The Assault on the Global Economy

Executive Speeches, February 2000 | Go to article overview

The Assault on the Global Economy


The global economy is under assault by a strange alliance of radical groups and several mainstream environmental organizations. The outfits from the far left, such as the Institute for Policy Studies, are long-term opponents of the capitalist system, at home and abroad, so their opposition to trade between nations is neither new nor newsworthy.

It is surprising, however, that the Sierra Club and the Friends of the Earth have let their names be associated with this effort to oppose the modern economy. Therefore, those views need a response, especially since they are being circulated via expensive full-page advertisements in major national media on the topic of "Economic Globalization."

Here are the major arguments and my personal responses:

1. "The goal of the global economy is that all countries should be homogenized" One of the ads states that "a few decades ago, it was still possible to leave home and go somewhere else: the landscape was different, the language, lifestyle, dress, and values were different."

First of all, there is no truth to the charge that homogenization is the goal of any specific company or industry or business association involved in the global marketplace. Nor does it make any sense for such a goal to be adopted. It runs counter to the division of labor that is at the heart of the global economy. It does not make any economic sense for each country to become a carbon copy of every other country. By the way, it is commonplace for managers in the international economy to urge their employees to "Think global, but act local."

Yes, it makes good sense for people--be they business and government decision-makers or individual investors and consumers--to take account of the important trends occurring outside of their community or nation. But every business that has operated successfully in more than one country has learned, often the hard way; that people's tastes are hardly uniform. Despite the rise of the European Union, the French are not stampeding for German wines and the British are still driving on the wrong side of the road.

Consider these pairs of countries: France and China, Poland and New Zealand, or Denmark and Thailand. Anyone who has visited them knows that they are so different in landscape, language, lifestyle, dress, and--especially--values. The kindest response is that the organizations that have lent their names to these wild statements either did not read the ads or they did not spend any length of time in those countries. Indeed, there is little evidence from the world around us to support the contention that "Every place is becoming every place else."

2. "Diversity is an enemy because it requires differentiated sales appeal." A statement like that betrays ignorance of the actual operation of the private enterprise system. In recent years, diversity in all its dimensions has become a watchword in the modern corporation. Moreover, it is on those differences that provide "niches" that individual corporations love to focus in their constant efforts to achieve product differentiation and greater competitiveness.

3. "... the ultra-secretive World Trade Organization (WTO).. now rivals the International Monetary Fund (IMF) as the most powerful, yet undemocratic body in the world." Such blatant falsehoods feed on the public's unawareness of how these organizations operate. The nations that join the WTO and the IMF have full voting rights. Moreover, their decisions are fully reported to the public.

4. "Every country loses while global corporations win." On the contrary, the business enterprises that operate in the international economy typically are the most effective source of economic development in the poorer nations in which they invest and provide new technology. These enterprises also are among the most productive companies at home and typically pay well above average wages and benefits.

5. …

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