From Globalization to Localization Bringing Kentucky Out of Poverty

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  • 8/14/2019 From Globalization to Localization Bringing Kentucky Out of Poverty


    From Globalization to Localization: Bringing Kentuckyout of Poverty by Garda Ghista

    The Kentucky River in the state of Kentucky, USA

    The solution to removal of Appalachian impoverization is to adopt theprinciples that will support economic decentralization, namely: (1) Allresources in a socio-economic unit should be controlled by the localpeople. (2) Production must be based on consumption and not on profit. (3)Production and distribution of all natural resources and finished productsmust be carried out by cooperatives. (4) Local people must be employed inlocal business enterprises, and (5) All goods that are not produced locallyshould be removed from local stores. In addition to these five principles for

    creating and maintaining a decentralized economy, Sarkar has providedrequirements for the implementation of economic democracy, as follows:(1) The minimum requirements of a particular age food, clothing, housing,education and health care must be guaranteed to all citizens; (2)Increasing purchasing capacity must be guaranteed to all citizens. In fact,adequate purchasing capacity of every person must be guaranteed in thenational constitution; (3) The power of making economic decisions must lieentirely with the local people; and (4) Outsiders, non-local people, must in

  • 8/14/2019 From Globalization to Localization Bringing Kentucky Out of Poverty


    no way be allowed to interfere in local economies. This will stop theoutflow of local capital, the present cause of local impoverization. Thesefour requirements if implemented along with the principles necessary tocreate a decentralized economy will lead people closer to economicdemocracy, because the power to control the economy will lie with the

    people. When outside ownership of local land and resources is prohibited,and when local lands and resources are owned collectively by local people,at that point in time poverty in Kentucky will cease to exist, and willbecome a relic in the history museum. - Garda Ghista

    A typical Kentucky horse farm. The American Saddle Horse originates fromKentucky.

    BackgroundCommunism as an economic model was tried in various parts of the world suchas Russia and Eastern European countries, however it failed. Under communisteconomies the common people became even more impoverished than they were

    prior to communism. Communism is symbolized by state ownership and publicenterprise. In essence, it is state capitalism. Capitalism is the economic model invogue today in most countries of the world. The United States is the bastion ofcapitalism. In fact, many scholars and historians refer to it as the AmericanEmpire, which has replaced the British Empire of the 19th and 20th centuries.Capitalism is symbolized by individual ownership and private enterprise. Wehave today not merely capitalism but global capitalism, also referred to asglobalization. In all these economic systems, i.e., communism, capitalism and

  • 8/14/2019 From Globalization to Localization Bringing Kentucky Out of Poverty


    global capitalism, the economic system is centralized with control being in thehands of a few persons. The question begs to be asked as to whether thecommon people have fared well in centralized economies, and whether theyhave been guaranteed an improved standard of living based on increasingpurchasing capacity. According to economist Prabhat Sarkar, in a centralized

    economy exploitation cannot be eradicated nor can the poverty of the commonpeople be removed. In the above economic paradigms, economic policies areformulated by a handful of men for the benefit of those men who are generallyindifferent to the plight of the masses.

    GlobalizationFor the past several decades, economists, political scientists, presidents, primeministers and corporate CEOs have championed the cause of economicglobalization, saying that a nations economic goals should include comparativeadvantage and international competitiveness. Globalization as an economicconstruct has become the new global theology. Comparative advantage refers to

    the belief that accessing the cheapest source of supply is of greatest benefit andefficiency to a particular country. The term was coined by British economist AdamSmith in 1776 and later refined by David Ricardo in 1817. According to Smith andRicardo, all nations benefit when each nation specializes in particular products,i.e., specialized cash crops. If one nation has the land, climate, natural resourcesor labor to produce a good more cheaply than other nations, it should focus onmass production of that product. This gives it a comparative advantage in theglobal market. Economies of scale the idea that the more goods you produce,the cheaper they become to produce is a contributing factor in pushing forcomparative advantage, i.e., specialization of particular crops and goods in eachnation. Smith believed in open trade boundaries between all nations to maximize

    the benefits of comparative advantage. He further insisted that the invisiblehand of market forces would bring about the best global scenario. Neither Smithnor Ricardo could predict the unfettered flow of money across nationalboundaries. This free flow of capital has led to comparative advantage changingto absolute profitability, and hence absolute advantage has replaced comparativeadvantage. The other factor they overlooked was that comparative and absoluteadvantage were guaranteed not just by corporations but by state governmentsand their military machines. The present Bush-Cheney regime in the U.S. hastaken this guarantee to new heights such that militarization has replacedglobalization as the U.S. government invades other nations at will in the name ofgaining market shares or trade advantage for U.S. corporations. While the WTO,IMF, WB, NAFTA, MAFTA, et al were the legal handmaidens of U.S.corporations, today they became insignificant in the face of U.S. globalmilitarization to ensure obscene profits for the Iron Triangle, i.e., the nexusbetween government, military and corporations.

    Globalization supporters claim that the theory of comparative advantage andinternational competitiveness support the growth model, i.e., the growth of GNP.In reality, globalization compels state leaders to sign away the rights of the

  • 8/14/2019 From Globalization to Localization Bringing Kentucky Out of Poverty


    common people and hand them over to corporations and financial speculators. Inthat process the common people lose their right to better wages, better healthcare, better education and a host of other social benefits. Furthermore, in thename of benefiting international trade, what used to be an infinite spectrum ofavailable goods became a consumer monoculture.

    Production in other countries means unemployment for local people. Even thelowest-priced items at Walmart cannot be purchased when people areunemployed. Hence, the urgency is to bring production back to the localcommunity or region. When goods are produced in China or India, local peoplehave no control over that production or that economic process. In contrast, localproduction leads to local control and hence control over the local economy. Thegoal of concerned citizens is to regain control over the local economy. Thecommon people should not live at the mercy of transnational corporations who onany particular day may decide to move their factories from Bellevue, Kentucky toTijuana, Mexico or to Dhaka, Bangladesh. The owners of those transnational

    corporations may reside in New York, San Francisco, Germany or Australia andhave never met anyone in Bellevue, Kentucky. There is no relation, nosentimental connection, and hence there is corporate indifference to the welfareof the Bellevue population. If 90 percent of Bellevue residents lose their jobs, it isof no concern to corporate CEOs living in another region or country. Internationaltrade, be it in bananas, hormone-filled beef or genetically modified (GM)vegetables, benefits the owners and CEOs of gigantic agri-corporations. Thecommon workers and consumers do not benefit financially from internationaltrade. At present, the laws of the World Trade Organization (WTO), NorthAmerican Free Trade Association (NAFTA), Middle-East American Free TradeAssociation (MAFTA) and other global corporate bodies are carefully crafted so

    as to create a continuous curb on public expenditure, meaning health, social andeducation programs for the common people. Corporations, who in nexus withnational governments create global trade agreements, do not acknowledge anyneeds of the people. For this reason, alert citizens often refer to globalization asthe trade liberalization beast.

    Evidence indicates that economic globalization, whose hallmarks areinternational competitiveness and comparative advantage, leads to a rise inunemployment. Higher GNPs give the illusion that national economies benefitfrom globalization. However, only the owners of corporations benefit from globalcompetition and comparative advantage. The common people of all countries,including the United States, are suffering economically as a direct consequenceof globalization. As a simple example, in recent years India has signed severaltrade agreements with the United States that give all-powerful Americancorporations unhindered access to Indian markets as well as raw materials. TheIndian GNP has risen markedly during the same period. Both Indian and non-Indian businesses have flourished. However, during the same period, Indianfarmers have starved. In the past year in Central and Southern India, thousandsof farmers have committed suicide, either by hanging themselves or taking

  • 8/14/2019 From Globalization to Localization Bringing Kentucky Out of Poverty