Globalization Arguments

The strongest argument for globalization is that it enables you to profit from specialization. Now, by that I do not mean there is a static specialization like I am going to be the drawer of water or the hewer of wood because endowments, technology everything is changing all the time. What I mean is, at any one point of time you have certain set of endowments which you have accumulated, you have shaped and so on which then define what you are good at, right? Once you do that then we economists say this goes back Adam Smith and it's the very essence, over 200 years ago, that maybe I can do every thing better than you can. Like I can maybe interview better than you do. I can teach better than you do, but clearly my greatest advantage over you is in teaching, certainly not in -- I might be a little bit better than you at interviewing.

There is this joke about, Jewish joke about someone ask somebody "Could you play the violin?" The answer by this Jewish wit is that "Maybe I can but I have never tried."
So maybe I am a better interviewer but I have never tried. But let's grant it for argument sake what economics teaches you, international economics is that and what Adam Smith point to that was that if I specialize in where my advantage over you is greater and therefore teach and leave you do the interviewing we will both been better off because we will have more of each, each of these two activities and then each activity or each good is actually a good not a bad like -- then you are going to be better off. So that's the fundamental case.

Today people are worried about this case and we can come back to that later in the discussion and see how the modern world looks but the greatest argument against it today is the two sets of arguments and let me just say, one of is the social criticism the many young people, altruistic and pathetic and they worry about the effects of globalization on women's rights, on democracy, on poverty in the poor countries, on indigenous culture like Eva Morales, you know that globalization is going to wipe it out. Then Monsieur Bouve (ph) in France worries about mainstream culture, that the French culture will like that and also french agriculture for that matter. So it is a double jeopardy for the French and so there are variety of such things and those I would say are mainly the concerns of the young and idealistic people and they really form the most important part of the world in my view.

Then there are the fears in and self interest driven critics of globalization. Those are the AFL-CIO or the presidential candidates today in the United States who of course reflects the AFL-CIO fears and so on, they are worried about how trading with the out side world having multinational corporations investing abroad and so on how all of that is going to be really undermine our rages of our unskilled workers maybe even the middle class in some cases. There are some people who worry about that but I would say that ties up with my original worry of -- what's going to happen to the bottom 20%.

I am a democrat in the US political configuration I have always worried about the bottom 30%. If this it true, it's a serious downside. But I do not believe it is true but this is something which a lot of people fear and that is a biggest challenge to globalization today in the rich companies.


Transcription by: Scribe4you Transcription Services