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).
  1. What is globalization?
  1. Make a T Chart. List 3 pros of Globalization on one side and 3 cons on the other.
  1. How does globalization affect you on a personal level? Provide examples and explain.
  1. Does globalization ultimately help or hurt the world? Use two pieces of evidence from the packet to support your answer.
  1. How is globalization in Asia affecting American middle class? Explain.
  1. 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. 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. ______

Globalization: Pros and Cons

MARCH 26, 2014BYNICK 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 long-term 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.

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.

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.

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The Noble Feat of Nike

Johan Norberg—TheSpectator, 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 anti-globalization 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 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 MrKiet, 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?

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.