There may be two sides to every issue, but they seldom enjoy the same merits. This is certainly true in the case of globalization, a trend whose benefits far outweigh the associated costs.
In the closing address of Yale’s tercentennial celebration, former President Bill Clinton LAW ’73 suggested the dominant trait of humanity today could be viewed in two lights, one “optimistic” and one “pessimistic.” For globalization, this meant it could be appreciated for the opportunity and mobility it provides. Or more pessimistically, globalization could be lamented for excluding poor nations whose people, Clinton cited, often live on less than $2 per day.
Yet to give these two interpretations equal emphasis is to downplay real progress that has resulted from globalization.
The trend of globalization, or the growing economic, cultural, and social connections of countries everywhere, has yielded and will continue to yield substantial gains for all involved parties. The first area of these gains is economic. In short, globalization increases the incomes of affected nations. Insofar as it encourages the free trade of goods, globalization allows countries to reap gains from comparative advantage and specialization that might not otherwise be possible.
Consider, for example, the case of developing nations that have much to gain from greater access to foreign products. Instead of having to devote economic resources to areas outside their core competencies, such as drug development or aircraft manufacturing, growing nations can focus on industries in which they have efficiency advantages. From this production, they can engage in enriching trade to acquire the other necessary items, thus permitting the country and its people to reach higher levels of income than would happen in an unconnected, closed society.
This higher level of national income feeds into itself, raising standards of living and allowing improvements in infrastructure and education that will in turn produce future economic benefits. The same argument applies for all nations, of course, but globalization can particularly help pull the developing world out of a cycle of poverty resulting from inefficient allocation of resources.
Economic gains aside, increased global interaction also produces positive returns socially, culturally and politically. The exchange of goods, people and ideas builds greater understanding of other nations and their cultures, a key element of education and even of peace. All together, globalization opens doors and creates opportunities a closed market simply could not provide.
In spite of these benefits, many revert to the criticisms of globalization proposed in Clinton’s speech Saturday. Some countries, they say, are being left behind, surrendering most of their gains to the more powerful West, left to wallow in poverty without reaching a “living wage.”
More than that, skeptics say, globalization results in “Coca-Cola-nization,” or the unwanted takeover of indigenous cultures by that of corporate America. If this is the case, then some might conclude that the costs of global interconnectedness are too high.
That conclusion would, however, be based on false assumptions. Though these issues are each complex enough to deserve a much more detailed discussion, some observations are fitting to diminish their credibility. The living wage argument, for instance, lacks perspective. Market forces will naturally result in an equilibrium wage based jointly on employers’ demand for work and the laborers’ desire to work. If, therefore, it results in the $2-wage mentioned by Clinton, it is a function of the individual country’s labor market and not of globalization.
More than that, citing absolute wage levels alone is meaningless and exaggerates the severity of the problem. Considered on a relative basis compared to the cost of living in a particular location, the picture would not seem so dismal. In any case, globalization’s expansion of economic gains would only help people earn higher incomes, not hinder them.
The “overbearing culture” arguments also fail to hold water. Coca-Cola and McDonald’s would not be present in countries around the world if the consumers in these markets did not invite them by buying their products. Globalization is not at fault, then, for cultural exchanges of this type, inasmuch as they provide goods that are demanded, can be quite beneficial as well.
Indeed, globalization is a strong endorsement of the American system of free enterprise, and it should be a welcome one. There may indeed be two sides to this issue, but it is a lopsided fight: the benefits far exceed any costs.
William Edwards is a senior in Pierson College. His columns regularly appear on alternate Mondays.