Consumerism Divergence and Convergence

Convergence Divergence

Labor Divergence/Convergence

Agriculture Divergence/Convergence

Voice Divergence/Convergence

Economic and Democratic Divergence/Convergence

Consumerism Divergence/Convergence

Import/Export Divergence/Convergence

Three varied economic views on globalization as they represent the core of the debate regarding globalization, as each camp stresses its take on the negative and/or positive outcomes of the increasingly globalized economy. Convergence and divergence in many areas of the global economy are discussed.

This work discusses the three varied economic views on globalization as they represent the core of the debate regarding globalization, as each camp stresses its take on the negative and/or positive outcomes of the increasingly globalized economy. Convergence and divergence in many areas of the global economy are discussed. In a more general sense "convergence is inevitable in the context of globalization." Meaning that convergence of the systems of the economy are taking place, while the disparities of income divergence still seems to rule the day, as the poor get poorer the rich richer and the size of the former grows and encompasses many whom at one time would have been considered the middle class. Convergence then seems to be a situation that is secondary to income, as the institutions and systems merge while incomes continue to elicit and even grow disparities among nations and individuals.

Introduction

Within the rhetoric of globalization and the economic theory surrounding it is a sense that many experts believe and espouse that income convergence is a logical outcome of globalized markets. In other words that income disparities on and individual and national level will begin to converge, along with the development of convergence of economies in a more general sense, leaving an international economic system where most nations and individuals share in the positive economic impact of increased trade between nations. Yet, many other experts contest that globalization is not creating convergence but is instead creating divergence, or greater disparities between developed and least developed nations and therefore the peoples who reside within them. It is likely that the moderate economist would be able to find examples in the current global market where both are taking place, while those who believe in the early positive predictions of convergence stress that any divergence seen currently is simply a necessary but temporary evil. While those who observe divergence stress that there is simply no incentive for those who have to begin to share profits with those who have not and that the situation will likely get worse, with regard to income and voice divergence.

In a sense these three varied economic views on globalization represent the core of the debate regarding globalization, as each camp stresses its take on the negative and/or positive outcomes of the increasingly globalized economy. In a more general sense "convergence is inevitable in the context of globalization." Meaning that convergence of the systems of the economy are taking place, while the disparities of income divergence still seems to rule the day, as the poor get poorer the rich richer and the size of the former grows and encompasses many whom at one time would have been considered the middle class. Convergence then seems to be a situation that is secondary to income, as the institutions and systems merge while incomes continue to elicit and even grow disparities among nations and individuals.

Labor Divergence/Convergence

By now most people have heard of the very public breakdowns at prominent World Trade Organization events, the riots in Seattle, U.S. (1999), the early breakdown of talks in Cancun, Mexico (2003). Some people might have even have a broad concept of the concerns voiced by those in opposition of the WTO and the "free trade" movement in general. The main line of which is that those who have been most effected by world trade, globalization have been negatively affected and have little voice to resolve the issues that surround changes. This work will address the issue of convergence as apposed to divergence in the global economy, looking for evidence of both but mainly it will discuss why are some individuals and groups are protesting/resisting "free trade," if it is the kind of trade that has been touted as the savior of the undeveloped nation in the global market? The greatest difficulty regarding globalization has been the severely limited voice of the nations that globalization is said to be the greatest future asset for:

in past events, trade negotiations were heavily dominated by the U.S., Europe and Japan. Developing countries, comprising four-fifths of the WTO's membership, were expected to take a backseat. The wealthy nations frequently used a "carrot and stick" approach by offering enhanced trade opportunities and debt relief to persuade poor nations to accept their distorted agendas. (Siddiqui, 2003, p. 64)

In part protests of world trade are linked to the indifference that has been shown developing nations, with regard to policy development and agenda. Yet, the opponents of free trade have a broader list of complaints that have to do with overall economic dominance and divergence associated with the globalization movement by the developed nations. The fears of the opposition are that trade, in this venue will further tax, rather than assist poorer countries, due to its aggressive emphasis on the bottom line. The globalization movement may allow new markets to open in these previously isolated economies but at what cost and for how long will the cost of income and voice divergence negatively effect these nations and peoples?

The historic global business emphasis on using the bottom line as the solitary guiding force behind international business is questioned, yet not by those who set standards and develop agendas. Seeking cheep labor the developed nations invest in markets that might provide jobs to poorer nation's people but they are not jobs that pay enough for these people to climb out of poverty, in fact they are jobs that keep them away from home and family for very long hours, for very little pay. While the developed nation's labor forces may be willing, to a certain degree to absorb the 12-hour 7 day work week, they do so at a price, demanding wages that are not responsive to the bottom line. The resolution then by emerging global markets is to seek labor in places where wage labor can be contained at very low rates.

Agriculture Divergence/Convergence

This brings to mind a documentary I recently watched, where thousands of women in Ethiopia were sitting around long lighted tables for 12-hour shifts meticulously sorting and grading coffee beans, for dollars a day "Black Gold" (2005). These scenes of "work" were juxtaposed by scenes of American's and Europeans snuggly sitting in up scale coffee shops, shops where their cup of coffee cost upwards of 5 dollars but where the sorter, grower, harvester and organization that supplied the coffee they were drinking made a disturbingly small amount on the bushel of coffee bought by the multi-national business selling it. Coffee, then is a great place to start when looking at globalization, as it is a commodity that can be grown only in limited locations in the world and must then be processed to some degree there.

Coffee is one of the most highly traded commodities in the world, second only to oil. The trade of coffee generates $80 billion every year in the global market, and that amount is growing. In 2001, coffee prices on the global market hit a 30-year low, and a humanitarian crisis ensued for the 25 million coffee farmers and families around the world, including many in Ethiopia. The fall in revenue has affected the income small farmers earned for the 'fruit of their labor" as a result, the farmer are unable to send their children to school and could not afford to pay for their basic needs. (Assefa and Degefa, ND, online at (http://www.hmbasha.net/Starbucks_Ethiopia.htm)

The coffee market then is a perfect example of divergence, in that previously growers and commodity processors had some limited controls and were able to earn a living on the product. The product requires significant time commitment, as the growing of plant to fruit is a significant commitment, once made is a commitment that many are not willing to simply give up on, plow under and grow a new crop. So, as a group these growers must weather the storm of the economy, even when its shifts to such a degree that they are no longer making enough money on the crop to survive, but where global retailers are in short siphoning the profit off the top from the finished product.

However, from the retail sides demand for coffee has risen and the coffee industry has shown remarkable profit. For example, Starbucks, an 8 billion dollar a year company, was able to sell Ethiopian Harar coffee for $26.00 per pound, whereas the farmer only received between $0.60 and $1.10 per pound and only 3 cents goes to coffee farmers for every cup cappuccino Starbucks coffee sales for $3.00. Coffee prices have risen a little recently, but hard working coffee farmers continue to work relentlessly, receiving minimal profits for their crop, while coffee companies and corporations are bathing in earnings. (Assefa and Degefa, ND, online at (http://www.hmbasha.net/Starbucks_Ethiopia.htm)

Until, very recently there were many upscale coffee drinkers that assumed that the nations that hold a geographic monopoly on the coffee market (as coffee can be grown in a very limited region) were benefiting from the overall growth of the success of coffee as a preferred drink all over the world. They were wrong, nations that sell coffee usually in its raw form are suffering at the hands of corporate greed and dominance a clear example of divergence of both voice and income.

The opposition movement is an attempt by forward thinking individuals to warn blind consumers about the dangers of globalization when it goes into the market unchecked by the needs of the people it buys raw goods from. The divergent camp, apposed to globalization would say that the poorest countries in the world deserve a share of the earnings that are being made with these raw goods rather than continued status as the lowest people on the food chain, in a very literal sense. The camp also claims that the poorest countries remain so because they have no real voice in setting prices for goods, and no way to combat the larger nation delegates when their agendas, in these negotiations, are set on the back burner as the larger nations make all the rules about determined progress based on corporate interest on the bottom line. Making the rich richer and the poor poorer and essentially washing away the middle class.

Voice Divergence/Convergence

In the agricultural industry, the U.S. And the UK, two of the nation's largest voices in the "free trade" negotiations have an established set of rules in the face of agricultural sustainability. These nations pay subsidies to their own farmers when the prices fall. Historically this has even meant paying farmers for fallow land, to try to decrease the amount of product on the market and therefore increase prices. The developing nations have no such support, the globalization opposition movement claims, logically that the lack of such subsidies leaves these nations at a disadvantage in global trade as they then become victims of rising and falling prices, going through long periods where they cannot feed, cloth or educate their children or prosper in any way, despite their increased workload, when the demand is high. The opposition movement demands that these subsidies either be extended or eliminated to ideologically establish a sense of real "free trade." As is stated in the documentary "Black Gold" the inability of any industry to have a voice in the value of the goods they provide leaves them in a position of being slaves to the dominant international price setters, even though the large stock exchanges have no other bearing on their lives, and make no difference to them on a daily level of struggle. Nations providing raw goods are then left with the option of gaining voice through NGOs (Non Governmental Agencies) that are a bold attempt at a bridge between social progress and globalization. Yet, it is also clear in the current history that the ideas of corporate social responsibility voiced by NGOs are as marginalized during WTO and other free trade conferences as are direct representatives of the developing nations.

This early history of CBOs signified the birth of pluralist democratic cultures in many developing countries but has been ignored in the current policy environment characterized by free market reform and the dismantling of the social democratic state apparatus. With the imposition of structural adjustment programs and neoliberal economic policies in Africa, Latin America, and South Asia, CBOs have become useful and even essential to the functioning of international donor institutions. The lack of state infrastructure, combined with the decline in state entitlements to the poor, has led donor agencies to channel greater amounts of aid to CBOs and NGOs rather than to state governments. (Kamat, 2003, p. 65)

The complaints on the part of those in opposition to "free trade" often revolve around the idea that if these organizations and the nations themselves want to compete in a global market then true fair trade must be the answer. The gift of aide to any nation is welcomed but the WTO opposition demands that aide is not the answer, as these people are not seeking to be provided with their daily bread they want to work for it, for a fair price. This is also a thematic symbol in "Black Gold" as aide distribution is juxtaposed with farmers working in the fields, meeting to talk about how to build a school with no money and how to create a market for their goods that is not dependant upon the commodities market for pricing. Clearly coffee just serves as a limited example of the problems associated with globalization. The limited or non-existent voices of developing nations are limited in many areas and regions not limited to in any way the coffee or agricultural markets.

As the Taliban regime fled Kabul, the World Bank and other development agencies began discussing their role in the rebuilding of Afghanistan. Meeting in Islamabad, Pakistan from Nov. 27 to 29, 2001, the World Bank, Asian Development Bank (ADB), and United Nations Development Program (UNDP) hosted a conference on "Preparing for Afghanistan's Reconstruction." Nearly 60% of conference participants were representatives of donor nations such as the United States and officials from the host institutions. NGO representatives and Afghan professionals comprised the remaining 40%. (Jatkar, 2002, p. 88)

The resulting voice then is limited to those who have a say in where the money is coming from, rather than where it will be going to, which means that the nation who understands its cultural and economic history is not in the forefront of the resolutions.

Environmental Convergence/Divergence

Another desperate issue that needs to be addressed in global market negotiations, that has also been sorely neglected is the balance between economic growth and environmental damage. As agriculture and other raw industries spring up and expand at the whim of market shift the environment is becoming a victim as well. Creating sustainable practices in agriculture and mining, under pressure of the need to produce more product to elicit the same or less profit puts the traditional stewards of the land in a precarious position and the result is often ignoring sustainability.

A the best solution to the problem of habitat destruction may be for South American countries and donors to invest in agricultural development and education. For example, if investments were made in agricultural research and extension, and South American agriculture became more productive, demand for farmland would fall. Investing in education is equally important. "The bottom line is to give people better alternatives where they already live so they won't become agricultural colonists in tropical forests. Conservation depends more on economic development than on anything else. Unless this is recognized, the campaign to save South America's biodiversity will fail." ("Saving Rainforests May Be," 1994, p. 15)

Though the protests at WTO meetings and other globalization assemblies serves to at least give pause to developed nations and corporate interests about the willingness of the developing nations to lay back and take it as a carrot to future promises of return and aide, there is a clear sense that protest is not enough.

Economic and Democratic Divergence/Convergence

Economy and democracy are at odds with the globalization movement, as it leaves those at the bottom in the most vulnerable of economic positions and this must be addressed on many levels. In the book Globaphobia Gary Burtless points out that though many assessments of the modern economy are decidedly positive others claim, the WTO protesters included that the economy is, "...very kind to a few at the top, but barely rewarding for many in the middle, and a continuing nightmare for those at the bottom." (Burtless, 1998, p.1) the question then arises with regard to globalization that because this economy is expanding to the global marketplace, where the majority of peoples suffering from this "continuing nightmare" live, all care must be taken to redress this social concern. (Spotts 2005, p.5) Some will invariably argue that the development of trade agreements is simply the next step in a self-serving corporate mindset to more effectively direct the funds into the pockets of those at the very top.

Consumerism Divergence/Convergence

The divergence camp demand that consumers take notice, as the problems are likely to get worse before they get better, transitional market or not, consumers need to follow their own consumer footprint to understand where they are buying products from, and who is reaping the benefit and then in the case that they find dubious results from such an investigation they need to stop buying those products and buy others where all the people in the chain of profit are being rewarded for their work. Though more important than this, the consumer needs to heed the warnings of the current practices of the globalized movement and begin to force the situation to correct itself through a demand for international corporate social responsibility. The WTO opposition would say that progress is great, but history will repeat itself and just as in the industrial revolution, without balanced discourse and the real implementation of change the progress will likely be made on the backs of those with the most to lose and the least collective voice.

The United States and many other nations, less successful in independent development are products of a historical global economy as many were outposts for colonial economic trade and industry. Through fierce individualism, as well as limiting technology and trade difficulties, associated with mostly overseas distribution in the past the U.S. And Europe has been doggedly self sufficient, almost since the American Revolution but many other nations have not had this experience. Things have and continue to change dramatically as increased consumption of goods as well as the ability of some nations to provide those goods or provide those materials for lower prices than what can be produced in the U.S. And visa versa is creating a more-global trade market than has ever been realized in the past. Additionally, technology has improved so rapidly in communication and transportation that a global market would seem almost inevitable. The U.S. In particular trades with other nations to acquire goods that it either does not have or cannot produce with ease or for the cost provided by the foreign nation. The phrase, global economy, is so frequently used it is hard to say what it does not encompass.

Import/Export Divergence/Convergence

Many economists have been concerned with global trade deficits of developed nations for a long time, concluding that the amount of goods exported as compared to what is imported is unequal and therefore lacking, yet the evolving economy of service, probably offsets such a change as the developed nations transition into providing services, often on an international basis rather than relying solely on industry, as employment traditionally has in the past. The economy of the U.S. now employs 50-70% of its working adults in service jobs. (Workman, 2006, np) Though this change is dramatic it is largely the result of a changing economic dynamic and niche for the U.S. And has greatly increased international tourism as well as changing the traditional manner in which the U.S. provides services internationally, as one of the leaders in new global trade and technology.

The Columbia Encyclopedia) Other developed nations, and in particular those in Europe also show similar patterns of economic development. Some might see this change as a leveling factor, in that intangible goods of these nations tend to dominate the local market while they then become more dependant on those nations that provide tangible goods to them, and yet realistically these nation, and the organizations born there have many decades of experiences working out the best deal they can get for goods, almost without concern for the outcome, as long as goods are cheep, when they are shelved.

Conclusion

International trade is assumed to benefit both nations as they are able to receive and export goods that otherwise would have gone unutilized in surplus, though for the most part the businesses involved, in a capitalistic society benefit the most from global trade and in theory are then able to grow to provide more employment and put funds back into the nation of origin. There are many who question this structure, saying that international trade does not benefit those with little or no stake in the system, especially in the situation of a trade deficit, yet the national economy tends to be far more healthy when trade is occurring, as apposed to when it is lagging in either direction and consumers are able to obtain more in the way of goods and services than they would otherwise. The international trend of those who have getting richer and those who have not gaining relatively little is also, by some standards an outgrowth of global economies, in a capitalistic system that is a concern for many that has been traditionally answered by trade barriers and controls but with recent changes in the global economies this market stake situation is still alarming. (Conti, 1998, p. 42)