At Cato University, I picked up In Defense of Global Capitalism, by Johan Norberg from the Swedish think tank Timbro.#

The book deals with myths about the phenomenon generally known as "globalization" and attempts to set the record straight about why its development is a Good Thing™. He puts particular emphasis on how globalization and free trade is a good thing for developing countries in particular, with only minute mentions of the gains developed countries. (This is possibly because they are much simpler: Cheaper products and less taxes.)#

Preface#

He talks about the "anarchists" that disrupted an area where he was to give a speech:#

I never got the chance to give my speech. The place where I was to speak was suddenly in the middle of a battle zone, where so-called anti-globalization anarchists were smashing shops and throwing stones at police officers who were trying to defend a democratic meeting. These were "anarchists" demanding prohibitions and controls and throwing stones at people with different values, "anarchists" who insisted that the government retake control of people who no longer found themselves constrained by national boundaries. They made a mockery of the idea of freedom. [... People] like that had nothing to do with anarchism. [... They] were, if anything, fascists. [p. 10]

I. Every day in every way...#

On global inequality...#

Second, the allegation of increased inequality is just wrong. The notion that global inequality has increased is largely based on figures from the UN Development Program, in particular its Human Development Report from 1999. But the problem with these figures is that they are not adjusted for purchasing power. That is, the UNDP numbers don't take into account what people can actually buy for their money. Without that adjustment the figures mainly show the level of a country's official exchange rate and what its currency is worth on the international market, which is a poor yardstick of poverty. Poor people's actual living standard, needless to say, hingers far more on the cost of their food, clothing, and housing than on what they would get for their money when vacationing in Europe. [p. 55-56]

II. ...and it's no coincidence#

More on a different aspect of inequality... why is it bad?#

Many believe that liberalization and economic growth entail a growth of inequality in a society. Once again, I would like to point out that this is not the most important thing. If a better standard of living is worth pursuing, then what matters is how well situated you are period, not how well situated you are in relation to others. The important thing is for as many people as possible to be better off, and across-the-baord improvement doesn't become deterioration just because some people improve their lot faster than others. [p. 84]

III. Free trade is fair trade#

Why anything by unilateral free trade is irrational:#

The best policy is unilateral free trade, that is, the United States dismantling its own tariffs and quotas even if other countries retain or even increase theirs. Why should we subject our population to more tariffs and prohibitions merely because other countries do so to their populations? To borrow an analogy from the British economist Joan Robinson, there is nothing very clever about tipping boulders into your own harbors just because your neighbors have rocky and inaccessible coastlines that make it hard for your own ships to dock. Saying "I'm not going to allow myself to choose from a wider range of good, cheap products unless you do the same" is a sacrifice, not a cunning reprisal. [p. 123]

IV. The development of the developing countries#

A nice bit of information about the benefit for developing countries...#

It is, of course, hard to quantify the loss that the developing countries sustain as a result of protectionism, but many people try to. The British Labour government's white paper on globalization issues asserts that a 50 percent reduction of import duties in industrialized and developing countries would lead to a growth of prosperity in the developing countries by something like $150 billion, or three times as much as global development assistance. The United Nations Trade and Development Program (UNC-TAD) claims that, with greater access to the markets of the affluent countries, exports from the developing world would grow by about $700 billion annually. That is 14 times the development assistance they receive. [p. 162]

On the statistical trick of death due to debt payments...#

So what about debt cancellation? I believe there are good reasons for it, but also risks involved if we do not go about it in the right way. We should note at the outset, though, that the debate is exaggerated. Critics of the IMF and the WB claim that something like 20,000 people die in the developing countries every day because of debt. That figure is reached by adding up the interest payments that developing countries are forced to make to these institutions and then working out how many human lives could be saved for the same amount of money. Even if we grant the fanciful supposition that all the money would otherwise goto medicines and food instead of munitions, which is not at all credible, the claim overlooks another important fact. These debt-ridden countries receive more credits, grants, and development assistance from the industrialized countries and global institutions every year than they pay in interest. The 41 most highly indebted poor countries (HIPCs) receive about twice as much from the Western world as they pay every year. So to accuse the Western world of causing the deaths of tens of thousands of people in the developing countries every day by collecting interest payments is a grotesque statistical trick. [p. 182]

And another statistic about how to aide developing countries...#

Personally, I believe we have more to expect from philanthropic capitalists than from politics. Capitalism does not force people to maximize their profit at every turn; it enables them to use their property as they see fit, free of political considerations. Microsoft's Bill gates, the very personification of modern capitalism, himself devotes more to the campaign against disease in the developing countries than the American government does. Between November 1999 and 2000, through the $23 billion Bill and Melinda Gates Health Fund, $1.44 billion went to vaccinate children in developing countries for common diseases and to fund research into HIV/AIDS, malaria, and TB, for example, in developing countries. That is a quarter of what all industrialized nations combined devote to combating disease in the developing countries. So the fact that Bill Gates is worth more than $50 billion should give the poor and the sick of the world reason to rejoice. Clearly they would stand to gain more from a handful of Gateses than from the whole of Europe and another couple WHOs. [p. 189]

V. Race to the top#

One of the quotes on the back says, "Norberg is Europe's answer to our own Naomi Klein." and is from "Dave O'Brien, Winnipeg Free Press." I am trying to decide if this is meant to say that Norberg is like Klein but from Europe, or if Norberg provides an answer or rebuttal against Klein. The reality is the second, but I suspect Dave did not read the book and meant the first.#

In this chapter he specifically mentions Klein:#

The presence of multinational corporations in oppressive governments can very often be an aid to the pursuit of democracy, because those corporations are sensitive to pressure from Western consumers, which has a direct impact on sales. It can be easier to influence Nigerian politics by boycotting Shell than by trying to bring pressure to bear on the Nigerian government. This is hinted at in the subtitle of Naomi Klein's book No Logo: Taking Aim at the Brand Bullies. Klein points out that the big corporations have tried to create a special positive aura for their trademarks through many decades of advertising and goodwill. But by doing so they have also shot themselves in the foot. The trademarks, being their biggest asset, are hugely sensitive to adverse publicity. It can take a company decades to build up a trademark but only a few weeks for activists to demolish it. Really, though, Klein ought to see this as an argument for capitalism, because the corporate giants can be pressured if they behave badly in any respect. A street vendor can cheat you because you will never see him again, but the big trademarks, as a matter of survival, have to behave respectably. They have to turn out good, safe products and treat employees, customers, and the environment well so as not to lose their goodwill. Negative attention spells huge losses. [p. 222]

VI. Irrational, international capital?#

He addresses the "dictatorship of the market"...#

What critics really find threatened by the market is not democracy but the politics they want democracies to introduce--policies involving greater government power over people's economic decision-making. But saying that the market threatens government control of our economic actions is less exciting than calling it a threat to democracy. Why should it be "more democratic" for a democratic government to have more powers of decision-making over us? Would the United States, by this logic, be made more democratic if the government were to decide whom we could marry, what work we could do, or what we were entitled to write in a newspaper? Of course not. A majority of the people should elect their political representatives; that doesn't mean they should also decide by vote how individuals should run their lives. Democracy is a way to rule the state, not a way to rule society. [p. 273]

VII. Liberalize, don't standardize#