The Race to the Top
Globalization Is Good for Everyone
JULY 01, 2002 by GEORGE C. LEEF
The inveterate complainers who jump at any opportunity to smash windows to protest globalization are fond of saying that globalization means “a race to the bottom.” Supposedly, unfettered worldwide trade and competition are bad because they will drive down wages, living standards, environmental conditions, and so on. Just as Karl Marx tried to frighten people with the prophecy that laissez-faire capitalism would reduce wages to the level of bare subsistence, so do antiglobalists try to frighten people with the prophesy that it will impoverish nearly everyone except a few plutocrats.
Marx was famously wrong, of course, and so are the antiglobalists. Economists have demonstrated why, in theory, the wider the market, the greater will be the benefits of specialization and trade. That argument convinces a few people, but most don’t grasp theoretical arguments. Far more persuasive for most people are individual stories where they can readily see the impact that freedom (or its absence) has.
Enter Swedish journalist Tomas Larsson with his book The Race to the Top. Larsson has actually lived in a number of the nations that the rock-throwers say they intend to save from the horrors of globalization, and his observations on the actual rather than the imagined effects of foreign investment and trade are simply devastating to the antiglobalist position. Freedom, it turns out, begins not a universal race to the bottom, but instead a race to the top that is especially beneficial for the world’s desperately poor. In the course of the book, hand-wringers like John Gray come off looking ridiculous.
Brazil is a country the antiglobalists often point to, claiming that its experience proves that the uncontrolled market leads to “economic polarization” manifesting itself in “special enclaves for the rich and stashing the poor in prison.” Reality is far different, Larsson shows. Despite an extraordinary degree of governmental interference with free markets–high tariffs protect inefficient state enterprises and a fat public sector drains resources away from workers and entrepreneurs–where economic freedom has seeped in, it has made a tremendous difference. Larsson quotes another journalist intimately familiar with Brazil: “I know people who were literally starving 10 years ago, who now have both fridges and computers.”
Thailand is another country supposedly threatened by globalization. Larsson spent years there and understands its situation well. Again, it’s a case of capitalism struggling against the clumsy meddling of government. “The country’s rulers have been more concerned with building up prestigious heavy industry than with making proper jobs possible for young people,” he writes. Trade and investment are stifled by “all manner of taxes and regulations that fend off foreign goods and capital.” A high minimum wage keeps low-skilled workers from a chance at improving their lot in life. Critics who cite Thailand as evidence of the harm of globalization have it all wrong, Larsson argues. The anti-market rhetoric is again proven to be shallow and ill-informed.
What about the antiglobalist argument that free trade leads to the “McDonaldization” of foreign countries, supplanting their indigenous (and in the minds of most antiglobalists, morally superior) cultures with American commercialism? Again, Larsson scoffs, having actually observed cultural assimilation. “This is not persuasive,” he writes, “especially to those who have taken the trouble of visiting a foreign land. All the cultural diversity is still there.”
The recurring theme of the book is the antagonism between the expanding opportunities globalization brings to people and the efforts of elites to shut down those opportunities to protect their comfortable status quo. One of Larsson’s most telling insights is the role of information in economic liberalization. “A free (and professional) press is one of the key institutions that enable individuals and countries to take advantage of the opportunities presented by the global economy-and to avoid its pitfalls,” he writes. Unfortunately, “of the five countries receiving the largest net income from multilateral aid organizations like the World Bank and International Monetary Fund, not one enjoys a free press.”
The antiglobalists (and statists of all varieties) spin out elaborate, deceptive webs to snare the gullible into believing that freedom is dangerous and undesirable. The Race to the Top stands for the opposite idea. “Freedom is good for everybody,” Larsson says.
If you won’t settle for overheated rhetoric and ignorant rants about globalization, and would like to know the truth, this is a book you will want to read.