What does Friedman mean by Globalution?

Question for Discussion: What does Friedman mean
by Globalution?

Readings: Friedman, pp. 167-193; Meadows, "State
of the Village" , Arctic Ice Melting ; Global Survey
On Globalization

Video: Worldcom: The Big Lie (2003)

Winner-take- all Economy

Friedman's Rules of Globalution (in-class)
Basic Conditions sought by the Electronic Herd
(in-class)
Friedman: Rules of the Electronic Herd (in-class)
Coporate and Individual Wealth (in-class)
What is the Race to the Bottom? (in-class)
The Lessons of Crony Capitalism (in-class)
Crony Capitalism in the USA (in-class)
Friedman, Who will Rule the Electronic Herd
(in-class)
Government as Countervailing Power
and Market Referee (in-class)

Debating Globalution

The Electronic Herd and Globalution

Global Survey on Globalization (in-class)
2008 Financial Crisis (in-class)
What Caused the 2008 Financial Crisis? (in-class)
Corporate Globalization Fact Sheet (in-class)
The Winner-Take-All Economy (in-class)
The Race to the Bottom (in-class)
Global Economic Inequality (in-class)
Corporate and Individual Wealth (in-class)
Friedman's Rules of Globalution (in-class)
Friedman: Rules of the Electronic Herd (in-class)
Basic Conditions sought by the Electronic Herd
(in-class)
The Lessons of Asian Crony Capitalism (in-class)
Crony Capitalism in the USA (in-class)
Friedman, Who will Rule the Electronic Herd
(in-class)
Government as Countervailing Power
and Market Referee (in-class)

Global Economic Inequality

Korten Graph of Income Inequality (1992) (in-class)
Graph of Global Rich and Poor (1997) (in-class)
How Unequal are We?
The Global Rich and Poor: Percentage share (1997)
Where the Rich live in the Global Economy
Where the Rich live in Percentages per
Global region (1997)
Percentage Living on less than $1 a day
Global Injustice and Inequality

The Race to the Bottom

Basic Economic Conditions sought
by the "Electronic Herd"
(These are ideal conditions that make local economies
"competitive" in a global market.) (by Chris Lewis):

1. Low Wage workers. Very low to no-minimum
wage laws. Right-to-work (no Unions) conditions.

2. Little to no income tax on Corporations and
the Wealthy.

3. Government support for Global Corporations.
Build plants, train workers, create basic
infrastructure for tax-free Export Processing Zones.

4 . Little to no environmental, work-safety, and
plant-safety regulations.

5 . Ability to easily move profits and investments
out of the country. No capital controls.

6. No to weak-Union environment. Some
countries will have "company" or "state" unions.

7 . Stable currency with no inflation. Balanced government budgets to make the currency more
stable.

8 . Allow child labor and don't limit work to the
40-hour work week.

9 . Reduced government support for health-care, education, anti-poverty, and anti-hunger programs.
This forces workers to work for the lowest wages
because they are desperate.

10. Little to no social security, healthcare, or workers' compensation taxes on Global Corporations.

Asian 1997-98 Economic Meltdown:
Crony Capitalism?

The Asian Economic Meltdown (in-class)
The IMF's Response to the Asian Crisis (in-class)
Analysis of the 1997-98 Asian Meltdown

WorldCom's Crimes

"WorldCom/MCI engaged in a concerted program of manipulation over three years by which it fraudulenty manufactured $9 billion in income, making victims of investors, pension funds, and every honest company struggling to survive the telecom meltdown.

As a result of the WorldCom/MCI fraud, investors lost roughly $175 billion – more than three times the losses in Enron. WorldCom/MCI 's brazen scheme dramatically deepened the crisis of confidence in corporate America, imposing incalculable costs across the country.

While the Securities and Exchange Commission (SEC) and the Justice Department have focused on pursuing individuals who perpetrated this crime, the government seems poised to allow WorldCom/MCI as a company to escape with the fruits of its unlawful conduct. "

No Bigger Fish than MCI

Crony Capitalism in the USA?

Krugman: Crony Capitalism, USA (in-class)
Shaken Markets: The Tech Bubble Burst (in-class)
The Global Cost of Crony Capitalism
Crony Capitalism Revisited
The Corporate Scandal Sheet (in-class)
Worldcom's Crimes (in-class)
No Bigger Fish than MCI (in-class)
Worldcom's Financial Bomb: The Big Lie (in-class)
Worldcom: The Surprising Face of Corporate Evil
(in-class)
Ebbers gets 25 years for Worldcom Fraud
The Enron Scandal
The Enron Affair (in-class)
Tech Bubble: Who Benefitted?
Shaken Markets: The Tech Bubble Burst (in-class)
Beating the Streets: Accounting Scandal Tricks
to boost a Company's bottom line. (in-class)

Corporate and Individual Wealth

Forbes List of Wealthiest People and Corporations
(in-class)
The World's Leading Companies (in-class)
The Top 200: The Rise of Global Corporate Power
(in-class)
U.S.: Inequality Gap widest since 1929 (in-class)
Globalization 101
Corporate Globalization Fact Sheet

Friedman's Rules of Globalution

"If you don't run with the Global Herd and live by
its rules...accept the fact that you are going to
have less access to capital, less access to technology,
and ultimately a lower standard of livng." (Friedman, 168)

"While the Electronic Herd and the Supermarkets will be important contributors to democratization, they will also create the opposite effect. They will contribute to a widespread feeling, particularly within democracies, that even if people have a democracy at home they have lost control over their lives, because even their elected representatives have to bow now to unelected market dictators." (190)

"A certain degree of decision-making is moved out of each country's political sphere into the global market sphere, where no one person, country, or institution can exert exclusive political control--at least not yet. Think how many times you've heard the expression "The markets say..." (191)

"I call the process by which the herd helps to build
the foundation stones of democracy "revolution from
beyond," or "globalution." (Friedman, 169)

"I still believe that as a general rule the more democratic,
accountable, and open your governance, the less
likely it is that your financial system will be exposed
to surprises." (Friedman, 187)

"In the globalizations system...a certain degree of
decision-making is moved out of each country's
political sphere into the global market sphere, where
no one person, country, or institution can exert
exclusive political control...Think how many times
you've heard the expression "The markets say...,"
"The markets are demanding...," "The markets were
not happy...." (Friedman, 191)

Rules of the Electronic Herd:

Stability--Economic and Social
Accounting and Financial Standards
Predictability
Transparency--Open Financial and
Government books
Democratization and Public Accountability
The Rule of Law and Public Accountability
No Corruption or bribery
Free Press and honest reporting of economic
conditions
Ability to transfer and protect wealth and
private property
Regulated Stock, Bond, and Financial Markets

Friedman, Who will Rule the Electronic Herd?

"One of the biggest challenge...in this
globalization era is how to give citizens a
sense that they can exercise their will, not
only over their own governments but over at
least some of the global forces shaping
their lives." (Friedman, 192)

"What is acceptable conduct in the relations
between states and Supermarkets, between
states and Super-empowered individuals, and
between Super-empowered individuals and
Super-markets....Who will govern relations
between me and my internet, and between
Supermarkets and me, and between my
government and the Supermarkets?"
(Friedman, 192)

"The interests of all nations ought to be fairly
straightforward--quality jobs, a rising living
standard, technological and industrial
development, ensured rights of workers and
consumers, and a high-quality environment
at home and globally."
(Korten, 128)

"What happens when the interests of the Electronic
Herd run counter to the needs and interests of
cities, nations, and regions? If the process of
Globalution forces cities and nations to accept a
general set of rules for running their societies and
economies, how can we be assured that the
democratic rights of citizens will be protected? If
people don't have the right to shape and control
their lives and societies is Globalution really
democratic?"
....Chris Lewis

Government as Countervailing Power
and Market Referee

To address these problems, Federal and State governments serve as countervailing power to check and limit the power of what Friedman calls "the Electronic Herd."

1. What is good for business isn't always good for the larger society.

2. Unregulated Corporations often cheat the public
and the markets.

3. The need for the government to promote the larger social good, such as a clean environment, good schools, good roads and bridges, good health care, and safe products.

4. The need for government to protect the weak, such
as children and the elderly, from fraud and abuse from Business and other elements in society.

5.The need for government to protect national cultures and ways of life from domination by the Electronic Herd.

6. The need for government to promote a fair, just, and
humane society and limit the power of money and class
to dictate our lives.

In this model of government as a countervailing power,
the government acts as the protector of society, of the weak and powerless, and creates a 'level playing field" so that all people play by the same rules. Without the government acting as a countervailing power, the financial markets,global corporations, and the wealthy and the powerful would use their enormous power to
"rig the game" in their favor.

See Whitehouse for Sale.com on how Corporations use
money to buy influence from Government

The First World assumes that its modern way of life is and should be the model for the rest of the world. The larger goal of development efforts has been to bring the progress, wealth, freedom, and abundance that modern, industrial societies and cultures enjoy. Third World peoples see the wealth, freedom, and abundance of the First World and want to become like us. Especially the younger generation in the Third World wants everything modern. The drive toward development in Third World societies has transformed them overnight from traditional societies and cultures to societies racing toward the modern way of life. But should modern, industrial society and culture be the model that Third World peoples strive for? Is the modern way of life really free of problems and dilemmas?

Students argued that there were, indeed, serious problems facing our modern, industrial American society. We have increasing inequality of wealth, increasing poverty, increasing pollution, and an increasing sense of unease about our society and our future. But how does modern industrial society appear from the perspective of a Third World person, who is wondering whether they or their society should adopt the modern way of life?In his essay, "The Myth of the Modern," Nsekuye Bizimana, a Rwandan doctor who spent twenty years living in Germany, provides a Third World perspective on the social and cultural problems in the First World. He argues that Europeans feel an acute sense of loneliness. They feel like isolated individuals lost in a vast sea of people who they don't know and don't care about them. He writes: "One feels like one in two million--in other words, like nothing." As a result of this loneliness, overwork, stress, and emotional isolation, Bizimania argues, "many people in these countries have been dead inside for a long time, and that they are only moving body masses." First World peoples have a "hunger for love, security, and community." But what causes this unhappiness and unease about First World peoples?Bizimana argues that First World peoples are under so much pressure to achieve, to become successful at work, wealthy, and prosperous. The drive to overwork results from the fact that in modern, industrial society individuals stand out from the anonymous crowd by being able to buy the most stylish cars, homes, technological gadgets, clothes, and lifestyles. But the stress created by this quest for individual recognition in this consumer culture leaves First World people "unhappy despite their material affluence." This unhappiness is expressed in drug use, alcoholism, alienation, broken families, and even suicide. Bizimana contrasts life in modern, industrial society with life in traditional village communities in Rwanda. In Rwanda, people were part of a community, they didn't need to acquire wealth to be establish their identity. People were important because they were part of a shared community that supported, comforted, aided, and nurtured its members. In this village community people have enough work, land, resources, and support to live comfortable lives. They were part of a secure, loving community. Bizimana concludes that Africans should not adopt the modern, industrial way of life, but improve their societies and lives by building on the strengths of their traditional village communities, morality, culture, and way of life. Let's look at Koyaanisqatsi: Life Out of Balance (1983) to get another perspective on modern, industrial culture and society. This film attempts to look at modern society from the point of view of the Hopi prophecies, arguing that modern culture is out of balance and self-destructive. In Koyaanisqatsi, we see life in modern cities as fast-paced, crowded, full of motion and constant movement, lonely, and almost frantic. People seem to get lost in crowds of cars, pedestrians, and large skyscrapers. People seem to be caught up in the accelerating speed and motion, which dominates them at work, on the assembly line, and in their comings and goings in the industrial city. The modern, industrial city seems to be alive, to be a giant organism that absorbs and control individuals and our collective lives.But after seeing scenes from this film, students noted that this is "our way of life." Many Americans like these cities, like this speed, this motion, and being lost in huge crowds and vast cities. For some students, the industrial city celebrates the power of "free enterprise" and the productivity and wealth of modern American society. The cars, the lights, the vast skyscrapers, the constant motion, and the speed of life in these cities can be seen as progress and power. The modern industrial city can be seen as a symbol of the individual freedom, the wealth, the power, and opportunities that modern Americans have. In fact, many Americans and First World people are addicted to this modern way of life; they would be very uncomfortable giving it up.On the other hand, Evelyne Hong in her essay, "The Impact of Modernisation on Indigenous People," argues that life in modern industrial society should not be the model Third World peoples strive to follow. She sees the modern, industrial city as colorless, anonymous places: "The four-lane highways, skyscrapers, shopping complexes, cosmopolitan city, devoid of any indigenous character, culture, or charm, and a very lonely place to live." She sees the modern way of life as soulless individualism, obsessed with success, consumption, and style. Like Bizimana, Hong argues that Third World people should "wake up from the development myth and dream, face the fact that modernisation is alienating our human values and destroying our resources." She concludes that Malaysians should follow their traditional culture and community values, building their societies on the "community spirit, respect for nature, appropriate forms of habitat and technologies, simples lifestyles and...based on human, really human values." But will the younger generation of Malaysians accept traditional culture and values and reject the seductive allure of modern industrial culture and way of life?Just as many Americans and First World peoples are unwilling to give up the freedom, wealth, success, and opportunities of modern industrial culture, so too are many Third World young people unwilling to reject the seductive promise of the modern way of life. As individuals, the believe they can escape the problems and threats posed by modern industrial culture. Even if most people around them can't prosper, they can become successful, wealthy, free, and independent. As long as First and Third World people continue to see the promise of modern industrial culture in terms of their own individual success, they will refuse to recognize the larger social, economic, and environmental contradictions created by life in modern industrial society. Just as the modern industrial city absorbs its inhabitants into a larger organism, so too will modern industrial civilization absorb the desperate mass of individuals--all seeking its promises but refusing to recognize it growing problems and threats.We cannot begin to resolve the global environmental crisis and the growing economic and social problems facing modern industrial society unless we as individuals begin to ask what are the larger consequences of our individual lives and choices on our larger society and environment. Modern industrial culture is so powerful and seductive because it seems to offer individuals the freedom to live their lives without worrying about their larger community or society. Until First World peoples begin to recognize that there are social, economic, and environmental limits on individual freedom, then Third World young people will continue to adopt the modern way of life. Modern industrial culture is so powerful because its seductive promise of individual freedom, wealth, success, and power offers all the fruits of modern life without any of the larger responsibilities.
The social, economic, and environmental problems facing modern industrial civilization grow out of this contradiction between individual freedom and responsibility to one's family, community, society, and larger environment. We want the freedom without any of the responsibility that freedom imposes. Many will say, especially the younger generation, that we have managed thus far: What's wrong with the individualism of modern industrial culture? We can answer this question by looking at how the growth of modern industrial culture affects Third World peoples and how it affect individuals in our vast industrial cities.