CHAPTER 1

GLOBALISM

GLOBALISM > LOCALISM = the emergence of:

1. An integrated world economy

2. A universal Westernized culture (individualism + capitalism)

3. Diminished Western nationalism

WHO IS RESPONSIBL

E FOR GLOBALISM?

1. Companies that sell outside their home market.

2. Companies that offshore (manufacture abroad)

3. Companies with foreign suppliers

4. Companies that hire illegal aliens & the consumers who use the products & services of these companies.

5. Stockholders who invest in global companies.

6. Nations dependent on foreign natural resources.7. Nations that join the World

Trade Organization, International Monetary Fund, or free trade agreements.

8. People who buy foreign owned brands & don’t even know it

9. YOU!

GATEWAYS TO GLOBALISM1. Global proliferation of

individualism culture & the emerging universal generation

2. Digital communication technology

3. Turbo-capitalism4. Media5. World Trade organization,

International Monetary Fund, International Standards org.

6. Oil7. Outsourcing of Western

manufacturing & computer services to Asia & other developing nations

8. Asian financing of Western government fiscal deficits

9. Economic power > Military

10. Free trade agreements

COMPONENTS OF

GLOBALIZATION

THE IDEOLOGICAL ASPECTS OF GLOBALIZATION

1. The ideological exports of powerful nations often include their government & economic system (such as representative government & profit-maximization capitalism for the USA), as well as their culture (American pop culture).

2. Such exports are designed to advance the nation’s nationalistic agenda & open new export markets.

TECHNOLOGICAL ASPECTS OF GLOBALIZATION

1. Global telecommunications infrastructure

2. The Internet & e-commerce3. Cross-border licensing of

patented technology between corporations

4. A universal computer operating system in place (Microsoft Windows)

POLITICAL ASPECTS OF GLOBALIZATION

1. Power of global government organizations (GGOs) over nations

2. Rise of non-profit governmental organizations (NGOs) to represent non-business interests around the world

3. Emergence of the International Criminal Court

4. Proliferation of regional free trade agreements (EU, NAFTA, etc.)

FINANCIAL ASPECTS OF GLOBALIZATION

1. Worldwide integrated financial markets

2. The World Bank and International Monetary Fund

3. Instantaneous electronic transfer of funds across borders

4. Dollarization: consolidation of the number of currencies used throughout the world

5. “Hot money”--$3 trillion crossing borders daily

CULTURAL ASPECTS OF GLOBALIZATION

1. Global consumerism spurred by giant global corporations & the advertising of global brand names

2. Emergence of middle class social structure in a growing number of developing nations

3. Greater international tourism & immigration

4. The emergence of a universal generation of young people who share more cultural similarities than differences

ECONOMIC ASPECTS OF GLOBALIZATION

1. Relatively easy movement of people, merchandise, technology, & capital across borders

2. Rising free trade in large part due to regional free trade agreements and the World Trade Organization (WTO)

3. Spread of capitalism to China, the former Soviet Union, & to developing nations

MARKETING ASPECTS OF GLOBALIZATION

1. Rise of the service sector, backed by intellectual capital (patented, copyrighted products) among developed nations

2. Sales of global brands with global product designs around the world

3. Emerging consumerism in former Communist nations

4. Rapid increase of joint ventures between companies in different parts of the world

OPERATIONS ASPECTS OF GLOBALIZATION

1. Off-shoring of manufacturing from highly industrialized nations to developing nations

2. Standardization of business technology & operations practices by the International Standards Organization (ISO)

3. Rapid informational flows across borders

4. Emerging ecological problems requiring proactive global cooperation

Fat Kodiak bears have a system working for them because they live near GOLDilocks. The system satisfies both their needs AND their wants. These fat bears have so much that they waste a lot of the luscious salmon scooped out of the gorged streams.

Mother nature has provided these bears with a system that takes care of their needs, but not necessarily all of their wants (they'd rather eat salmon than berries). They are not quite as big or fat as the Kodiak bears, but they are in good health.

THEGARBAGE

CANBEARS

Human land encroachment (colonialism & “turbo” capitalism) has ruined the feeding system of these bears, so they fend for themselves as best they can out of garbage cans. The garbage can bears aren’t served by GOLDilocks. They long to visit their kindred bruins who have it made in a better system, but those bears don’t share; they want MORE from GOLDilocks.

FOUR WORLDS

World #1: Affluent Middle

Class (“Godzilla” nations): USA,

Western Europe, Japan, Hong Kong,

Taiwan

Pop culture exports (media, music, lifestyles), service

sector, patents & copyrights

Who made Jerry’s clothes & cell phone? Who takes care of his luxstadium? House? Swimming pool? Lawn? Car maintenance?

Shopping? Taxes? Laundry?

Cooking? Crashed computer? Xmas

presents?

World #2:Rising middle class (large

“Tiger” nations): Mexico, Chile,

Singapore, Taiwan, etc.

1. Skilled labor manufacturing

2. Computer hardware & electronics

3. Cell phones4. Medical equipment

World #3:

Emerging middle class (“Tiger cub”

nations): China, SE Asia,

India, some of South America

1. Low-skill labor assembly (sports equipment, shoes, bicycles, etc.)

2. Local, non-exported agriculture

3. Under-employment & unemployment

World #4:

The non-developing world

(“zebra” nations):

Africa, Middle East

1. Small farm agriculture

2. Oil, gas, minerals & other earth exports

3. Social problems stemming from historical colonialism, religious intolerance, & political dictatorships

•How can impersonal, invisible, uncontrollable capitalism be managed in C21 to bring its potential benefits to more of the world’s people?•Currently there is no agreed upon answer to this question.•Something is going to have to happen in C21 that didn’t happen in C20 for capitalism to serve ALL of the world’s people, not just a few.

UNBALANCED

GLOBALISM

GLOBAL CONSUMPTION PATTERNSThe USA (4.5% of population), Europe, & Japan currently consume 68% of the global economy, while the “BRIC” (Brazil, Russia, India, & China) consume only 10%. Obviously, global consumption patterns are not balanced, equitable, or stable. The 21st century will be a time of fluid change in global consumption & the capitalist system.

THE TWO-EDGED SWORD OF GLOBALISM

“There is no question globalism has been responsible for flourishing international trade and foreign direct investment, particularly for China, Brazil, India, and Turkey, to name just a few. But globalization has also generated imbalances in the market that have resulted in disastrous consequences both in the developing & developed worlds. Globalism ought to be good for all countries.”

UNBALANCED WORLD POPULATION

1.Current estimated world population: 6.3 B; 10.5B predicted by 2050

2.Asia, including India: 60% of global population

3.Africa: 15%4.Europe: 11%5.Latin America/Caribbean: 9%6.North America: 5%7.Oceania: less than 1%

THE POST-AMERICAN

WORLD (a book by Fareed

Zakaria)

Fareed Zakaria (foreign news editor for Newsweek magazine) says his new book is “not about the decline of America, but rather about the rise of everyone else.” This rise of “emerging” global economies (especially China, India, Brazil, Russia, & Mexico) has accompanied the 21st century decentralization of global power, the natural outgrowth of the fall of Communism in the late 20th century. “Power is shifting away from nation states, & the traditional application of both economic & military power have become less effective.”

KEY OBSERVATIONS BY ZAKARIA

1. The biggest challenge stemming from the “rise of the rest” is to “stop the forces of global growth from turning into the forces of global disorder and disintegration.”

2. Because the U.S. is the top world power, it will be most challenged by this new global era.

3. With so many other nations on the rise economically & politically, the U.S. must allow other nations to participate in running the world’s affairs.

4. American culture is not sufficiently globalized to deal with shared governance. Americans are “increasingly suspicious” of the new global order & are encouraged in their ethnocentrism by an “irresponsible national political culture.”

5. China currently has a larger supply of global currency assets than any other nation, reflecting its rising global status.

6. By 2040, India will be the 3rd largest global economy, behind the U.S. & China.

7. America faces a serious future growth dilemma stemming from its high indebtedness. “Americans are borrowing 80% of the world’s surplus savings and using it for consumption. We are selling off our assets to foreigners to buy a couple of lattes a day.”

8.“The American political system has lost the ability for large-scale compromise, and it has lost the ability to accept some pain now for much greater gain later on.”

9. “For the past 2 decades the growing integration of the world economy has coincided with the intellectual ascent of the Anglo-Saxon brand of free market capitalism. The freeing of trade and capital flows and the deregulation of domestic industry and finance have both spurred globalization & come to symbolize it.”

10. “America is losing economic clout and intellectual authority, as emerging economies are shaping the direction of global trade so they will increasingly shape the future of global finance.”

11.“More than a new capitalism, the world needs a new multilateralism.”

12.“Critics claim that the Washington consensus or deregulation and privatization, preached condescendingly by America and Britain to benighted governments around the world, has actually brought the world economy to the brink of disaster. If this notion continues to gain ground, politicians from Beijing to Berlin will feel justified in resisting moves to free up the movement of goods and services within & between their economies.”

Not too many years ago, a sports team was sold to a foreign entity. I wondered, how much did these people know about baseball? It’s been happening, this selling off of America, for several years. I don’t know all that has been sold to foreign nationals and I doubt the average citizen is aware of this selling off of America. Not too long ago, some wanted to sell an American port business to a foreign nation. Recently, the Chrysler building was sold to another foreign concern. Now Budweiser is to be sold to Belgians. What’s left? If we average American knew what has been sold to foreigners, I would say we would not at all be pleased. (Letter to the editor)

THE 21st CENTURY

DRAMA OF GLOBAL

BUSINSS

Click for

CHARACTERS

in the global business drama

PREVIEWS OF THE COMING 21ST

CENTURY GLOBAL DRAMA

?

TOP 10 ECONOMIC

REVERBERATIONS

OF THE CAPITALISM

GLOBAL DRAMA:

1. Currency values2. FDI flows3. Geo-political power &

interdependencies 4. Importing & exporting

patterns5. Industry/corporate

profitability

6. Interest rates7. National

protectionism8. Stock prices9. Taxes10.Unemployment

BUCKLE YOUR SEATBELTS!

21ST century global megatrends usually arrive unannounced, unexpected, & leave a trail of uncertainty.

1.Global mortgage financing meltdown

2.EU member bail-outs3.Currency

protectionism4.Chinese defective

exports5.Rebuffing of Western

financial policy by China

GLOBALDRAMAS

DRAMA #1Large nations

end agricultural subsidies

1.Domestic unemployment in AG industry

2.Decline in AG exports & increase in imports

3.Standard of living benefits to DCs

DRAMA #2Asia cuts its

USAinvestments by 20-25%

1.Hiking USA T-bond interest2. Rising USA

taxes3. Decline in USA

dollar4. Recession

DRAMA #3

Significant new global tax hikes on natural & resource consumption (gas,

wood, water)

1.Declining profits & stock prices in connected industries

2.Increased R&D for alternative resources

3.Decline in USA dollar

DRAMA #4

China gains control over the

global supply chain for all

digital products.

1.Increased consolidation & concentration of digital industry

2.Disruption of industry price declines

3.Digital manufacturers increase influence over software developers

DRAMA #5Expansion of NAFTA into the free trade agreement of the

Americas eliminates all trade barriers in North, Central, &

South America

1.Rise of corporate liquidations, concentration, & privatization in Americas

2.Rising FDI flow to Americas

3. Impetus for global free trade triangle

DRAMA #6

The WTO mandates

global sustainable

income standards

1. Employee lay-offs in developing nations

2. Stock price declines in outsourcing corps

3. Increase in “shadow” (illegal underground) corps

4. Longer workerhours in nations lacking

overtimepay

DRAMA #7EU ratifies a

constitution that significantly

expands government

power

1.Rising EU taxes2.Increased EU

mixed capitalism3.Rising stock

prices in EU’s larger companies

DRAMA #8The WTO, IMF/World Bank merge into a single economic

global government organization

1.Increases in FDI flows to individualism capitalist ecos

2.Power surge for Western global corps

DRAMA #9

Asian nations pledge to base their

future economic growth on trading within Asia more

than with the West

1.Fall of Western currencies

2.Rise in stocks of Asian-based corps

3.Rise in Chinese geo-political

influence

DRAMA #10

EU accepts Turkey as a full-fledged

member

1.Increase cooperation between largest EU economies

2.Rising FDI into Turkey-based corps

3.Rise of Euro4.Backlash of European

racism

DRAMA #11

The world’s existing regional free trade

agreements consolidate into a single, integrated

FTA

1.FDI, stock price, & currency declines in protectionist & mixed capitalism nations

2.Stock price increases in Godzilla corps

3.New pockets of unemployment & “creative job destruction"

DRAMA #12

Faster than predicted

middle class growth in

China & India

1.Rising FDI & outsourcing in both nations

2.Rise in C & I domestic corps

3.More mergers between Western & Eastern corps

DRAMA #13

Trade wars among Asia

nations

1.Eco destabilization of entrepot Asian nations

2.Greater influence of China over Japan & region

DRAMA #14

The Kyoto global warming protocol mandates that all

nations must cut CO2 emissions 10% annually for 10

consecutive years

1.Fall of profits & stocks of CO2-heavy corps

2.Fall of FDI & currencies in “red bulls” (nations living beyond their means) & rise in “green bears” (nations with resources to spare)

DRAMA #15

Joblessness soars in

Mexico

1.Increased USA taxes for law enforcement bulk-up

2.Rise of American racism

3.Increased drug cartel violence in both MX % USA

DRAMA #16

Permanent free trade agreement

between USA & EU

1.Rise in FDI & Godzilla corp. stocks

2.Hypocritical controversy over mixed capitalism

DRAMA #17

China becomes world’s largest economy and

market

1. Increase in C. domestic corps

2. Increased FDI for entire region, especially for Asian entrepot nations (those who ship global exports to China)

3. Empowering Chinese-owned domestic corps

USAGB

DRAMAS

USA DRAMAS DEALING

WITH TRADE

DEFICITS

DRAMA #1USA mandates 5 years to turn trade deficits into surpluses

1.Legislation to curb outsourcing

2.Devalued dollar sparks global currency conflict

3.Rise of global protectionism

DRAMA #2

America devalues $ to

stimulate exporting

1.Complaints from Asian investors

2.More expensive imports

3.Subsidizing corps who manufacture in USA

DRAMA #3Interest rates on

government bonds hiked to attract

more incoming FDI

1.Slowdown of domestic borrowing, investment, new job creation

2.Increased sale of treasury bonds

DRAMA #4America imposes

high “luxury” taxes on imported products

1.Trade wars & WTO suits

2.Violation of NAFTA

3.Complaints of USA outsourcers who import to USA

Drama #5USA subsidizes America corps

that don’t off-shore

1. Hiking of USA T-bond

interest2. Rising USA

taxes3. Decline in USA

dollar

DRAMA #6

NAFTA repealed

1.Fall in FDI to NAFTA zone

2.Rise of Mexican protectionism

3.Decline of USA exports to MX & Canada

USA DEALING

WITH GOVT. SPENDING DEFICITS

DRAMA #1

New USA legislation mandates permanent

balancing of the federal government

budget within 5 years

1.Tax increases at national & local levels

2.Decreases in govt programs & rise in social problems

3. Prolonged recession

DRAMA #2New financial

legislation & higher interest rates

encourage Americans to save

more, consume less

1. Rising corp. equity but falling revenue

2. Declining dollar, eco growth, importing, FDI, Asian stocks

USA DRAMAS DEALING

WITH FEDERAL BUDGET

CUTS

PRICE OF THE BUDGET CUTS AHEAD

1. Dampened eco growth2. Higher unemployment3. Declining value of

stocks, currency, FDI4. Gradually balancing

the budget5. Rise in social problems

DRAMA #1

2% annual increase in federal taxes for 5 straight years to finance temporary

aid program for eliminated govt.

workers

DRAMA #2USA to cut military budget 1/3 over 10

years while withdrawing as

“policeman of the world”

DRAMA #3Most forms of

subsidized health care eliminated

over 7 years

DRAMA #4Govt.

privatizes Social

Security system

DRAMA #5Agricultural subsidies

eliminated over 7 years

DRAMA #6Federal food

stamp programs eliminated

over 3 years

DRAMA #7All federal aid

to public schools

eliminated over 6 years

DRAMA #8Post office

system privatized over

3 years

DRAMA #9

Federal education loan

program truncated

DRAMA #10

Privatization of national

parks system

DRAMA #11States given mandate to

consolidate or eliminate 1/4 of

higher education institutions within

10 years

DRAMA #12Legalization of

most illegal drugs to cut

state & local law enforcement

budgets in half

DRAMA #13

Crackdown to expel all illegal

immigrants

DRAMA #14

Official adoption of the metric system to cut costs of non-

compliance with ISO standards

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UNKNOWN ZONE

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OECD undertakes long-term program of

significant economic subsidies to the

world’s least developed economies

(due to continued ineffectiveness of

GGOs)

Global insurance companies drop coverage of all “acts of God,”

including hurricanes,

tornados, & floods

Swiss banks open secret accounts for

review by world governments and judicial authorities

WTO regulates Internet &

taxes Internet

sales

WTO grants Microsoft legal monopoly to become the

world’s official computer

operating system

Nuclear war in the

Middle East