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Question for Discussion: What does Friedman mean
by "the Electronic Herd"? Should countries allow
themselves to be dominated by the Electronic Herd?


Readings:Friedman, pp. 112-117, 123-128, 131-141;
Korten, "Dreaming of Global Empires"
;
Korten, "The Moral Justification of Injustice"

Video: YouTube: Income Inequality: Is America OK with Growing Wealth Disparity ;
YouTube: Joseph Stiglitz: "The Price of Inequality: How Today's Divided Society
Endangers our Future"
;
YouTube: Joseph Stiglitz on America's Growing Inequality In Brief



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The Global Electronic Herd


AFL-CIO Exporting America website

"Corporations will ship an estimated 830,000 white-collar U.S. jobs overseas by the end of 2005, according to Forrester Research Inc ., and some estimates say up to 14 million middle-class jobs could be exported out of America in the next 10 years.

Accountants, software engineers—even X-ray technicians—are losing their jobs as corporations look for low-wage workers in countries such as India and China.

At the same time, 2.8 million manufacturing jobs have been lost since the Bush took office, many of them because corporations have shipped them to countries such as China , which is creating a booming manufacturing industry on the backs of its poorly-paid workers.

Meanwhile, the jobs being created in the United States often are low-wage jobs that don't offer health coverage or ensure retirement security. Nearly one-quarter of the nation's workers labor in jobs that generally pay less than the $8.85 hourly wage the U.S. government says it takes to keep a family of four out of poverty. Sixty percent of such workers are women, and many are people of color."


Trends in Exporting Jobs


Global Financial Institutions and Globalization

Global Labor and Globalization


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The Geopolitics of the crisis in the Ukraine

The Costs of Attracting the Electronic Herd


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Friedman's definition of the Electronic Herd

But the global marketplace today is an Electronic Herd of often anonymous stock, bond, and currency traders and multinational investors, connected by screens and networks (Friedman, 113)


Supermarkets have replaced the superpowers as
sources of capital for growth (Friedman, 116)

Two sorts of Cattle in the Electronic Herd

1. The Short-Horn Cattle: Investors who buy stocks, bonds, future contracts, currencies, derivatives, options, and hedge funds.

2.The Long-Horn Cattle: Multinational corporations
that engage in direct foreign investment by
building factories and utilities and supporting local corporations in so-called "strategic alliances" and "local partnerships."

The "democratization of technology, finance, and information" --which have changed how we communicate, how we invest, and how we look at
the world-- gave birth to ...today's globalization
system" (Friedman, 140)


Friedman, No One is In Charge

"And the most basic fact about globalization is this: No one is in charge....I didn't start globalization. I can't stop it and neither can you -- except at a huge cost to your society and its prospects for growth."
(Friedman, 112)


In the relatively closed economies of the pre-1970s Cold War system, a government's own monetary
policy completely dominated the setting of its
own interest rates and a government's fiscal
policy was far and away the dominant instrument
for stimulating growth. [These closed economies
had capital controls, tariffs to protect domestic
national corporations, and tightly controlled the
value of their currencies]
(Friedman, 115)

From the late 1940s to the mid- to late-1970s, governments could use "Keynsian economic policies" to promote economic growth and full employment policies. [Chris Lewis]

"The long-horn cattle can and do play off every developing country against the others. Each of these countries is desperate for multinational investments, because it is the quickest way for them to make technological leaps. Nike first established its Asian production facilities in Japan, but when that got too expensive it hopped over to Korea and then went to Thailand, China, the Philippines, Indonesia, and Vietnam." (Friedman, 134)

They [ the Electronic Herd] just have their way with you and move on. The Electornic Herd turns the whole world into a parliamentary system, in which every government lives under the fear of a no-confiedence vote from the herd. (137)

In the past, members of the Electronic Herd competed to see who could make themselves most attractive to governments, both domestic and
foreign. For it was governments that passed out most of the goodies. Now governments compete to see who can make themselves the most stable, inviting, and attractive to the Herd.[Friedman, 139]

"All world leaders have to think like governors now....But their main job these days is enticing the
Electronic Herd and Supermarkets to invest in their
states, doing whatever it takes to keep them there
and constantly living in dread that they will leave
.... Kings, dictators, emirs, sultans, traditional presidents, and prime ministers -- they're all being reduced to
governors now." (Friedman, 139)

The Global stock and bond and currency markets can even make the United States government
stand up and listen, driving interest rates, bond
prices, and the dollar's value up or down. With
this global Electronic Herd, it is increasingly
difficult for governments, even as big as the
United States, to control their economies
.
[Chris Lewis]


"The Internet is "going to become the turbo-charged engine
that drives globalization
forward.....The Internet will ensure
that how we
communicate, how we invest, and how we look
at the world will be increasingly global"
(Friedman, 140)


Korten, Dreaming of Global Empires

"The men who run the global corporations are the first in history with the organization, technology, money, and ideology to make a credible try at managing the world as an integrated economic unit.... What they are demanding in essence is the right to transcend the nation-state, and in the process, transform it."

-Richard J. Barnet and Ronald E. Muller

"The past two decades have seen the most rapid and sweeping institutional transformation in human history. It is a conscious and intentional transformation in search of a new world economic order in which business has no nationality and knows no borders. It is driven by global dreams of vast corporate empires, compliant governments, a globalized consumer monoculture, and a universal ideological commitment to corporate libertarianism."

"Given that as much as 70 percent of world trade is controlled by just 500 corporations, and a mere 1 percent of all multinationals own half the total stock of foreign direct investment," it seems that The Economist measures progress by the rate at which a few transnational corporations are consolidating their hold
on the global economy."

"The more readily a firm is able to move capital, goods, technology, and personnel freely among localities in search of such advantage, the greater the competitive pressure on localities to subsidize investors by absorbing their social, environmental, and other production costs. "


Protecting the Interests of Nations

"The interests of all nations ought to be fairly straightforward-quality jobs, a rising standard of living, technological and industrial development, ensured rights of workers and consumers, and a high-quality environment at home and globally .... As compared to nations, the interests of MNEs are far more situation-oriented and linked to opportunity."
(The Congressional Office of Technology Assessment)

"The interests of American citizens are good, high-paying jobs, increasing standard of living, high quality of life, protections for consumers, workers, and the environment, democratic rights, and a healthy, prosperous, middle-class society. But these American national interests often go against the interests of global corporations, investors, and bankers. How can the U.S. government decide between the national interests of its citizens and the interests of the "Electronic Herd"?

Friedman argues that even nations as powerful as the United States can't stand up to the increasing demands of the Electronic Herd. If the global market is that powerful, what can individual nations do to protect their national interests in this era of globalization, global competition, and the Electronic Herd?"
(Chris Lewis, Ph.D.)


"Growth has been explosive, from 620 maquiladora plants employing 119,550 workers in 1980 to 2,200 factories employing more than 500,000 Mexican workers in 1992. Many feature the most modern high-productivity equipment and technology. Although the productivity of Mexican workers who work in modern plants is comparable to that of U.S. workers, average hourly wages in maquiiadora factories are just $1.64, compared with an average manufacturing wage of $16.17 in the United States . "

"Mexican workers, including children, are heroes of the new economic order in the eyes of corporate libertarians--sacrificing their health, lives, and futures on the altar of global competition. "

Corporate Globalization's Ideal World

A serious reading of the financial press and the treatises of the architects of globalization suggests that the ideal world of the global dreamers can be characterized as one in which:

"The world's money, technology, and markets are controlled and managed by gigantic global corporations: A common consumer culture unifies all people in a shared quest for material gratification; There is perfect global competition among workers and localities to offer their services to investors at the most advantageous terms; Corporations are free to act solely on the basis of profitability without regard to national or local consequences; Relationships, both individual and corporate, are defined entirely by the market; and there are no loyalties to place and community."

"Embellished by promises of limitless and effortless affluence, the vision of a global economy has an entrancing appeal. Beneath its beguiling surface, however, we find a modern form of enchantment, a siren song created by the skilled image makers of Madison Avenue, enticing societies to weaken community to free the market, eliminate livelihoods to create wealth, and destroy life to increase unneeded and often unsatisfying consumption. Contrary to what the corporate libertarians would have us believe, the seductive melodies that beckon us are not produced by inexorable historical forces beyond human influence. They come from the well-rehearsed human voices of Stratos dwellers calling out to us from their city in the clouds across a great gap that most of humanity can never cross. "


Basic Economic Conditions sought by the "Electronic Herd"
(summary by Chris Lewis):


(These are ideal conditions that make local economies "competitive" in a global market.)

1. Low Wage workers. Very low to no-minimum wage laws. Right-to-work 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.


Nike as Example of company moving its operations from
country to country

"Nike first established its Asian production facilities in Japan, but when that got too expensive it hopped overe to Korean and then went to Thailand, China, the Philippines, Indonesia, and Vietnam."
[Friedman , 134]


Sources of Information for the Electronic Herd:

1. CEO Express: Online Business Portal

2. Wall Street Journal Online

3 . Barrons Online

4. Business Week Online

5. Investors Business Daily

6. Bloomberg.com


7. CNN/Money.com


8. CNBC.com

9 . The World Bank

10 . World Trade Organization

11 . International Monetary Fund

12. CEO.Express.com

13. Financial Times.com

14 . Bloomberg Online: World Currencies Values

14. CNN/Money: Global Stock Markets


What is Neo-liberalism?

"Neo-liberalism" is a set of economic policies that have become widespread during the last 25 years or so. Although the word is rarely heard in the United States, you can clearly see the effects of neo-liberalism here as the rich grow richer and the poor grow poorer.

The main points of neo-liberalism include:

  1. THE RULE OF THE MARKET . Liberating "free" enterprise or private enterprise from any bonds imposed by the government (the state) no matter how much social damage this causes. Greater openness to international trade and investment, as in NAFTA. Reduce wages by de-unionizing workers and eliminating workers' rights that had been won over many years of struggle. No more price controls. All in all, total freedom of movement for capital, goods and services. To convince us this is good for us, they say "an unregulated market is the best way to increase economic growth, which will ultimately benefit everyone." It's like Reagan's "supply-side" and "trickle-down" economics -- but somehow the wealth didn't trickle down very much.

  2. CUTTING PUBLIC EXPENDITURE FOR SOCIAL SERVICES like education and health care.

  3. REDUCING THE SAFETY-NET FOR THE POOR, and even maintenance of roads, bridges, water supply -- again in the name of reducing government's role.
    Of course, they don't oppose government subsidies and tax benefits for business.

  4. DEREGULATION . Reduce government regulation
    of everything that could diminish profits, including protecting the environment and safety on the job.

  5. PRIVATIZATION . Sell state-owned enterprises,
    goods and services to private investors. This includes banks, key industries, railroads, toll highways, electricity, schools, hospitals and even fresh water. Although usually done in the name of greater efficiency, which is often needed, privatization has mainly had the effect of concentrating wealth even more in a few hands
    and making the public pay even more for its needs.

  6. ELIMINATING THE CONCEPT OF "THE PUBLIC GOOD" or "COMMUNITY" and replacing it with "individual responsibility." Pressuring the poorest people in a society to find solutions to their lack of health care, education and social security all by themselves -- then blaming them, if they fail, as "lazy."

In the United States neo-liberalism is destroying welfare programs; attacking the rights of labor (including all immigrant workers); and cutting back social programs. The Republican "Contract" on America is pure neo-liberalism. Its supporters are working hard to deny protection to children, youth, women, the planet itself -- and trying to trick us into accepting this by saying this will "get government off my back." The beneficiaries of neo-liberalism are a minority of the world's people. For the vast majority it brings even more suffering than before: suffering without the small, hard-won gains of the last 60 years, suffering without end.

by Elizabeth Martinez and Arnoldo García
Updated: February 26th, 2000


If Third World countries' economies are now producing more food, more cash crops, and harvesting more fish, exporting more natural resources such as lumber, coal and oil, and producing more manufactured goods, then why is there still such poverty and malnutrition? Why can't these peoples buy the crops, profit from the export of natural resources, and purchase the industrial products they export? Because the majority of peoples in these developing, Third World countries cannot afford to buy the goods their economies are so successfully producing. In addition, to their low wages as factory, farm, timber, fishing, and mine workers, these peoples cannot outbid the growing demand of First World peoples for these resources and products. The increasing growth in First World economies is driven by the export of resources and products from the Third World. Until First World consumers reduce their consumption and demand for resources, they will continue to outbid Third World peoples for the food, resources, and products they produce.

I want to now look at Vandana Shiva's provocative essay, "Globalism, Biodiversity, and the Third World." Shiva is a Third World environmental activist, who speaks throughout the world on the need to preserve biodiversity and protect Third World resources and the rights of Third World peoples to their biological heritage. Shiva's larger argument is that First World efforts to preserve biodiversity is the larger cause of the genetic erosion, the destruction of wild and indigenous varieties of plant species, that is threatening both the First and the Third World.Through the World Bank, global agricultural companies, and First World development efforts, Third World countries have been sold on the Green Revolution in agriculture. In return for development assistance and loans, Third World countries are sold hybrid seeds, fertilizer, pesticide, and herbicide, all bred and produced by global agricultural companies, which they are told will produce huge crops. As a result of this Green Revolution, Third World countries have created vast plantations of single crop, single strain, plants. Shiva refers to these plantations as monocultures. Global seed companies encourage Third World farmers to plant all their corn, wheat, rice, and sorghum using three or four varieties of seeds. Instead of growing multiple crops using several different strains or varieties of plants such as rice or corn as they once did, Third World farmers are encouraged to plant huge tracts of land in a single crop using just one plant strain.Shiva argues that this monocultural agricultural is the major cause of the threat to biodiversity.

In planting more and more of their lands using hybrid seeds, local varieties of crops such as corn, rice, and wheat are pushed aside, and they may become extinct. But this focus on a few select strains of the major agricultural crops grown throughout the world can lead
to serious problems. What happens if one of these strains is uniquely susceptible to a plant virus or fungus or to a bug or pest? Large portions of these vast plantations could be destroyed if this problem wasn't quickly controlled. The First World's focus on "plant reserves" or "set asides" also creates serious problems. How do we know whether these reserves are large enough to support the continued survival of these wild strains? What happens, if as a result of global warming, the strains in these "plant reserves" can't adapt to rapid climate changes? First World agricultural companies argue that their scientists are collecting, storing, and warehousing as large a sample of wild strains of the major grain crops, and thus will be able to preserve this biodiversity. In fact, these companies are now engaged in a global effort to collect and catalog as many varieties of grain crops as they can. With their global efforts to collect and store as many wild strains as possible, Global seed companies claim that they can both preserve biodiversity and quickly respond to threats posed to global monocultural crops by breeding new varieties of hybrid seeds. Thus, First World governments and development institutions believe that they can continue to support global monocultures and preserve and protect biodiversity.

Shiva argues that the First World's support for the Green Revolution and plant monocultures for grains, timber, and other crops undermines biodiversity in Third World countries. By forcing Third World farmers and governments to use the new Green Revolution hybrid seeds and buy these seeds, pesticides, fertilizers, and herbicides from global agricultural companies, First World countries are undermining biodiversity, replacing local seeds and strains of plants with global hybrids. First World countries force Third World countries to use these hybrid seeds and chemicals by threatening to deny development loans to countries who refuse to use these Green Revolution seeds. As a result, we are witnessing the spreading growth of global monocultures and the increasing control over seeds and crop strains by global agricultural companies.

Under GATT, the United States and First World countries have forced Third World countries to recognize these hybrid seeds as "intellectual property." If Third World farmers don't pay royalties for the yearly use of these seeds, then First World countries threaten them with loss of development assistance and putting high tariffs on Third World countries' exports. Thus, instead of saving some seeds from the annual harvest, Third World farmers are forced to buy new seeds every year. For Shiva, this biological imperialism is the direct result of First World colonialism. First World countries first occupied and stole the land and resources of the Third World, then these Third World countries won their independence but were still dominated by First World economic domination, and finally First World economic interests have stolen the biological resources of Third World farmers and peoples, who have bred these plant crops for hundreds of years but now have to pay the First World for these seeds.

Shiva concludes that in order to protect biodiversity and the rights and economic survival of Third World farmers, Third World countries should once again insist on controlling their own biological heritage. They should prevent First World seed companies from stealing their cultivated and wild strains of plant crops, they should protect and store these strains for use and control by their own peoples, they should share and develop their biological resources with other Third World countries. In addition, they should encourage Third World farmers to reject monocultural production in favor of growing diverse plant crops and plant strains in their fields. Shiva concludes that only by encouraging diversity in farming and production can biodiversity truly be protected.

Let's now look at the Philippines as a case-study of the impact of First World development efforts on the Third World. In order to begin to understand the growing environmental threats to the Philippines, we need to briefly examine the political history of the Philippines. The United States conquered the Philippines as a colony by first fighting a war with Spain and then fighting a bloody war with the Philippino people, in which hundreds of thousands of Philippinos were killed, between 1898 and 1903. From 1903 to the end of World War II, the United States controlled the Philippines as a colony. After the war, in the 1950s and 1960s, the United States gradually relinquished direct imperial control over the Philippines. But the United States supported strong, authoritarian leaders who would run the country to support American interests. From the early 1970s to the late 1980s, the Philippines was controlled by a brutal American-supported dictator, Ferdinand Marcos. Under these American-supported leaders, and especially under Marcos, the Philippines was opened up to the control and domination of Transnational corporations. These corporations, drawing on First World development assistance and favors from the Marcos dictatorship, soon gained control of large chunks of Philippino agriculture, logging, fishing, and resource extraction. With the support of the Philippine government, these companies began exporting billions of dollars of resources annually. First World leaders and economic interests praised this emphasis on export crops as a model for other underdeveloped countries.

By the 1990s, the Philippines is exporting more food and natural resources and producing more industrial goods than ever before. But the Philippino people and their environment have not really benefited from this economic success.Beginning under colonialism, continuing under the domination of American-supported authoritarian rules, and even continuing today, Philippino peoples are being forced off their land. In the name of profits and export crops, the Philippine government has granted large tracts of agricultural, forest, and grasslands to large national and transnational companies. The local peoples who used to control and develop this land to support local needs were forced off this land. First World and Philippino economic interests did not recognize this village or community ownership of resources. They argued that only under individual ownership and private property could these resources be properly developed for profits and export earnings for the country. As a result of this policy of pushing local peoples off their land throughout this century, Philippino peoples have either been forced to migrate to the overcrowded cities or to move to marginal land that the large corporations don't want.

Because of the growing pressure of this migrant population on marginal farm land, forests, and grassland, we are seeing increasing soil erosion, deforestation, loss of soil fertility, and growing pollution. The ultimate irony is that large corporations now blame environmental problems on this migrant population, who were forced to move to the worst land and denied the security of village and community ownership of resources by these same corporations. But the real cause of the massive deforestation of the Philippines, the destruction of fisheries, soil erosion and loss of soil fertility, and air and water pollution are these large national and transnational corporations. In the name of profits and export earnings, these corporations are rapidly destroying the natural resources of the Philippines. Because they don't have to live with the consequences of their environmental destruction, these corporations are putting increasing pressure on the already fragile Philippino environment. But, in addition to these corporations ruthlessly extracting natural resources, the exploding growth of Philippino cities and the growth of factories and industries in these already overcrowded and polluted cities is putting additional pressure on the Philippine environment. The rush for profits and export crops and the explosion of urban populations and industry is threatening the Philippine environment and the health, livelihood, and future of the Philippino people.

Rosario-Santos concludes that First World colonialism and development efforts have hurt the Philippines. She argues that the Philippines should return to national control over their resources and economy. They should develop their natural resources and industries to feed and support their own people. They should end foreign control over Philippino resources and industries. Only by regaining local control over their own resources, by returning them back to the villages and communities that once controlled them, can the Philippine people protect their environment and guarantee that their land and resources are used to support local needs. Rosario-Santos' argument is an excellent example of a "counter-development" argument, because it demonstrates the damage caused by development and offers alternatives to development to support the needs of the Philippine people and protect their environment for future generations.


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Created 1 June 2000:  Last Modified: 3 March, 2014
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