Question for Discussion: Does Globalization need to
be fundamentally reformed in order to work?

Readings: Friedman, pp. 434-451; Korten, "Agenda for Change" ;
Faiola, "What Went Wrong"

Video: Commanding Height, vol. 3, chap 19 & 20:
Capitalism and the Third World

Korten vs. Friedman on Globalization

• Friedman vs. Korten on Globalization ( in-class)
  
  
• Friedman vs. Korten vs. Lewis on Globalization
  ( in-class)
  
  
• Global Problems not being Solved by Globalization
  ( in-class)
  
  
• Two Models of Globalization ( in-class)
  
  
• Who are the Players in Globalization
  
  
• The Bretton Woods Institutions as Global government ( in-class)
  
  
• Cavanaugh on Corporate Globalism (in-class)
  
  
• Do Korten and Friedman have Different
  Definitions of Democracy ( in-class)
  
  
• Friedman, Who will Rule the Electronic Herd
  (in-class)
  
  
• Friedman on Democracy & the Golden Straitjacket
  (in-class)
  
  
• Korten on Democracy and Corporate Power
  
  
• Friedman's Model of Globalization Positions
  (in-class)
  
  
• Draft Norms of Responsiblities of Transnational
  Corporations
  
  
• Korten: Principles of an Ecological Revolution
  (in-class)
  
  
• Korten: Getting Corporations out of Politics
  (in-class)
  
  
• Korten: Summary of Political & Economic Reforms
  (in-class)
  
  
• Hindery, Education isn't the only Solution for Jobs
  (in-class)
  
  
• The GANE Plan

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The Globalization Debate

• Debating Globalization for the Exam
  
  
• Is there any alternative to Globalization?
  
  
• Globalization is Greatttt
  
  
• The Key Questions on Globalization
  
  
• Debating Globalization: Thinkers
  
  
• Debating Globalization Websites
  
  
• Who are the Players in Globalization?
  
  
• The Washington Consensus: A Definition
  
  
• Washington Consensus or Washington
  Confusion?
  
  
• The World Economic Forum
  
  
• The World Social Forum
  
  
• Alternative to Economic Globalization:
  Introduction
  
  
• The anti-Thomas Friedman Home Page
  
  
• Resources for building the Alternative
  Global Economy
  
  
• Another World is Possible
  
  
• The Threat of Globalization
  
  
• The People-Centered Development Center:
  David Korten's Organization
  
  
• Global Civil Society: The Path ahead

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THE GANE Program for Global Reform

• General Agreement on a New Economy
  
  
• For Full Employment, Equity and
  Environmental Sustainability
  
  
• Community Federalism Diagram
  
  
• GANE: Corporate Issues
  
  
• GANE: Community Federalism Issues
  
  
• GANE: Meaningful Work
  
  
• GANE: Working Draft of full GANE proposal
  
  
• Rowe: Down Among the Economists

Debating the Rules of Globalization

• Faiola, "What Went Wrong"
  
  
• Ivry, Bank of Ameica moves Derivatives onto the Public
  
  
• Naked Capitalism, Bank of America DeathWatch
  
  
• Goodman, Bank of America Dumps $75 trillion of Derivatives
  on American Taxpayer
  
  
• Socialism for the Rich Editorial Cartoon
  
  
• Basic Assumptions behind Corporate Globalization
  (Use ths to set up Entire Lecture: Does Globalization need
  Government or Not?)
  
  
• Friedman vs. Korten on Globalization ( in-class)
  
  
• Friedman vs. Korten vs. Lewis on Globalization ( in-class)
  
  
• The Larger goals of our Global Economy
  
  
• Corporate Globalization's Ideal World ( in-class)
  
  
• Global Problems not being Solved by Globalization ( in-class)
  
  
• Global Financial Institutions and Globalization ( in-class)
  
  
• Two Competing Models of Globalization ( in-class)
  
  
• The Bretton Woods Institutions as Global government ( in-class)
  
  
• Cavanaugh on Corporate Globalism (in-class)
  
  
• Do Korten and Friedman have Different Definitions of Democracy
  ( in-class)
  
  
• Friedman, No One is in Charge ( in-class)
  
  
• Friedman, Who will Rule the Electronic Herd (in-class)
  
  
• Friedman on Democracy & the Golden Straitjacket
  (in-class)
  
  
• Basic Economic Conditions sought by the "Electronic Herd" ( in-class)
  
  
• Protecting the Interests of Nations against the demands of the Electonic Herd( in-class)
  
  
• Is Government Broken? Strengthening Democracy through
  Election and Governance Reforms
  (86% think the Federal Government is Broken)
  
  
• Visual 1, "Economic Functions of Government"
  
  Economists, however, identify six major functions of governments in market economies. Governments provide the legal and social framework, maintain competition, provide public goods and services, redistribute income, correct for externalities, and stabilize the economy.
  
  
• Activity 3, "What Role Should The Government Play in the Economy?"
  (See Conservative versus Liberal perspectives)
  
  
• Regulation and Control in the U.S. Economy
  
  
• Hernando De Soto: Right-Wing Revolutionary  
  
  
• DeSoto, "The Mystery of Capital:
  
  
  Failed Government make it too risky to invest in Third World Economies. There are no legal protections protecting their investments. In such a world, we get a rule by the strongest, who can protect their interests.
  
  
  
• Bernie Madoff's $50 Billion Ponzi Scheme:
  Demonstrates the need for Government to regulate the Economy
  
  
• Mexico: On the Road to a Failed State? | STRATFOR
  
  
• Korten on Democracy and Corporate Power (in-class)
  
  
• Friedman's Model of Globalization Positions (in-class)
  
  
• Basic Assumptions behind Corporate Globalization
  (Use ths to set up Entire Lecture: Does Globalization need
  Government or Not? The answer is Yes!)
  
  
• The UN Global Compact: Advancing Corporate Citizenship (in-class)
  
  
• 10 Principles of the UN Global Compact on Global Corporations (TNCs)
  
  
• Korten: Getting Corporations out of Politics (in-class)
  
  
• Why Wall Street reform is stuck in reverse (in-class)
  
  
• A Primer On The Foreclosure Crisis - CNBC
  
  
• What the 'Foreclosure Crisis' Means for You - WSJ.com
  
  
  Korten's Plan for Reform
  
  
• Friedman vs. Korten vs. Lewis on Globalization ( in-class)
  
  
• Korten: Principles of an Ecological Revolution (in-class)
  
  
• Korten: Summary of Political & Economic Reforms (in-class)
  
  
• Korten: Guiding Principles for an Ecological Revolution (in-class)
  
  
• The Larger Values of an Ecological Revolution (in-class)
  
  
• The GANE Plan (A model for Global Reform)
  
  

Friedman's Model of Globalization Positions (438)

Friedman is an Integrationist Social Safety-Netter

Dr. Lewis is in the middle -- both a Separatist/Integrationist and a Social Safety-Netter.

Korten is a Separatist Social Safety-Netter

Friedman vs. Korten vs. Lewis on Globalization

"I heard voices uninterested in any compromise, voices for whom the American government was some kind of evil enemy. I heard men and women who insisted that the market alone should rule, and who thought it was enough to be right about the economic imperatives of free trade and globalization, and the rest would take care of itself." (Friedman, 435)

"They should come to war-torn Africa and get a real taste of what happens to countries where there is no sense of community, no sense that people owe their government anything, no sense that anyone is responsible for anyone else, and where the rich have to live behind high walls and tinted windows, while the poor are left to the tender mercies of the marketplace." (Friedman, 436)

"As the country that benefits most from today's global integration,...It is our (the United States) job to make sure that globalization is sustainable." (Friedman, 437)"

"The globalization system is built around the threat and challenge of rapid technological change and economic integration that are uniting the world." (Friedman, 441)

"A politics of sustainable globalization needs the right balance of policies...It demands a new social bargain between workers, financiers, and governments that will make for sustainable globalization." (Friedman, 444)

"You stabilize globalization by democratizing globalization -- by making it work for more and more people all the time...The question we now face is where the appropriate equilibrium point between integrationism and social safety nets in today's globalization."
(Friedman, 445)

"What is needed...is a new social compact that
both embraces free markets but also ensures
that they benefit, and are tolerable for, as
many people as possible....There is no Third
Way. There is only one way--this balanced way."
(Friedman, 444)

Friedman uses the metaphors of the trapeze, the trampoline, and the safety net to describe his program for globalization.

"The most important trampoline is lifelong learning."
(Friedman, 447)

"Third, and finally, we still need tradtional safety nets--social security, Medicare, Medicaid, food stamps, and welfare--to catch those who
simply will never be fast enough or educated enough to deal with the Fast World, but you don't just want falling onto the pavement."
(Friedman, 449)

"Because the democratic process gave the public [in these countries] a sense of ownership over the painful process of economic policy reform. It was no longer something that... was being done to them. They were being consulted on it and given a choice about at least the speed of the process." (Friedman, 450-1)

"The message sinks in to the public that there really is no alternative to the Global Straitjacket.....Democratization helps make coming to
terms with reality possible." (Friedman, 451)

What does Friedman mean by the Trapeze, the Trampoline, and the Safety Nets? How do we ensure that governments can protect the
Trampoline and the Safety Nets from global corporations and the wealthy, who demand that governments cut taxes and reduce spending.

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Korten: Principles of an Ecological Revoution

"A political community cannot be healthy if it cannot exercise a significant measure of control over its economic life. "
-Herman Daly and John Cobb Jr'

"Political rights belong to people, not to artificial legal entities. The claim by corporations to the same constitutional rights as natural-born persons is a legal perversion without moral or logical foundation. As instruments of public policy, corporations should obey the laws decided by the citizenry, not write those laws. The corporate claim to First Amendment free speech protection, on which corporations base their right to lobby and carry out public campaigns on political issues, is particularly pernicious. As Paul Hawken observes, by invoking this right, "corporations achieve precisely what the Bill of Rights was intended to prevent: domination of public thought and discourse "(266)

"A first step toward removing corporations from the political sphere would be to eliminate all tax exemptions for corporate expenditures related to lobbying, public "education," public charities, or political organizations of any kind. The ultimate goal, however, is to prohibit the involvement of publicly traded corporations in any activity intended to influence the political process or to "educate" the public on issues of policy or the public interest. Furthermore, corporate officers should be prohibited by law from acting in their corporate capacities to solicit political contributions or political advocacy efforts from employees, suppliers, or customers." (267)

"Politics in America has been reduced to a system of legalized bribery. If democracy is to survive, reforms must get corporations and bribery out of politics. The ability to spend millions of dollars to saturate the electronic media, especially television, with negative messages about one's opponent has become a key to winning elections. So long as winning an election is excessively expensive and the only sources of adequate funding are powerful financial interests, policy will favor financial interests over the public interest."
(268)

"Few rights are more fundamental than the right of people to create caring, sustainable communities and to control their own resources, economies, and means of livelihood. These rights in turn depend on their right to choose what cultural values they will embrace, what values their children will be taught, and with whom they will trade. A globalized economy
denies these rights by transferring the power to make the relevant choices to global corporations and financial institutions." (Korten,265)

"The guiding principles of the Ecological Revolution are actively pro-business and pro-market, but they are also strongly partial to locally owned businesses that provide employment to local people, pay local
taxes to maintain local infrastructure and social services, meet local social and environmental standards, participate in the community, and
compete fairly with similar businesses in markets that have no dominant players." (Korten, 265)

"The aim is to limit the power and freedom of the largest corporations in order to restore democracy and the rights and freedoms of people and
communities." (Korten, 266)

"Political rights belong to people, not to artificial legal entities [ like corporations]...Corporations are public bodies created by issuing a public charter to serve public needs and have only those privileges specifically extended to them by their charters of the law." (Korten, 266)

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Friedman on Democracy & the Golden Straitjacket:

To fit into the Golden Straitjacket a country must either adopt, or be seen as moving toward, the following golden rules: making the private sector the primary engine of its economic growth; maintaining a low rate of inflation and price stability, shrinking the size of its state bureaucracy, malntaining as close to a balanced budget as possible, if not a surplus, eliminating and lowering tariffs on imported goods, removing restriction on
foreign investment, getting rid of quotas and domestic monopolies, increasing exports, privtatizing state-owned industries and utilities, deregulating capital markets, making its currency convertible, opening its industries, stock, and bond markets to direct foreign ownership and investment, deregulating its economy to promote as much domestic competition as possible, eliminating government corruption, subsidies and kickbacks as much as possible, opening its banking and telecommunications systems to private ownership
and competition, and allowing its citizens to choose from an array of competing pension options and foreign-run pension and mutual funds. When you stitch all of these pieces together you have the Golden Straitjacket. Unfortunately, this Golden Straitjacket is pretty much "one size fits all.' (Friedman, p. 105)

"As your country puts on the Golden Straitjacket, two things tends to happen: your economy grows and your politics shrink....Once your country puts it on, its political choices get reduced to Pepsi or Coke....The only way to get more room to maneuver in the Golden Straitjacket is by enlarging it, and the only way to enlarge it is by keeping it tight....The tighter you wear it, the more gold it produces and the more padding you can then put into it for your sociey." (Friedman, p. 106)

"You stabilize globalization by democratizing globalization -- by making it work for more and more people all the time... (Friedman, 445)

"Because the democratic process gave the public [in these countries] a sense of ownership over the painful process of economic policy reform. It was no longer something that... was being done to them. They were being consulted on it and given a choice about at least the speed of the process." (Friedman, 450-1)

"The message sinks in to the public that there really is no alternative to the Global Straitjacket.....Democratization helps make coming to
terms with reality possible." (Friedman, 451)
........................................................................................

Korten on Democracy and Corporate Power

" The decisions that shape humanity's future are being made by a small but powerful corporate elite that has circumvented and corrupted the
institutions of democracy to advance a narrow special interest [corporate] agenda without regard to the consequences for others."
(Korten, 283)

"The aim is to limit the power and freedom of the largest corporations in order to restore democracy and the rights and freedoms of people and
communities." (Korten, 266)

"Politics in America has been reduced to a system of legalized bribery. If democracy is to survive, reforms must get corporations and bribery out of
politics." (Korten, 268)
.........................................................................................

• White House for Sale.org
  
  
• Money in Politics: How Political Bribery Works
  
  
• Industry Profiles of Campaign Contributions
  to Politicians
  
  

Basic Conditions sought by the Electronic Herd

.........................................................................................

Do Friedman and Korten have different definitions of democracy:

The Democracy of Citizens vs. the Democracy of Wealth:


1. One man -- one vote. (Democracy of Citizens) You vote for people to represent you, and that is the end of your democratic participation.

2. All individuals have an equal right to participate and
influence the political process. Money does not give the rich greater access.

or

3. Democracy is based on wealth and power. (Democracy of Wealth) The rich get more democracy than the poor.

4. The right by all interests to compete in the
political process. Note, that this isn't the right to
"compete equally."

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The GANE Plan

First written and proposed in 1995, the General Agreement for a New Economy (GANE) provides a useful model for many similar proposals to reform or transform our economic and social institutions that have been put forward since 1972. In 1972, the first Global conference on the environment was held in Stockholm to address growing environmental problems created by the growth and development of our global industrial economy. Since the Stockholm conference, concerned politicians and environmental activists have developed programs to reform our global industrial society and economy. Reform programs such as GANE demonstrate that our existing economic and social institutions are not inevitable products of social evolution, but are the result of a complex set of historical decisions made by individual, societies, corporations, and economic interests. If our present global industrial society and economy is creating economic, environmental, and social problems and threatening our future, then we can reform or transform it in order to solve and reduce these growing problems.

The most radical aspect of the GANE proposal is that it redefines the larger goals of the economy.

In our present global economy,
the larger goals are:

1. Maximize individual freedom to create wealth and opportunities.

2. Maximize individual and corporate profits.

3. Maximize individual control over their lives and environments.

GANE imagines a reformed society in which these are the larger goals:

1) Promote economic welfare of individuals and communities.

2) Promote environmental sustainability and health.

3) Promote the social well-being of individuals and communities.

See the GANE model of Community Federalism.
The implicit argue in the GANE proposal is that our present economy works to undermine economic welfare, environmental sustainability,and social well-being. By focusing on individual wealth, profits, and individual control, our present economy undermines the larger well-being of communities and the environment. For the GANE activists, economic and political institutions should be reformed in order to better serve human needs and protect the environment.

The central reform proposal offered by GANE is community federalism. They imagine a three-tiered economy and society. The first tier is creating and supporting sustainable local communities and economies. Communities create local economies that provide jobs, goods to support local needs, and protect the local environment. The second tier is creating regional economies and societies that will support the these local communities achieve their economic and political goals. Regional governments will try to promote the communities in their region create full employment, protect their environment, develop the technology needed to support their local economies, and facilitate trade within and between regions. The third tier is the federal government and economy, which tries to support regional and local economies. The federal government would provide support to remedy past and current ecological and social problems, to regulate global corporations and trade, and to provide monies to support the development of local and regional economies. The larger focus of community federalism to use regional and national resources to help communities create full employment, support local needs, and provide a measure of social well-being.

But critics of the GANE proposal and community federalism would argue that the present focus of economic activities is the global economy and individual and corporate profit. How can we possibly redirect the focus of our economy and large national and global economic interests? GANE introduces two economic reforms too address this problem: 1) Rewriting corporate charters, and 2) Reforming the tax code from income taxes to green taxes. Because all corporations, national or global, must be licensed--or chartered--by states and nations to do business, GANE proposes that corporate charters be rewritten to require "corporations to operate in conformance with sustainable practices and community sustainability plans." These charters should now be written and regulated by federal and not state government as is now the case. In addition, corporate charters should include a "sunset provision" that requires them to be periodically renewed and reauthorized; if corporations do not live up to the terms of their charter, they can be denied the right to do business in the region or nation. In addition, corporations would be required, under GANE, to develop and implement "sustainability plans" that would require them to:

1). Achieve the reuse of all materials and make products reusable, repairable, durable and recyclable;

2). Preserve and restore the ecological integrity on farmlands, forests and rangeland and water bodies by harvesting renewable resources such as timber, fish and crops on a sustainable yield basis and engaging in sustainable ranching practices;

3). Establish a rate of natural resource extraction that allows renewable resources to replace non-renewable resources before mining in highly sensitive environmental areas is required.

Finally, federal governments would work to pass a "United Nations Code of Conduct for Transnational Corporations" to force global corporations to abide by the same requirement for sustainability and protection of local needs and community resources.

GANE also proposes that corporate and individual tax laws be radically changed. Instead of focusing on income tax or corporate profits, GANE proposes that tax law should focus on unsustainable economic activities. GANE proposes "green taxes" which would punish and provide disincentives to individuals and corporations from polluting, destroying or wasting natural resources, and excessive material consumption. These green taxes would be placed on individual and companies for "pollution, unsustainable consumption, and natural resource depletion." In addition to green taxes, tax laws would provide tax incentives for national and global companies to reinvest their profits back into the local and regional economies and tax penalties for companies taking their profits out of the country. The tax code would thus reward sustainable activities and penalize unsustainable, environmentally destructive activities.

In addition to changes in the tax code, GANE proposes that federal and regional governments provide tax and financial incentives for investors, stock funds, and pension funds to invest in the creation of community and regional sustainable economies. The government would support and encourage "local and regional sustainable loan funds." In addition, the federal government would provide funds for communities and regions to create and develop sustainable economies. And, finally, the government would work to create the economic and social infrastructure to support these sustainable economies. Just as the federal government today supports the infrastructure for American participation in the global economy by creating national highways, national communication systems, national transportation systems, and global shipping and transport, GANE would have the federal government provide the economic infrastructure to support local and regional sustainable economies.

Many critics of this GANE blueprint would argue that it is completely unrealistic. How can we expect national and global corporations and economic interests to stand for these major transformations of our economy and society? Wouldn't national and global corporations simply refuse to do business in the United States if we imposed new corporate charters and environmental and economic regulations on them? Wouldn't powerful economic interests and lobbyists kill these proposals before they were even brought up for debate by state and federal governments. Wouldn't GANE undermine individual freedom and corporation's rights to profits? Yes, all these things are probably true, but the GANE proposal is still a useful exercise anyway. Because it demonstrates that our economic and social institutions are created and supported by powerful interests, and with sufficient political activism and debate those institutions could one day be transformed to serve and protect other interests, such as full employment, sustainable economies and environments, and social well-being. Proposals like GANE serve to remind us that our present social, economic, and environmental problems aren't beyond our control, but are, in fact, the products of a series of complicated economic and social choices that we have collectively made. Thus, we aren't doomed to destroy our environment and civilization because progress and development are inevitable, the natural product of human evolution. We can still choose to reform our economic and social institutions to solve the growing economic, social, and environmental problems created by global industrial development and the growth of the global economy.