average, multinationals in the least developed countries pay
twice as much as domestic companies in the same line of business. If you get to work for an American
multinational in a low-income country, you get eight times the average income. If this is exploitation,
then the problem in our world is that the poor countries aren't sufficiently exploited.
The effect on local business is profound: 'Before I visit some foreign factory, especially like Nike, we
have a question. Why do the foreign factories here work well and produce much more?' That was what
Mr Kiet, the owner of a local shoe factory who visited Nike to learn how he could be just as successful at
attracting workers, told me: 'And I recognize that productivity does not only come from machinery but
also from satisfaction of the worker. So for the future factory we should concentrate on our working
conditions.'
If I was an anti-globalist, I would stop complaining about Nike's bad wages. If there is a problem, it is
that the wages are too high, so that they are almost luring doctors and teachers away from their
important jobs.
But - happily - I don't think even that is a realistic threat. With growing productivity it will also be
possible to invest in education and healthcare for Vietnam. Since 1990, when the Vietnamese
communists began to liberalize the economy, exports of coffee, rice, clothes and footwear have surged,
the economy has doubled, and poverty has been halved. Nike and Coca-Cola triumphed where
American bombs failed. They have made Vietnam capitalist.
I asked the young Nike worker Tsi-Chi what her hopes were for her son's future. A generation ago, she
would have had to put him to work on the farm from an early age. But Tsi-Chi told me she wants to give
him a good education, so that he can become a doctor. That's one of the most impressive developments
since Vietnam's economy was opened up. In ten years 2.2 million children have gone from child labor to
education. It would be extremely interesting to hear an anti-globalist explain to Tsi-Chi why it is
important for Westerners to boycott Nike, so that she loses her job, and has to go back into farming,
and has to send her son to work.
The European Left used to listen to the Vietnamese communists when they brought only misery and
starvation to their population. Shouldn't they listen to the Vietnamese now, when they have found a way
to improve people's lives? The party officials have been convinced by Nike that ruthless multinational
capitalists are better than the state at providing workers with high wages and a good and healthy
workplace. How long will it take for our own anti-capitalists to learn that lesson?
7
Nike is NOT an American Icon, but a Typical One
Wall Street Journal (June 27, 2013)
Nike's profits are up again --- their fourth-quarter profits jumped 22%. Nike also expects
overall profits for fiscal 2014 to rise in the low double-digits as sales are expected to
climb, helped as Nike gears up for the 2014 World Cup in Brazil. Margins are expected to
strengthen throughout the year, helped by higher selling prices. Demand for athletic gear
in the U.S. has also been strong in recent years, and Nike's sales have been bolstered by
apparel tied to a contract with the National Football League.
Nike's grand strategy for reaping in huge profits every year is really quite simple: just
don't pay workers. That's how they sell a shoe for $180 that only costs just $5 to
manufacture.The people who are laboring to make that $180 pair of shoes, and other Nike
gear and apparel, are mostly young women, ages 16-24 (Although, in Pakistan, children
were once sewing Nike soccer balls for $0.60 a day.) In Vietnam the average worker is
paid about $0.20 an hour, or $1.60 a day. (The cost of eating is reportedly $2.10 a day).
And workers in Vietnam are forced to work 65 hours a week. Not only are they forced into
overtime without compensation, the 65 hour work week is in clear violation of Vietnamese
labor laws. In the Sam Yang factory in Vietnam there is only one doctor who works two
hours a day to service 6,000 workers.
Employees in Vietnam have stated that verbal abuse and sexual harassment are frequent
and that corporal punishment is often used. Supervisors have been reported to frequently
grab the women's breasts and buttocks.
Nike has reportedly responded to many of these allegations by widely publishing their
Code of Conduct in the factories --- but in Vietnam, few workers have even heard of such
a code, nor ever learned what provisions were within it.
Although Nike argues that they enter a country only when it is ready to make shoes, and
then leaves when it has developed past this point, the data suggest a different story.
Nike's movement directly correlates with a increased standard of living and increased
union bargaining power. When the pressure for wage increase is put on, just like with
most other American-based multi-national manufactures, Nike moves on.
This corporate strategy allows for the cheapest labor costs and bargains with the worst
governments. The result? Companies like Nike can keep manipulating their stocks,
dodging corporate taxes and making shoes for only $1.60 a day --- just so that Nike's
CEO can earn $96,000 a day. Heaven forbid if American workers ever made Nike shoes,
or else Nike's CEO might only earn a measly $10,000 a day (unless Nike raised the price
on their cow leather and rubber shoes to $500 a pair.)
And Nike is just but ONE of many U.S. corporations that operate like this. That's how they
can afford to pay their CEOs too much. Here's a list of the top paid CEOs from Forbes and
what they earn in just ONE year --- many of them on the back of cheap and exploited
foreign labor. Last year's congressional study on offshoring says 29% of U.S. jobs are
prone to outsourcing --- and then add in all the new work visas with the new immigration
bill --- on top of the long-termed unemployed (and the 99ers) that we already have, and
there were be plenty of shoe-shine jobs available for a nickel a shine. Bring jobs back to
America and pay workers a "living wage"...no excuses, Just Do It!
8
Apple Chinese Factory Foxconn Nightline (ABC News) February 22, 2012
https://www.youtube.com/watch?v=h1_XAuJ8qCc
Video Questions:
1.
What tech companies are making products in China using Foxconn?
2.
How do Americans feel about Apple gadgets?
3.
How many steps does it take to make an IPhone?
4.
Describe the life of the workers (age, shifts, housing).
5.
How long does it take to assemble an IPAD?
6.
Is there interaction between workers? Explain.
7.
Why do people line-up to work at Foxconn?
8.
What has been done to prevent suicide?
9.
Describe the working conditions.
10.
Why did Apple pay for the Fair Labor Association audit?
11.
What are Chinese values for working?
9
Globalization to Remain Concentrated in Asia
Laza Kekic|Special to CNBC.com http://www.cnbc.com/id/46683675
Economic globalization (defined as the integration of markets across the world) has been one of the most
powerful megatrends of the past century. However, the global economic and financial crisis of recent years has
raised fears of a major backlash against globalization. Even before the crisis, there had been increased criticism
of globalization, in relation to a range of issues—the environment, democracy, national sovereignty, income
inequality and the exploitation of workers.
However, it would be wrong to declare the end of globalization. A backlash against globalization and a
significant increase in protectionism has so far failed to materialize. Many of the forces that underpin
globalization remain powerful. Businesses continue to depend on expansion beyond their home markets and
countries today are more interdependent than in the past. How much does this matter for future economic
development and growth trends? The answer is not self-evident. Much of the evidence is ambiguous. The
benefits of globalization for growth in recent decades have been heavily skewed towards Asia, especially China
and India. Indeed, there has been very little improvement in the relative growth rate of most other developing
economies, certainly outside Asia, compared with developed economies. It is only in recent years that an
appreciable number of emerging markets outside of Asia has been catching up with developed economies.
The critical question is why has Asia been so dominant? What growth-enhancing factors were unique to Asia
that were not shared by the rest of the world and that allowed this region to out-perform so much and for such a
long period of time?
The answer does not seem completely clear. Many equate the concept of globalization with free markets, even
laissez-faire. But catch-up growth in East Asia was not based on liberal free market strategies. Rather in many
cases it was based on extensive state intervention; the emphasis was on "getting relative prices wrong" and on
"governed markets". Although East Asian countries were certainly ‘outward-oriented’ in their growth strategies
in strong contrast to state-led inward-looking industrialization common elsewhere, Asian countries were not full
participants in the globalization process at least until the 1990s in terms either of openness to trade or capital
movements.
Most empirical studies point to a positive impact of foreign direct investment (FDI) on growth. The same is
certainly not the case for other capital flows—here the weight of evidence suggests that there has been no
impact or that the effect on growth has been negative. The finding which used to be confined to radical critics of
free markets is now also accepted by much of mainstream thinking. On trade, although the evidence is not
conclusive (it is often noted that the US was a high tariff country throughout its rise to world economic
leadership), on balance the evidence suggests that increasing trade is associated with economic growth.
However, in empirical studies there is a problem in identifying the primary direction of causation—does it run
from liberalization and increased trade to output growth or is increased trade the consequence of increased
incomes.
What does seem clear is that benefits of globalization for growth are likely to remain heavily concentrated in the
Asian powerhouses implies that over the next 40 years there will be a stunning shift in the distribution of global
output. Long-term forecasts suggest that share of world GDP (measured at purchasing power parities)
accounted for by North America and Western Europe will be halved from 40% in 2010 to about 20% in 2050,
while developing Asia’s share is predicted to almost double from 27% in 2010 to almost a half in 2050.
The share of China alone is projected to increase from 14% in 2010 to 20% in 2050. From a historical
perspective, China as the world’s leading economy will, of course, not be a new concept: it was by far the
world’s largest economy until the 19th century, accounting for 20-30% of the world’s output; along with India, it
dominated the world economy for nearly two millennia before its temporary decline.
10
So What Exactly Is Alibaba?
By Chris Wright http://www.forbes.com/sites/chriswright/2014/09/16/so-what-exactly-isalibaba/
You all know the headlines: the biggest ever tech float*. The biggest ever Chinese float. The
biggest ever US IPO. In fact, after yesterday’s increased price range, very likely the biggest
IPO ever, with the potential to raise over US$25 billion. But what exactly is Alibaba?
What does it do?
*DEFINITION OF 'FLOATING STOCK' OR ‘FLOAT’ The number of shares available for trading of a
particular stock. Floating stock is calculated by subtracting closely-held shares and restricted stock
from a firm’s total outstanding shares. A stock with a small float will generally be more volatile than
a stock with a large float, apart from having limited liquidity and wider bid-ask spread.
More recently, how many people who bought shares in Facebook had a clear
understanding of how the company planned to monetize its extraordinary reach? How
many really knew what its assets were? Not a majority, I would suspect; many instead
believed that a company with such recognition, with contacts to so many people, must be
able to perform as a stock too. And so to Alibaba, about to join
Facebook, Google GOOGL +2.19%, Amazon and eBay EBAY +0.63% at the top table of
online companies.
Alibaba is China’s biggest online commerce company (Kind of like Amazon to the
United States). It is chiefly a domestic operation, which sounds limiting, but when one
considers the numbers around China’s discovery of the internet, one can see the appeal:
China had 618 million internet users at the end of December 2013, according to China
Internet Network Information Center, or CNNIC; that figure was up 9.5% year on year but
still represented less than half the national population, showing clear room for growth.
Alibaba owns stakes in all sorts of things, but operates chiefly through three sites: Taobao,
China’s biggest shopping site; Tmall, which specializes on online sales of branded goods
and focuses on China’s fast-growing middle class; and Alibaba.com, which connects
Chinese exporters with companies elsewhere in the world. Between them they host
millions of merchants and businesses, and have hundreds of millions of users; in terms of
the amount of business handled, one can argue that Alibaba is actually the world’s biggest
online commerce company, not just China’s. On top of its core sites it owns alipay.com, a
Chinese equivalent of Paypal; and has large stakes in Sina Weibo, China’s version of
Twitter; and Youku Tudou, the closest Chinese equivalent to YouTube. How big a market is
China? Well, Alibaba – through its various sites – hosted $248 billion of online shopping
transactions last year, which is, according to the Wall Street Journal, more than eBay and
Amazon.com combined. The Journal cites data from a group called iResearch projecting
that China’s e-commerce market has gone from $74 billion in 2010 to $295 billion by the
end of 2013, with a projected total of $713 billion by 2017. The Hong Kong broker CLSA
says that 80% of China’s online shopping is done through Alibaba.
11
12
13