Chapter 5: Understanding Globalization
Leveling Effects of Globalization
What critics in the West fear most about globalization is its leveling effect. It means that an uneducated American will fare as badly as an illiterate Indonesian, but at the same time, a skillful Indian programmer can compete equally with his American counterpart. The much coddled and highly unionized American workers panic when they discover that Mexicans earning a fraction of the wages can do the same work just as efficiently and skillfully. Consequently many major American manufacturers are moving their plants to Mexico. It is this aspect of globalization that is most feared by America’s Pat Buchanans and Ralph Naders.
Manufacturing jobs are not the only ones heading south. Typists in India do the transcriptions for many American hospitals. My medical dictation at the local hospital is digitized, encrypted, and then transmitted via Internet to India, where it is downloaded and transcribed, and then re-transmitted back to America, ready for my patients’ charts by the next morning. Many of these typists are Indian doctors who found that they could earn more as medical transcriptionists working for American companies than as practicing physicians paid by the Indian government. Looked at differently, American capitalists value these Indian physicians for their typing skills while the Indian government does not value their healing skills.
The services of many American corporations are also increasingly contracted out to the Third World. Phone inquires are answered not by Americans but by Indians in India who have been trained to speak and respond like Americans. They even assume typical American names like Debbie and Patty. They are fully prepped in the minutiae of Americana so customers at the other end of the line think they are speaking to someone in Peoria, and not Poona.
The data entry work of many insurance companies and airlines are done in places like Jamaica and Ireland. Paper claims and used airline tickets are flown to Jamaica where they are inputted into computers and the data then relayed to America via satellite. Such labor-intensive clerical work would be too expensive to be done in America. With such opportunities afforded by globalization, it is hard to imagine it as a grand wicked scheme perpetrated by the West to victimize and oppress the Third World. These critics ought to ask those Indian transcribers and Jamaican data entry clerks before condemning globalization.
A common criticism of globalization is its tendency for social and cultural homogenization. The usual example cited is the ubiquity of McDonald’s restaurants worldwide. But this is a misreading. McDonald’s is popular in India despite Indians being vegetarians; it serves vegetable burgers instead. Thus what is popular is not the hamburger or McDonald’s, rather the concept of a fast, tasty, and affordable meal served consistently in a hygienic environment. That is the universal value, cherished by vegetarian Indians as well as chopstick-wielding Chinese.
When Malaysians bank at Citibank rather than the local variety, it is because Citibank offers superior customer services. Nationalism is a very distant (if any) consideration. This applies to Malaysians as well as Japanese and Americans. Japanese are the biggest buyers of American Treasury notes (at least until recently when the Chinese took over) because they consider that to be superior investments, not because they are particularly fond of Americans. What is valued is not America, rather quality and best returns.
Many in the Third World see globalization as another version of Westernization because many of the innovations that drive it originate in the West. But this will not be permanent. China is rapidly developing by enthusiastically embracing globalization, and once it becomes a giant power it will become a major player not only economically but also politically and culturally. Right now America can dictate its terms to the rest of the world, as there is no other power to challenge it. But within a generation, China will also be such an economic and political force that it could challenge America, though not necessarily militarily. Such Western concepts as human and civil rights that America now successfully presents as universal values simply because of the lack of credible challenges, will no longer be viewed as such once China is able to assert itself. China will then be able to present an alternative version of those concepts.
It is significant that Chinese leaders are furiously trying to catch up by embracing not only globalization but also all its other accouterments, especially the English language. China wants its future leaders to learn directly from the West without having to depend on translations. This is quite a remarkable transformation from the xenophobia of only a decade ago.
Kenichi Ohmae, the Japanese management consultant advising Mahathir on the Multimedia Super Corridor project, noted that crass appeals to nationalism are receptive only to residents of poor Third World countries. Once the annual per capita income reaches US$10,000, citizens begin to have a wider perspective. They are then more interested in quality and best returns for their hard-earned money. The typical American could not care less where her car is being manufactured, be it in Detroit, Tokyo, or Stockholm, as long as she gets value for her money.
Independence, for nations as well as individuals, is definitely overrated. It is much easier to be independent and to maintain your independence when you are strong, smart, and successful. Paradoxically, when you are all three, you choose to depend more on others, that is, you become more inter-dependent. I find the preoccupation of Mahathir and many Third World leaders in maintaining “vigilance” and “fighting” for their “independence” quaintly amusing if not for the fact that it is so misguided and downright destructive.
America is the largest, strongest, and most self-sufficient economy; it could easily afford to be insular and independent. If the Arabs were to shut off their oil, America will always be the Alaska oilfields and the vast coal deposits to replace it. If the dollar were to tank, ordinary citizens would not suffer. Sure imported luxury cars like Lexus and Mercedes may be more expensive, but there will always be Lincolns and Cadillacs as ready substitutes. America could afford to be independent and be closed to the world, but instead its American economy remains the most open.
As a result its citizens enjoy the highest standard of living. Americans are certainly not bothered that foreigners make their cameras and radios. Nor are they concerned that poor Indonesians and Vietnamese make their favorite sneakers. In many ways they are glad for if Americans were to make those products, the average consumer would not be able to afford them. In this way they could rationalize doing good by providing jobs to Third World inhabitants as well as benefiting from cheap imported consumer goods. Besides, if those Indonesians improve their standard of living, they might buy higher-value American products. One Boeing 747 sale to Indonesia’s Garuda Airlines would more than make up for the purchase of millions of sneakers. Similarly, one Malaysian studying at an American college for one year is equivalent to the export of three mid-size American cars. It is for these reasons that Americans are not obsessed with being “independent” or self-dependent.
The notion that each nation must be self sufficient and self reliant (the classical ideal of an autarky) is not only inefficient and wasteful but also not in concert with the basic human character. A nation, like an individual, cannot exist as an island unto itself.
Citizens of Cayman Island go through periodic referenda on whether they should be independent, and each time they choose not to. Having seen what happened to Jamaica and elsewhere, that is indeed a rational choice. Had the Chinese in Hong Kong been polled, most would have chosen to remain with the “white devil” British colonials rather than “unite” with their Communist (as well as ethnic) kin on the Mainland.
Many in the Third World misinterpret or are suspicious of globalization because of its Western, in particular American, origin. Since the West once colonized many Third World countries, this fear is understandable. This also reflects an ugly underlying racist assumption – distrust of the White Man.
Why should we reject ideas simply because they originate from other than one’s own kind? That is not rational. We should be able to evaluate the merits of globalization regardless of its promoters and or origin. The White Man also started socialism and communism, yet those ideologies were readily accepted in the colored world. In reality, the fear of globalization is more closely tied with the fear of foreigners, especially so if those foreigners were also former colonizers.
Globalization today is a reality, the mobs in Seattle and Prague notwithstanding. The 9-11 terrorists’ attacks may have slowed this fast galloping phenomenon, but it is only temporary. We can no more stop globalization than the flow of the mighty Mississippi. Globalization now has acquired its own momentum. Malaysia should accept this and begin learning to adjust and take full advantage of it. If Malaysians can better understand globalization, they can use to its full advantage. It is the ticket for Malaysia to join the ranks of the developed world and to achieve its Vision 2020 aspirations. The way forward for Malaysia is not to rant and rave against globalization, rather to accept it and seize the opportunities afforded.
Today’s globalization, unlike earlier ones that were based on ideology, is knowledge and technology driven. It is modern technology and the application of knowledge that drives the global economy of today. Trade and investments, together with the greater ease of movement of people across borders, are its drivers. To be sure, people (and thus labor) do not cross borders as easily as goods and services, unlike in the heyday of imperialism when unschooled natives of India and Africa could enter Britain at will.
To a large extent the mindset of critics of globalization in the Third World is conditioned by their earlier experiences with colonialism and their subsequent encounters with foreign investments. Thus an understanding of the history and dynamics of foreign investments in the Third World is warranted.
Next: Foreign Investments in the Third World