Free Trade as a Cause of Racism

As I was pondering the effects of allowing free trade to, as Stiglitz would want, be both "fair" and "free," I came upon a problem. As we discussed in class, the free movement of people is a sticky subject. It becomes very emotional, security issues are created, and just about everyone can agree it is not feasible at the current time even though it would prove beneficial for society as a whole according to pure economic theory. As I said, while thinking this problem through, I saw another issue that has been arising throughout the world due to the movement of people, although not free, becoming easier than ever. Racism against incoming people is rising incredibly in the countries that acutally have a need for cheap labor to do the jobs they do not want themselves. For specific examples, I will cite Denmark and Holland. In Denmark, there is a strict divide between Turkish immigrants and ethnic Danes. Separate living areas, distinct differences in education and income levels, as well as very separate cultures is creating a hatred that is reminicent of the United States during the days of Martin Luther King Jr. With such a homogenous society as Denmark has, full of blond haired and blue eyed children living in what the UN would describe as the happiest possible country in the modern world, it becomes easy to spot someone who doesn't belong. Is it simply these physical differences that are creating problems? Or is it the open nature of the Danes, with their newspaper cartoons making fun of Allah that is antagonizing the Muslim communities that have come to Denmark?
In Holland the problem is similar. Moroccan immigrants are being discriminated against in every aspect of life. However, there is also a crime wave whose proportion has never been seen in the Netherlands. Moroccan loverboys are kidnapping Dutch girls and selling them into slavery, women's bikes are being stolen from their back yards, and areas with only a single police officer are having their stores robbed on a monthly basis. The prime minister has admitted that Holland simply does not have enough police officers to combat this new level of crime. Their jail cells are empty, in fact they are even considering leasing their jails to Belgium for it to hold its criminals in. However, crime continues to spread. Amsterdam is no longer a city where people can go for a fun night on the town. Now Dutch teens must be constantly aware, looking for where the attack could possibly come. With Rotterdam being one of the first major cities in the Western World with a Muslim leader, is this an example of democracy showing the two conflicting cultures can actually live together in harmony, or is it an attack from the outsiders whose steadily growing numbers allow them to seize power at their own wills? Could democracy's very ideals be its Achille's heel? If a nation created around democratic ideals becomes dominated by a group of people who prefer a more extreme form of government, in this case perhaps Muslim rule, can those who created the ideals do anything to stop the demise of their culture?
Racism is an ugly thing. It is not beneficial to anyone. It slow economies, splits cultures, creates violence, and is generally harmful for everyone involved in it. However, when immigrants refuse to assimilate into an existing culture, what is to be done if they become hostile? How can two cultures with such different ideas about the world come together in a single harmonious society? If the answers to these questions come to you, feel free to share because there may be a Nobel Prize awaiting you.

International Wage Controls?

After the economic burst of last year, there is a new focus upon finding a new balance between the free markets and the governments that must regulate them. The article I discuss here can be found from BBC World at the following link. In summary, the EU has agreed that it will focus on its agreed upon position that bonuses paid to employees should be proportional to their incomes. Therefore, it incomes fall, bonuses should follow. The EU will argue for this agreement at the next G20 summit and they will speak as a block, making theirs a very strong stance. There is no clear cut position being issued by the United States but President Obama has made it clear that he does not want there to be any set caps on bonuses. The opinion of the BBC is that this proposal will be accepted by the G20 but that it will be more of a wide set of guidelines rather than set rules regarding pay. There is often much reservation when it comes to governments becoming involved in the internal actions of businesses. More free market economists, such as Joseph Stiglitz, would most definitely not be happy with such an action, even though Stiglitz does speak of the need for the government to act as an enforcer of contracts and a power that will ensure that business will continue uninhibted and without cheating. At this point, with banks having obviously operated in a greedy manner without proper thought as to potential consequences, can even these free-market supporters such as Stiglitz support a proposal to force companies to conform to the overall business cycle? What is the right thing to do? Is this simply a period of re-regulation which will inevitably be followed by one of deregulation to bring the world back to balance?

Recommended Reading

For the truly avid fan of globalization, be sure to read "How Football Explains the World." Slightly humorous, but a great way to find metaphors about all the most basic points made about globalization. Attacks everything from culture clash to interest rates to currency exchanges, all in a fun package.

Venezuela the Center of a New Global Threat?

Venezuela has signed a new agreement with China worth $16 billion to invest in its oil fields in exchange for future rights to purchase the oil at what will have to be below market prices. With Russia having signed a similar agreement with Hugo Chavez earlier this year worth about $20 billion, these actions must be raising some questions in Washington. More information on this specific agreement can be found from Reuters. However, to continue our discussion, is there a new "axis of evil" being created? Or is Russia joining forces to try to reclaim its glory from the Cold War days? I say perhaps a bit of both.
It can no longer be doubted that China will soon become, if you do not already consider it so, a global economic superpower. Its enormous physical capital as well as continued growth in financial capital allows it to continue to grow while becoming more important to nations, namely the United States, as a lender. Who would have ever imagined that a nation that was a primary antagonizer for both the Korean War and Vietnam would now be one that the United States greatly depends upon? There is no doubt about it, China's economy is not only growing but it is also maturing. Beyond only creating lead paint filled child toys, China is now becoming a source for outsourcing of white collar jobs such as professors, doctors, lawyers, and many more. China and the United States could potentially be great allies, much like the US and the EU are today, but their desire to continue to achieve may push them away from such a situation and towards one where they can dominate. An alliance of weaker nations under China's flag would do much to stoke the Chinese egos while also allow it to blantantly push its policies upon those under its influence instead of doing so in a more subtle manner today.
Russia is also having a bit of an ego trip. Whether it is a group of "excursions" into Georgia, stopping gas pipelines from supplying the EU, or cyber attacks upon Estonia, Russia has steadily been working to prove it is still a global power. With its abundance of oil and gas, Russia undoubtedly has great power over nations without this blessing. However, it is also at the whim of the capital markets which its history has so much hatred for. If the prices for oil and gas drop as they did recently, income estimated throughout Russia are greatly overstated and the economy is in great trouble. Rarely have any nations become truly great while relying upon natural resources as the basis for their economies, and we will see if Russia will become and exception or if it can diversity its economy before it becomes too late.
Back to the previous point, these investments in Venezuela seem to be a point in the direction of a new type of alliance. None of these governments are particularly fond of the great power the United States has enjoyed since the collapse of the Soviet Union. Russia has little to gain from investing in Venezuelan oil, it has much for itself. However, creating a friendship with a close neighbor who is not afraid to openly criticize the United States can be a powerful international sign. Russia is ready to be the enemy once again, or at least an annoyance that will need to be considered before the United States acts in the future. China does have a great need for oil with its booming economy, but it could also venture elsewhere to get it. Instead, by investing in Venezuela, it is making a similar statement. Instead of openly opposing the United States, who is the most important trading partner for China, it will fund Venezuela who will then be able to criticize the United States for them. This move may simply seem like an investment decision at first glance, but by looking at the political situations of the nations involved, it soon becomes obvious that there are other ideas bouncing around in the background. Is this the beginning of a new Cold War? Or is it simply a push for acceptance of the power that China and Russia have been building up recently? Is it even possible for China to ever become an enemy of the United States without absolutely devastating its own economy? Could Russia survive without the sales of its oil and gas to the EU? More thoughts about these questions coming soon but feel free to ponder them for yourself. Your ideas may become reality soon enough.

Culture Clash: The Most Pressing Issue Today

The 21st century brings an entire new level of global integration to every nation. The days are long gone where a nation was able to control its own economy without worrying about outside influences as a primary contributing factor. The recent global economic crisis has shown us all that when one nation’s economy tumbles, the rest follow. This brings back thoughts of the domino theory during the days of communism. However, today it is even more serious. Instead of a battle between two ideologies, this phenomenon of global economic integration will affect every nation that has any sort of interaction with any other. In the modern day, the number of nations who remain unattached through trade of products, capital, information, ideas, and people can easily be counted on a single hand. Nations such as Iceland, Japan, and even perennial economic powers such as the United States and those of Western Europe were all catastrophically affected by the global financial crisis. The reason that all nations were so affected comes from this, to use an overused phrase, globalization that has been as Thomas Friedman would put it, “making the world flat.”
The European Union is perhaps the greatest example of this as the member nations have found a way to retain their individualities and political independence while creating a global economic power that rivals the longstanding hegemony of the United States. While this may be the most extreme of examples, along the way international investments, increases in technology, and the opening of the world to foreign influences has brought all nations closer together. Along with this come problems. Perhaps the most pressing of these problems is the overlapping of distinct cultures. The global war on terror is an example of how the insertion of the capitalist culture into an area of the world that had remained highly isolated from its influence created new enemies. Not that everyone from the Muslim world hates the capitalist structure and culture; many have in fact benefitted from it and stand to continue to do so. However, with a new center of power always come people who have had their positions weakened and will therefore want to fight against the new power. The problem is exacerbated when the, for lack of better words, invading culture has not made a proper effort to learn about the indigenous culture and instead tries to replace it. When indigenous people feel attacked and belittled by an invader, there are bound to be individuals who choose to fight against it to protect their honor, their history, and their culture. This problem is not an easy one to fix. In many ways, the war has already begun in the case of the war on terror and without drastic changes, it will continue. It is incredibly difficult to go from being the “bad guy” to becoming accepted by people who know you only through bombs and soldiers. Education, rebuilding of infrastructure, democracy, and perhaps simply open signs of friendship may help to ease these tensions and make this less of a problem. With other cultures, it has been less of an issue, so perhaps it can become less of one throughout the Muslim world with enough effort on both parts.