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The Great Myths Of Globalization

The Insurgent

We cringe every time we hear someone respond to the assertion that globalization--more accurately global corporatization--is creating wealth and is the best hope for lifting people out of poverty. Inevitably, the response is "yes, but the benefits aren't reaching the most needy people."

While we agree that human progress should be evaluated by whether it helps the most needy people, that response accepts the premise that corporatization has increased economic growth. Yet that premise is demonstrably false.

In perhaps the most comprehensive such study to date, Scorecard on Globalization 1980-2000, Mark Weisbrot, Dean Baker and other researchers at the Center for Economic and Policy Research documented that key measures of progress have declined globally in the past twenty years.

Economic growth and rates of improvement in life expectancy, child mortality, education levels and literacy all have declined in the era of global corporatization (1980-2000) compared to the years 1960-1980--a period in which many countries maintained protectionist policies to insulate their economies from the international market to nurture their domestic industries and allow them to become competitive. Those policies are the same ones on which U.S. economic prosperity was built.

From 1980-2000, most countries followed the paths of public spending cuts, corporatization of public services, implementing fees for health care (and education in many case), and removing government protection for young industries. Many of the world's poor and mid-income countries experienced unprecedented levels of foreign debt and loss of their wealth to interest on loans during the period.

The Scorecard findings include:

An overall slowdown in reducing infant and child mortality and in improving overall life expectancy (not necessarily an indicator of policy failure--it could be a natural flattening of progress curve).

Reduced progress in education as evidenced by declining school enrollment rates and literacy. Slower growth in domestic spending correlates to decreased educational spending;

Slower economic growth for countries at all income levels;

A negative growth rate for the poorest countries;

For moderately wealthy countries, income growth declined from 100% increase per capita between 1960-1980 to a 21% increase in the last two decades

As a result of these trends, millions of people who could have escaped a lifetime of poverty under the former rules of market economics under democratic limits with were unable to do so under the new rules of global corporate governance.

The results here are not conclusive proof of failure of many policies, but the evidence indicates that structural and policy changes implemented during the last two decades have failed to improve incomes and quality of life in most countries.

it's worth noting that these numbers do not account for the fact that even modest gains in income may be a backslide toward poverty when population shifts from rural to urban as a result of substituting export foods for subsistence crops or other "income enhancing" strategies. For those living on the land, needing little income to keep fed and hydrated, an increase in income is no compensation for being forced into purchasing food for subsistence.

Scorecard on Globalization author Weisbrot also notes that the World Bank’s own projections do not support the contention that removing laws that control international commerce would benefit poor countries. If the richest countries eliminated all laws limiting or taxing imports by 2015, how much annual income would the low and middle-income countries gain as a result of this increased access to the markets of rich countries? According to the Bank, about 0.6 percent.

This presumes the poorest countries would get an equitable share of growth gains, a questionable assumption, but imagine that they did: a country in Sub-Saharan Africa with current per-capita income of $500 a year would, as a result of this trade liberalization, crawl to $503 in constant dollars. It’s a rather meager reward for trading away a substantial degree of self-governance.

The full report is available online from the Center for Economic and Policy Research: