Open World: The Truth about Globalization / Edition 384

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Overview

In a timely and provocative book, Philippe Legrain, formerly trade and economics correspondent for the Economist, argues that the idea and practice of globalization has been misrepresented by political activists who fail to understand its workings. Globalization, he insists, is neither a label for Americanization nor an excuse for worldwide corporate domination, and it does not eliminate local cultures or make governments irrelevant. Reassessing the pros and cons of the most controversial economic movement of our time, Mr. Legrain finds no real foundation for the alarm that globalization has generated among a variety of protest groups. His compellingly readable and balanced evaluation analyzes all the major forces in the economic equation—workers, companies, governments, national economies, industry and agriculture, patents and profits, money and finance—and makes a clear case that we are free to choose our future and to shape globalization for the benefit of all. Open World is a spirited and incisive work of socio-economic analysis and a clarion call to restore our faith in government. "At last a good book on globalization...lucid and persuasive."—Financial Times "If you have been convinced by Naomi Klein or Noreena Hertz, you owe it to yourself to read Legrain's persuasive defense."—New Statesman "One of those rare books that grabs the conventional wisdom and turns it on its head....Anyone who cares about our world and its future should read it."—Jonathan Freedland
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Editorial Reviews

Philadelphia Inquirer
A truly fascinating book that demonstrates not only the inevitability of continued globalization but its virtues as well.
Booklist
...A well-argued book that should serve as balance to current negative accounts.
Economist
In vanishingly short supply are books that are intellectually rigorous without being stuffy or inaccessible; which explain in plain words...globalization.... So in fact the world did need another book about globalization; Open World is it.
Financial Times
At last a good book about globalization...lucid and persuasive.
Chicago Tribune
Philippe Legrain counters many predispositions, on the left and right, and sets the stage for a more useful debate. The issue, he explains, is not being for or against global trade but how to manage economic change for the greatest benefit to the most people on a global scale.
— Bill Barnhart
Independent
A rapid rebuttal of the flimsy critique of anti-globalization activists.
New York Sun
Should be required reading for politicians and voters during this election year. Explains real injustices that exist in the trading system. Provides ample evidence of how corrupt and bad governance stunts growth in poor countries.
— Moore, Mike
Green Bay Press-Gazette
Makes a compelling case for an ever-continuing advance toward globalization. Legrain has written a truly fascinating book that demonstrates not only the inevitability of continued globalization but its virtues as well.
Choice
Here is a book that refreshingly argues for rather than against globalization…. Recommended.
Finance and Development
Legrain…has written a robust defense of globalization that combines the virtues of journalism with analytical rigor.
CHOICE
Here is a book that refreshingly argues for rather than against globalization…. Recommended.
Chicago Tribune - Bill Barnhart
Philippe Legrain counters many predispositions, on the left and right, and sets the stage for a more useful debate. The issue, he explains, is not being for or against global trade but how to manage economic change for the greatest benefit to the most people on a global scale.
Michael R. Kraig
Legrain masterfully defines a middle ground between the contending forces for and against globalization.... In a rare and frank analysis...Legrain argues forcefully that the worst abuses usually associated with globalization are in fact caused by a continued reliance on self-serving policies by the strongest governments in the world....
Martin Wolf
In this wonderfully lucid and intelligent book, Philippe Legrain takes on the many mistakes of the anti-globalizers. Globalization, he argues, is neither a label for Americanization, nor an excuse for worldwide corporate domination. It does not eliminate local cultures. Still less does it make governments irrelevant. It is a chance for mutual enrichment, not a route to global impoverishment.
New York Sun - Mike Moore
Should be required reading for politicians and voters during this election year. Explains real injustices that exist in the trading system. Provides ample evidence of how corrupt and bad governance stunts growth in poor countries.
THE ECONOMIST
In vanishingly short supply are books that are intellectually rigorous without being stuffy or inaccessible; which explain in plain words...globalization... So in fact the world did need another book about globalization; "Open World" is it.
FINANCIAL TIMES
At last a good book on globalization...lucid and persuasive.
The Washington Post
Legrain gleefully attacks the critics of globalization, systematically debunking what he contends are their simplistic arguments against it. He deftly weaves in a brief history of globalization, a movement that began, in his view, when Columbus discovered the New World, and is now accelerating, in the wake of the crumbling of the Iron Curtain and the opening of China. With an economist's passion for statistics and facts -- "the cost of sea freight has fallen by two-thirds since 1920; that of air transport by five-sixths since 1930. . . . A three-minute telephone call between New York and London cost $245 in 1990 dollars in 1930" -- Legrain, the chief economist of Britain, explains how ever-faster modes of transportation and communications have helped reduce the barriers once posed by national borders. — Robert Bryce
WASHINGTON POST BOOK WORLD
Legrain...deftly weaves in a brief history of globalization.... Well researched...an interesting and worthwhile book.
PHILADELPHIA INQUIRER
...Legrain has written a truly fascinating book...
New York Sun
Philippe Legrain's debut is...profound, entertaining, readable, and well-researched, backed up with credible sources...
Mike Moore, Former Prime Minister of New Zealand and First Director General of World Trade Organization
GREEN BAY PRESS-GAZETTE
...A truly fascinating book that demonstrates not only the inevitability of continued globalization but its virtues as well.
Library Bookwatch
Legrain does a very fine job of considering and articulating how world interactions are changing--and in many ways--for the better.
Publishers Weekly
Globalization is not some faceless bogeyman bent on destroying democracy and controlling the world, argues Legrain. That misunderstanding, he says, arises from the bad rap it gets from opponents of its current manifestation, like Naomi Klein, or even from proponents like Thomas Friedman, who characterizes globalization as inevitable. In fact, says Legrain, who is "chief economist of Britain in Europe" and a former trade correspondent with the Economist, globalization is "a political choice," and generally a beneficial one. Focusing his analysis on the historical benefits of international trade, Legrain readily criticizes what he sees as globalization's primary flaws. International patent law and financial markets each receive a scathing rebuke for the (sometimes lethal) harm they wreak on the developing world. Nevertheless, "No country has escaped poverty without trading with the rest of the world," and Legrain spends much of the book refuting depictions of globalism as a "race to the bottom," loading the book with examples of globalization's positive effects on global labor and environmental standards and its role as a lubricant for democracy. He is less persuasive and less rigorous when downplaying America's predominance in the global culture, and he too often deals with popular culture and European examples, such as fashion or opera, paying little or no attention to smaller, local cultures in developing countries. Likewise, his glib assertion that the most dominant mass media companies are a global hodgepodge, rather than rigorously calibrated and competitive organizations centered on profit, is unlikely to assuage the fears of their many opponents. Legrain's attempts at reconciling opposing arguments might not render the "truth," but they paradoxically mirror adjustments that have recently been made by activists, who have moved from "antiglobalization" actions to demands for "global justice." (Jan.) Copyright 2003 Reed Business Information.
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Product Details

  • ISBN-13: 9781566635479
  • Publisher: Dee, Ivan R. Publisher
  • Publication date: 12/28/2003
  • Edition description: New Edition
  • Edition number: 384
  • Pages: 384
  • Product dimensions: 6.40 (w) x 9.26 (h) x 1.38 (d)

Meet the Author

Philippe Legrain, who studied at the London School of Economics, is chief economist of Britain in Europe, the campaign for the United Kingdom to join the European Union. He was previously special adviser to the director-general of the World Trade Organization, Mike Moore. In addition to his work on the Economist, he has written widely for British and American publications, including the Financial Times, the Wall Street Journal, the New Republic, Foreign Policy, and the Chronicle Review. He lives in London. To find out more about Mr. Legrain, visit www.philippelegrain.com.
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Read an Excerpt

OPEN WORLD

The Truth About Globalization
By PHILIPPE LEGRAIN

Ivan R. Dee

Copyright © 2004 Philippe Legrain
All right reserved.


Chapter One

Worried Workers

Why globalisation is actually the least of their worries

In North America, the back end of an eighteen-wheeler heading for Mexico, workers weeping at the factory gate, the boarded-up windows of a hollowed-out factory town and people sleeping in doorways and on side-walks have been among the most powerful economic images of our time: metaphors, seared into the collective consciousness, for an economy that consistently and unapologetically puts profits before people. Naomi Klein, No Logo

Having declared free trade and open borders to be America's policy, why are we surprised that corporate executives padlocked their plants in the Rust Belt and moved overseas? Why keep your plant here when you can manufacture at a fraction of the cost abroad, ship your goods back, and pocket the windfall profits that come from firing twenty-dollar-an-hour Americans and hiring fifty-cent-an-hour Asians? Patrick Buchanan, The Great Betrayal

Those days are gone when we deplored the underpayment of exploited labour in poverty-stricken countries.., what we are now deploring is the underemployment it causes in our countries. Vwiane Forrester, The Economic Horror

The overall effect of unregulated global free trade is still to drive down the wages of workers - most particularly unskilled manufacturing workers - in advanced countries. John Gray, False Dawn

The free trade liberals hope that a high-wage, high-skill America need fear nothing from a low-wage, low-skill Third World. They have no answer, however to the prospect - indeed, the probability - of ever-increasing low-wage, high-skill competition from abroad. In these circumstances, neither better worker training nor investment in US infrastructure will suffice. Michael Lind, The Next American Nation

Chuck Swearingen is a mountain of a man. His green-and-white checked shirt is bursting at the seams over his enormous belly. As he reaches out his huge hand to shake mine, I feel small and vulnerable - and he is just one of the five giant American steelworkers I have come to have pizza with. But he breaks into a big smile - 'Nice to meet you, Philippe' - and my unease is gone.

Amid all the hoopla about Silicon Valley, Wall Street and the new Internet economy, it is easy to forget that there is still an older America too. A less glamorous America that makes ordinary things that you can drop on your foot. Like steel. America's steelworkers fear that their jobs and their way of life are under threat. They blame foreign trade. 'We know globalisation is here,' Chuck explains. 'But we want an equal and level playing field, instead of whoever has the cheapest labour or can do it cheapest no matter what rules they play by. We have to monitor the environment, control pollution. We have safety laws, pensions and healthcare to pay for.' His views are echoed by many other manufacturing workers in the old industrial heartlands of Europe and North America.

Whether you sympathise with them or not, America's steelworkers cannot be ignored. They are in the vanguard of the backlash against globalisation. Unlike the inveterate anti-capitalists, confused college kids or woolly-minded hippies who oppose globalisation in the abstract, they feel they are fighting for their livelihoods. They have so much political clout that even a professed free-trader like George Bush is listening. When I finished writing this book, in early March 2002, the American president had just slapped punitive customs duties on foreign steel - a move that could spark a global trade war.

Where Chuck works is only an hour's drive from Washington DC, but it feels light years away. Sparrows Point is in Maryland, just outside Baltimore, overlooking Chesapeake Bay. Chuck has spent thirty-two of his fifty-two years there, working for Bethlehem Steel, America's second-biggest integrated steel producer. He remembers when Sparrows Point was still a company town. Beth Steel bought the plant in 1916 and around it built a model town that was renowned for its well-kept homes, small-town atmosphere and self-sufficiency. They had their own churches, police and cemetery. The town boomed during the Second World War, when it cranked out steel and ships for the fight against fascism. At its peak, Sparrows Point, which was once America's biggest steel plant, employed 35,000 people. 'We were the highest-paid workers in the area,' says Chuck's colleague, Phil Pack. Now fifty-three, Phil started as an iron-worker apprentice thirty-five years ago - one of the first blacks to break into a then notoriously racist industry. Gordon Jakubowski concurs: 'We were the employment of choice.'

But then decline set in. From 1970 on, wave after wave of layoffs culled the workforce. As early as 1974, the last houses were torn down to make way for a new blast furnace, the largest in the Americas. The raw materials that used to be sourced locally - coal from Bethlehem Steel mines, coke made on site - now come from abroad: iron ore from Canada, coal from Australia, coke from China and Japan, and limestone from Argentina and Venezuela. Sparrows Point now employs only 3,500 people. Even these few remaining jobs may soon be gone: in October 2001, Bethlehem Steel declared bankruptcy, blaming foreign competition. It is now on life-support, awaiting a rescue plan in the legal limbo of Chapter 11 - America's insolvency procedures, which, unlike Europe's, give a company a breathing space to get back on its feet.

Sparrows Point is not a pleasant place. Vast smokestacks puncture the skyline and pollute the air. The scrubland is scarred by the iron ore, coal, coke and limestone that are blasted to make steel and by the slag heaps that are its by-products. Even the chunky steelworkers with blackened faces who toil amid the searing heat and choking dust seem slight set against the outsize building and machinery. It is a desolate wasteland - but working there provides good money.

Very good money, in fact, for work that does not require a college degree. On average, a steelworker at Sparrows Point makes $55,000 a year for a forty-hour week. But many earn as much as $70,000 to $80,000 a year by putting in a further twenty hours or more overtime. For $80,000 a year, you can live like a king in Maryland. 'We are privileged,' concedes Doc Iler, who is fifty and has been with Beth Steel for thirty years. 'When we see our way of life threatened, we're going to resist it.' Steelworkers drive huge SUVs (sport-utility vehicles), like the Ford Expedition, a macho cross between a van and a truck. They live in big houses with lots of land. Some have boats. Their pensions are generous, as are their healthcare benefits: big pluses in a country where so many fear that old age or illness spell destitution. Perhaps most importantly, they can afford to pay to put their kids through university. Chuck has a twenty-one-year-old son in college who wants to go into computers. What if his son wanted to work in steel? 'I would discourage him. There's no future.'

He is probably right. America's steel industry is shrivelling up. A global glut of steel is driving prices down to levels where American producers, with their bloated costs, can no longer compete with their foreign rivals. Phil thinks this competition is unfair: 'We can't go sell steel in Europe, Japan or China 'cause their markets are closed. There's overcapacity so people are selling below cost.' Chuck agrees: 'We can't export 'cause they put up barriers. If we put up barriers they go nuts.'

The truth is a bit more complicated. America's steel industry has long sheltered behind import barriers, yet it has still declined. Trade is clearly only part of Bethlehem Steel's problem. Even Chuck admits: 'We would still be losing jobs if there were no imports. We don't only have foreign competition; we also have domestic competition from [lower-cost] mini-mills. We've got very good contracts from when we were living high on the hog in the sixties.' You can say that again: although steel is a capital-intensive industry (remember all that gigantic machinery), employment costs account for around 40 per cent of Beth Steel's total costs. In a typical manufacturing firm, the figure is around 10 to 15 per cent. The company is hobbled by the huge pension and healthcare costs of its many former employees.

Technological change is also taking its toll. 'Back in the sixties, we used to produce 4 million tons [of steel] with 30,000 people. Now we produce three and a half to four with 3,500 people,' explains Doc. Since Sparrows Point produces almost as much steel as thirty years ago, but with less than an eighth of the workers, most of the job losses are due to cost-saving technology rather than dastardly foreigners. Even so, America's steelworkers are certainly among the losers from globalisation. If America's steel market was thrown open to foreign competition, many more jobs would undoubtedly go.

Whatever the cause is, losing your job can be terrible. 'It is devastating,' says Doc. 'Some of my good friends killed themselves. Families are torn apart. Steelworkers go from making good money to being homeless.' He has worked as a co-ordinator for the United Steelworkers of America (USWA) on its dislocated-worker programme. 'Sometimes we helped find them jobs that only pay $4 to $5 an hour with no benefits, when they were earning $17 to $18 an hour plus benefits. But they're happy to get them. They need somewhere to hang their hat.' In 1989 the USWA started a career-development programme. 'It didn't make sense to wait until workers are in the street to prepare them for changes.' But finding another job can be very tough. 'Lots of workers have jobs that are unique to the steel industry,' says Chuck. 'They feel totally lost when they lose their job. They have no skills to market themselves for other jobs. They're middle-aged, not skilled to find other work, or too fat and too lazy to find other work. But we've worked hard to get to the positions we've got to. People are protected here. They don't often appreciate that.' Chuck points out that General Electric and Western Electric have recently shut down their local operations. 'Jobs in IT are limited. Jobs in industry were unlimited. Only 20 per cent go to college, 80 per cent don't. Where do they go now? They used to go here. There are lots of working poor.' Jerry Ernest, an even bigger man than Chuck, interjects: 'Unemployment benefit is $280 for twenty-six weeks. I just checked it out. Two hundred and eighty dollars is only a little over a day's wages. We're all worried about layoffs because of Chapter 11. We're teetering.' Thankfully, the USWA has also negotiated a supplementary unemployment benefit for members who are laid off.

Ironically, Bethlehem may yet be saved by a foreign white knight. Robert Stevens, the company's new boss, who took over less than a month before it went into Chapter 11, is adamant that the industry must 'consolidate'. That means mergers, with US or foreign rivals. Even an all-American merger would rankle with some people. 'We are who we are. We'll manage on our own' is a common refrain. Many more would resent a foreign takeover. 'There is still a patriotic pride associated with the company. During the Second World War, Sparrows Point used to produce a ship a day for the war effort,' explains Bette Kovach, Bethlehem's PR woman, who has worked for the company for twenty-five years. But most would swallow their pride if it meant their company survived. 'I love steel. I love Bethlehem. I've worked my whole life here and I'd like to see it continue. If it continues as the US arm of a foreign company, I wouldn't say it's welcome, but it's still worthwhile if it could give our employees security and a livelihood,' she says. 'We're not opposed to foreign ownership,' says Chuck, 'but we'd rather preserve it for ourselves.' What if the choice were between a foreign takeover and taking a pay cut in order to keep the company independent? Chuck laughs. 'We're all capitalist here.' Besides, he adds, 'If they cut wages, no one would work here. Who wants to come work in a filthy place when you could be making the same money for Verizon [a telecoms company]?'

In the old redbrick block that serves as Sparrows Point's headquarters, the facility's boss, Van Reiner, echoes that mixture of pride and realism. 'The process of making things does more than just make things. It provides people with the opportunity to buy a house, raise a family, pay for college education. That is important enough that whose name is on the door doesn't matter. It would be a tragedy if this facility closed. The effect on this area would be catastrophic.' Bethlehem Steel has already shut many facilities, including in 1995 the plant in its home town of Bethlehem, Pennsylvania. Van, a wiry, excitable man, is passionate about steel. 'It's fascinating: making something out of dirt.' Indeed. Like computer chips, which are made out of sand. Would it be a tragedy if the steel plant closed and was replaced by a semiconductor plant? 'Yes. The dislocation would be terrible. And it [the semiconductor plant] just wouldn't open.' The evidence suggests otherwise: despite all the job losses in manufacturing, US unemployment was, until the economy turned down in 2001, at a thirty-year low. Even so, Van exclaims: 'A whole generation would be severely affected. The people who have the new jobs are not the same as the people who lost them. It creates an underclass.' He has a point. Adjusting to change can be painful. But thankfully, the future may be brighter for the next generation. Van's son, who was born in 1975, works as an architectural-graphics-software consultant in Japan, speaks Japanese and set up a dot-com during the Internet boom. He does not share Van's passion for steel: 'He doesn't look at making things like I do.'

Protectionism doesn't work

Some people argue that salvation lies in keeping out imports. Meet Curtis Barnette, who likes to be known as Hank. Hank looks like an old-fashioned gentleman. He is deliberately charming. He holds the door open, pours me a drink, enquires earnestly about my background. His suit is perfectly tailored, his greying hair gelled wet. He sports a Stars-and-Stripes badge and blue braces to boot. His smooth voice sounds measured and reasonable, his glasses lend his words weight and wisdom. He has an impeccable pedigree: chairman emeritus of Bethlehem Steel (chief executive and chairman proper from 1992 to 2000), chair of the American Iron and Steel Institute (and the International one too), member of the US president's advisory committee on trade, and so on. America's steel industry may be ailing, but Hank himself doesn't seem to be doing too badly.

Continues...


Excerpted from OPEN WORLD by PHILIPPE LEGRAIN Copyright © 2004 by Philippe Legrain. Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

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Table of Contents

Part 1 Foreword ix Part 2 Introduction 3 Chapter 3 FREE TO CHOOSE: What kind of globalisation do we want? Part 4 WORRIED WORKERS: Why globalisation is actually the least of their worries 25 Part 5 THE POOR PROFIT: Globalisation is the only route out of poverty 47 Part 6 A BRIEF HISTORY OF GLOBALISATION: How our open world emerged 80 Part 7 BRAND NEW WORLD?: Why brands are not all-conquering beasts 118 Part 8 GIANTS WITH CLAY FEET: Why companies don't run the world 132 Part 9 THE PHANTOM MENACE: Why government is not under threat 151 Part 10 GLOBAL GOVERNMENT: How the world should (and shouldn't) be run 174 Part 11 FOOD FOR THOUGHT: Why farm trade should be freed 211 Part 12 ENDANGERED EARTH?: How globalisation can be green 236 Part 13 PATENTLY WRONG: How global patent laws harm the poor and the sick 254 Part 14 FINANCIAL FAILINGS: Why global money should be caged 270 Part 15 CULTURE CLASH: Individual freedom, not Coke, rules OK 293 Part 16 A DIFFERENT WORLD: We can build a better globalisation 320 Part 17 Notes 335 Part 18 Bibliography 348
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