RE: WTO the rampage! (fwd)

Josef Dietl (
Tue, 7 Dec 1999 20:02:07 +0100

hmrmph... the message is well composed, I agree with the essence, but the
argument is more biased than I can just watch without adding.

it's not that I don't agree with you, but there are some side-effects in
this Globalization discussion that I haven't seen mentioned. So, while I
personally believe that we don't have much choice in the question and that
we (whoever that "we" may be, BTW) can only influence the "how", but not the
"if", for the sake of completeness I feel the following points have to be

First of all, I'm not sure the following is a compelling argument:

(copied from below)
> Does this viewpoint seem a little radical?
> It shouldn't. Ask 99 out of 100 economists
> (people who actually take the time to study
> and understand these issues), and they will
> explain that it is all common sense.

1st, this says in pretty clear words: if you don't agree with these experts,
you are just don't understand these issues (shut up and do your homework).
It's a "emperor's-new-clothes" argument, muffling more discussion.

2nd, even economists have trends and fashions. Currently, globalization is
"en vogue", so it's not surprising that the majority of contemporary
economists believe that globalization through free trade will solve all
(really?) our problems.

This leaves the question of why the current fashion is free trade, and that
is very likely because it has scored a few remarkable successes in the
recent past. But that doesn't mean that we should stop thinking about even
better solutions (which is why I post this message in the first place).

[disclaimer: I will use the terms "1st world" and "3rd world" in the
following. I do so despite I firmly believe that these expressions are
extremely ill-defined - but as their exact definition doesn't matter, this
is acceptable IMHO. I'm just too lazy to write "1st world - whatever that
may mean" and "3rd world by whatever standards". It is boring, unneccessary
and distracts the readers attention from the real arguments.]

Now, to contribute to the real discussion: The main effect of globalization,
and one of the driving forces of its opponents in Europe (some, but not all
of them sitting on "rust-belt" jobs) is that free trade and transfer of
knowledge is not only about equal distribution of wealth on the planet: it
is also widening the gap between the rich and the poor in national
economies - you could say, it is also about the equal distribution of
poverty. Exaggerated, what I'm saying is not that the third world countries
suffer from globalization: the first world countries do.

I haven't thought the following through completely, but I'm looking for your

In the "good old days", cheap labour was cheap relative to the domestic
average labour cost and determined by the domestic costs and standards of
living. In other words: both the measure for labour cost and the measure for
living expenses was domestic. Please note also that "cheap labour" often
means "workers with low educational standards".

Now, with globalization, many companies (say, textiles, just for the sake of
the example) move their production forces to 3rd world countries because
labour is even cheaper there. Now, the workforce from our original 1st world
country obviously can't follow where their jobs are going - partly because
of red tape, partly because of their families, partly because moving abroad
is expensive (and they have never made a fortune to begin with), and partly
because of language barriers. (I was able to move to France, but I can tell
you my part about language barriers now...)

So, the jobs are gone, the workers are still here. Just that their "cheap
labour" jobs have gone doesn't give them better qualifications either, but
their cost of living is still the same. What happens on a national scale is
that "cheap" labour is measured on a global scale, but cost of living and
living standards are measured locally. This is kind of a "social inversion":
for large parts of the population, the expenses even for their minimum
standards of living are higher than anything they can reasonably expect to
earn through honest work in the foreseeable future. Note that experience
shows that prices usually do not drop in step with the gains from moving the
jobs abroad - after all, companies are measured on revenue, not on turnover.
So, even if that "social inversion" is only a temporary phenomenon, it
persists over decades until prices have balanced again - if they do at all.
At times when companies are measured quarterly and almost-bankruptcies (sp?)
are turned around in less than a year, a decade is a lot of time. It is a
serious problem, first of all for the people affected, but also for the
governments responsible for them.

A social network will make - in some sense - things even worse, because it
supports the social inversion, but without social network people will either
literally starve in the 1st world or turn criminal. By building a social
network, the government effectively pays the bill.

Other supporting factors are that
- one definition of "1st world" is those countries with a low dependency on
cheap labour. But if only a low rate of the total workforce suffer the
"social inversion", the pressure on prices / the business opportunities of
price competition are are limited.
- even the 1st world will always need a certain number of "cheap" jobs
domestically (in the sense that the workers will have to bear domestic cost
of living - garbage collection as an example). This effectively reduces the
people affected by the social inversion further.

You can take the exit here, say "I don't want that" and join the rambos in
Seattle (or say "I don't believe this is going to happen" - please let me
know the arguments), or follow some more thoughts on what might happen next:

[note that the following looks like black and white because it's easier to
write, but the process described is actually a gradual one]

people know and learn (and earn) even more, climb the social ladder to avoid
being rationalized away, too. Thus we create a "upper class" group of people
who is pretty wealthy. The other pressure is "downward": in the name of
shareholder value, companies are forced to rationalize even more, and even
more "cheap" jobs are rationalized, automated or moved abroad as long as it
is economical to do so. Please observe that it is much easier (and, besides,
often out of your power) to be rationalized into the inversion, than it is
to escape the inversion again. Domestically, this extends the range of
people in reach of the social inversion, increasing the rate of people
suffering from it.

Only when that rate has grown enough and the domestic economy is in balance
with the rest of the world with respect to automation and living standards
for the lower classes, prices will reach the "real" equilibrium in the sense
of supply and demand again. Note that, from the philosophical perspective, I
don't care much about pricing of, say, Picasso-designed shoelaces. But when
it literally comes to bread and butter, everybody on the planet should have
the means to afford reasonable quality. IMHO.

So, while the final result is desirable balance on the planet, the stages
leading there are not exactly things that I'd want to go through. So: what
can we do to smoothen these swings?

The economist (!) has two nice articles, one about wage differentials and
one about the lower class in the US having to take on more than one low-pay
job to earn the life minimum. Unfortunately, their system prevents me from
posting the links - well... If they don't want to get the eyeballs...



> -----Original Message-----
> From: Dan Kohn []
> Sent: Tuesday, December 07, 1999 9:29 AM
> To:; Fork (E-mail)
> Cc: Alexander Blakely (E-mail); Mary O'Dell (E-mail); Mark Kuperberg
> (E-mail)
> Subject: RE: WTO the rampage! (fwd)
> In general, I agree with Chris Olds's comment that the Seattle police did
> not do too bad a job. Given that people are complaining about both their
> aggressiveness and their leniency, there's a decent argument that they did
> not under- or over-react.
> That said, I disagree with all of Chris's other points. If you want to
> alleviate poverty and end child labor in the developing world,
> support free
> trade and the WTO. If you want to improve the environment here
> and abroad,
> support free trade and the WTO. ("Rich" people care about the environment
> while poor people care about feeding their children. Free trade and
> economic development is the only way anyone knows to make poor
> people rich,
> as the Japanese, South Koreans, and Chileans can attest.) If you
> care about
> good jobs at good wages, support free trade and the WTO, since
> protectionism
> leads to neither (as demonstrated by India in the 1980's and much
> of Africa
> today). By contrast, if you care about preserving obsolete rust-belt jobs
> (the ones that tend to be unionized) at the expense of consumers
> everywhere
> and many good new jobs that could be created, oppose the WTO and join the
> Does this viewpoint seem a little radical? It shouldn't. Ask 99
> out of 100
> economists (people who actually take the time to study and
> understand these
> issues), and they will explain that it is all common sense. In
> fact, there
> is no subject that famously argumentative economists agree on
> more than the
> benefits of free trade (although they tend to call it Ricardian
> comparative
> advantage, as economics is not called the dismal science for nothing).
> What I simply cannot understand is why our political and business leaders
> have not been able to make these points in a way that regular people
> understand. Rather than meeting the protesters half way, we should be
> explaining that although their hearts are in the right place, there policy
> proscriptions are nearly exactly wrong.
> Before we have a big flamewar on this list, I'd request that interested
> parties read a couple of articles first:
> In Praise of Cheap Labor by Paul Krugman is one of the best
> things he's ever
> written:
> <>
> Critics take it as a given that anyone with a good word for
> [globalization]
> is naive or corrupt and, in either case, a de facto agent of
> global capital
> in its oppression of workers here and abroad. But matters are not that
> simple, and the moral lines are not that clear. In fact, let me make a
> counter-accusation: The lofty moral tone of the opponents of globalization
> is possible only because they have chosen not to think their position
> through. While fat-cat capitalists might benefit from globalization, the
> biggest beneficiaries are, yes, Third World workers.
> Enemies of the WTO is also excellent:
> <>
> The raw fact is that every successful example of economic development this
> past century -- every case of a poor nation that worked its way
> up to a more
> or less decent, or at least dramatically better, standard of living -- has
> taken place via globalization; that is, by producing for the world market
> rather than trying for self-sufficiency. Many of the workers who do that
> production for the global market are very badly paid by First World
> standards. But to claim that they have been impoverished by globalization,
> you have to carefully ignore comparisons across time and space -- namely,
> you have to forget that those workers were even poorer before the new
> exporting jobs became available and ignore the fact that those who do not
> have access to the global market are far worse off than those who do.
> Finally, here is an Economist editorial:
> <>
> Concerns about trade and globalisation are real, and can be
> legitimate: they
> deserve to be addressed. So here’s an idea: let governments start
> addressing
> them. Let them explain that trade is first and foremost a matter of
> freedom—that if a government forbids its citizens to buy goods
> from another
> country it has infringed their liberty. Let them explain that trade makes
> people better off, especially the poorest people in the poorest countries.
> Let them explain that trade improves the environment, because it raises
> incomes, and the richer people are, the more willing they are to devote
> resources to cleaning up their living space. Let them explain that the WTO
> is not a global government, but merely a place where governments make
> agreements, and then subject themselves to arbitration in the event of a
> dispute.
> - dan
> P.S. As Milton Friedman said on The Lehrer Newshour, "I'll give
> a $100 for
> any can of tuna purchased from a US supermarket that is NOT dolphin-safe."
> (As he didn't add, one can limit per respondent.) This gets to one of the
> compromise areas that I see. Although the WTO prohibits
> restraint of trade
> for things that environmentalists and others see as critical, I do not
> believe it restricts labeling. Thus, in the US, it becomes extremely
> unlikely to sell non-dolphin-safe tuna because consumers expect to see the
> dolphin-safe label. Similarly, Gap or Nike could label their
> products "not
> sewn by a 9 year-old-girl". And, in the extreme, genetically
> modified foods
> could be labeled, allowing consumers (and their supermarket chains) to
> decide whether cheaper, fresher products that use less pesticides
> are worth
> (what is IMHO) a fictional health risk, analogous to fluoridation
> of water.
> --
> Daniel Kohn <>
> tel:+1-425-519-7968 fax:+1-425-602-6223
> -----Original Message-----
> From: []
> Sent: Friday, 1999-12-03 13:10
> To:
> Subject: Re: WTO the rampage! (fwd)
> Interesting point of view. I wonder if the things he's saying about
> the WTO are accurate. If they are, then it surely deserves
> opposition.
> --
> <> Kragen Sitaker
> <>
> The Internet stock bubble didn't burst on 1999-11-08. Hurrah!
> <URL:>
> ---------- Forwarded message ----------
> Date: Fri, 3 Dec 1999 01:36:58 -0800
> From: Chris Olds <>
> To: Karee Swift <>,
> Subject: Re: WTO the rampage!
> > I still wonder, political protest over what?
> I had expected more clue from FoRK (overall, not to pick on anybody).
> Regardless of one's political persuasion (and I know we run the gamut), I
> think that the WTO would be a no-brainier to oppose. This is an
> unelected,
> secretive body that has been give the power to override laws passed by the
> legitimate government of *any* country, including <insert favorite WTO
> member nation here>. The unions are protesting the WTO position
> that goods
> made with child or slave labor may not be discriminated against. The
> environmentalists are protesting the WTO position that promotes rainforest
> destruction. They are working together because they see that the only
> beneficiaries of the current WTO process are large corporations
> (Boeing is a
> host company, I'm not sure about MS). If, as has been proposed,
> corporations are given the power to challenge laws as a restraint
> to trade,
> then Boeing, Weyerhaeuser, and Microsoft (to name three large Washington
> multi/transnational companies) will be a giant step closer to wielding the
> same power as nations. Now, I have friends (whom I trust) that work for
> each of these companies, but I don't want them to have that kind of power.
> The WTO protest is a broadly based movement that has the
> potential (IMNSHO)
> to unify the remaining forces in favor if social liberalism in
> this country.
> To use European terminology, the greens and the unions may have found each
> other, and found out that they have a *lot* in common.
> As far as the cops go, after listening to the shoutcast of their comms I
> think that they are doing an acceptable job in a tough situation. The
> biggest blunder I can see is that they underestimated the need for
> visibility early on, and kept the King Co. Sheriff's forces off the street
> on Monday. In typical Seattle style, the Times is reporting that Seattle
> residents think that protesting is fine, but they are upset about the mess
> being made downtown. The Mayor apologized tonight to the people who were
> gassed. There have been excesses (tear gas on Broadway, when I-5 was the
> eastern edge of the curfew zone), and I'm sure there will be a
> long round of
> meetings about it (Seattle _loves_ meetings). So far, I have yet
> to hear of
> any serious injuries, and given the number of protesters I think
> the number
> of arrests is small (1%? 2%?). I have read multiple reports of protesters
> keeping vandals from breaking windows, and of people showing up to scrub
> graffiti off walls. This is not an unthinking, uncaring mob. It
> is a very
> large number of thoughtful people practicing non-violent resistance (and
> yes, breaking the law) being discredited by a small number of
> people taking
> the opportunity to practice violent criminal behavior.
> This is not a simple protest by the wandering unwashed. People of
> conviction came to Seattle to try to claim a voice in a process that
> threatens to transfer more power from elected governments to transnational
> corporations and bureaucrats. If the analysis forwarded by Balachander
> Krishnamurthy is correct, the WTO meeting will prove to be a
> non-event. I'm
> thinking that this may be the best we can hope for.
> The political protest in Seattle is real, and there are important
> issues for
> both the right and the left. Conservatives, both right and left (and as
> distinct from the radical right) should be supporting the goals of the
> protesters, even if they deplore their methods. As for the vandals, they
> should be treated as the criminals they are. As for the police, if they
> exceed the boundaries set by the law and their superiors, they should be
> punished as well (the hearings will take years). Seattle is an
> interesting
> choice for such a controversial meeting; there are not many (any?) other
> cities in the US that have the same combination of a strong environmental
> culture and an equally strong pro-labor culture. Strikes still mean
> something in Seattle, and recycling is a reflex. The city is
> facing up the
> fact that it needs to account for an endangered species (Salmon) in
> everything from its power generating facilities to its water supply to the
> way it deals with street runoff (of which there is a lot - rain happens).
> Trade is very important to Seattle, but so are the environment and social
> justice. People there respect work, both for production and for
> the benefit
> of society.
> Ask yourself what the outcome would be if tens of thousands (10K?
> 20K? 30K?
> 50K? more?) of protesters were on the streets of your city. How
> many severe
> injuries would you expect? How many deaths? (50K people implies a
> measurable risk of someone dropping dead without provocation!).
> 'nuff said.
> /cco
> --
> Unsubscribes to; public
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