[Silver Cheetah]

Just want to check my understanding of globalisation.... and put a theory...

Globalisation works thus, I believe... in theory, we are working towards removing all or most artificial barriers to trade, including subsidies, tarifs on imports etc. Products/commodities will thus compete on price and merit, across the globe. (Hence the term 'level playing field. What we currently have certainly isn't a level playing field.)

Result: companies offering the cheapest, best products will move their product easily and do well. Consumers generally will benefit from this.

Companies offering more expensive products that aren't particularly competitive will not be able to compete, and on a level playing field with no help from government, will go under. (Thus products will always be available to the consumer at the lowest possible price.)

Costs in the West are generally higher than in the rest of the world, so in order for goods to compete/manufacturers and producers to be safe, we currently have a system of tarifs on cheap imports, to make them less competitive with our own goods, and we have subsidies for our farmers, so that they can afford to produce food cheaply and competitively.

As we move further towards globalisation, tariffs/subsidies will be lowered, and eventually, removed altogether. This is the vision of the free marketeers (which the leadership of the developed world subscribes to enthusiastically, at least in theory.)

Now, how come everyone is so enthusiastic about the idea of the free market, til it actually comes down to cutting the subsidies/letting in foreign goods at lower/non existent tariffs?

At this point, everyone goes nuts, especially if their particular interests are under threat. And understandably so. Jobs are put at risk, in fact, whole industries will be/are being put at risk.

If globalisation gets where it's heading for, eventually each geographical area of the world will be confined to making/growing products/commodities that it is cost effective for them to make, given the resources they have access to, and the price of labour. To a great degree, this is happening already, and is a key reason behind many multinationals location of their production facilities in the third world (bye bye local jobs.)

Eventually, Western countries will become primarily service industries oriented (taking the argument to its logical extreme conclusion) because commodities such as wheat, maize, beef etc, will be just too expensive to 'grow' in the West, once subsidies have been removed.

But do we want this? Doesn't it seem just a tad risky? The interdependencies are potentially shocking. Personally, I'd rather live in a country that is at least partially self-sufficient when it comes to necessities like food. Luxuries don't matter as much. This is an uncertain world, as we've been made to realise particularly during the past year or so, and anything can happen. There's also the fact that lots of interdendencies means that when one goes down, the whole lot can go down.

I think the free trade gurus are barking mad, personally. Nothing wrong with trade between countries, in fact, it's wonderful. But I also see nothing wrong with countries protecting their own industries, including farming. And that goes right across the board for the developing world also.

?? Yes, no?

If you keep the subsidies and the tarifs, then it can be whatever you want, but it's not 'free trade'.

So, are you for free trade? Or against it? Or somewhere in the middle?

What do people think?

[ 05-13-2002, 02:47 PM: Message edited by: Silver Cheetah ]