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The Eight Losers of Globalization

Who are the losers of globalization — and who are the winners?

April 19, 2002

Who are the losers of globalization — and who are the winners?

I remember the time when the government of Haiti was planning to lower duties on imported cooking oil. This was going to put the country’s only oil plant out of business — and its 300 employees out of work. The media ran an intensive campaign against liberalization, focusing on the 300 workers.

Yet, cooking oil represented 5 percent of the entire budget of Haitian households — and a much larger proportion for poorer families. Since imports would cut the price in half, this meant that liberalization would raise the real income of the average Haitian household by at least 2 percent in one fell swoop. In other words, it would have the impact of a year’s worth of GDP growth. The positive impact on poorer households was even greater.

The media, however, ignored this — and it does so in most countries. Because they tend to be unorganized and because the impact of price reductions on each individual is small, consumers in developing countries do not have a voice — but producers and organized labor do.

The same thing happens in the industrial countries. Overall, unemployment in the industrial countries has not increased systemically over the last 10 to 20 years. While some workers lost jobs, others found new ones. Indeed, far more people found new jobs than lost jobs. Yet, the media focus on losers — not on those who found new jobs.

Each of these items lends itself beautifully to graphic representation. It is easy, and indeed inviting, for CNN to take a shot of an unemployed worker in a U.S. steel town. Or, an endless row of Indonesian women bent over sewing machines.

Images of a Pakistani child stitching a football, dying monarch butterflies or bewildered Amazon Indians huddling near a bus depot are all equally poignant. As is José Bové bulldozing a McDonald’s outlet in Southern France — or Thai bank executives reduced to selling fish on the streets.

Proponents of globalization have a much harder time, because they cannot produce such dramatic and visual exhibits. Who benefits from the free movement of ideas, goods, people and capital?

The answer is: The vast majority of the world’s population. Yet, it is nearly impossible to show this in a photograph. Necessities such as food and clothing are much cheaper today than they were 10 or 20 years ago — in large part, this is a direct consequence of liberalization and trade expansion. Such gains benefit literally billions of people, while workers who lost their jobs number in the millions, a quantum difference.

As an economist, I would respond to each of the points above as follows: