Monday, February 11, 2008

In Defense of Global Capitalism

I just finished reading an insightful book on globalization by Swedish think tank Timbro's Jonah Norberg titled In Defense of Global Capitalism. This book is the first to rebut, "systematically and thoroughly, the claims of the anti-globalization movement. With facts, statistics and graphs, [the author] shows why capitalism is in the process of creating a better world." Below I have selected my favorite parts of my favorite chapters from the book and hope that they will prove insightful to you as well:

The Preface
"By capitalism I do not specifically mean an economic system of capital ownership and investment opportunities. Those things can also exist in a command economy. What I mean is the [classic liberal] market economy, with free competition based on the right to use one's property and the freedom to negotiate, to conclude agreements, and to start up business activities. What I am defending, then, is individual liberty in the economy. Capitalists are dangerous when, instead of seeking profit through competition, they join forces with the government…they are [then] a threat to the free market and as such must be criticized and counteracted… What I believe in, [first and foremost], is man's capacity for achieving great things, and the combined force that results from our interactions and exchanges. I plead for greater liberty and a more open world, not because I believe one system happens to be more efficient than another, but because those things provide a settings that unleashes individual creativity as no other system can. They spur the dynamism that has lead to human, economic, scientific, and [technological] advances. Believing in capitalism does not mean believing in growth, the economy, or efficiency. Desirable as they may be, those are only the results. At its core, belief in capitalism is belief in mankind."

Oppression of Women
"It is true, as many complain, that globalization upsets old traditions and habits. How, for example, do you maintain patriarchal family traditions when children are suddenly earning more than the head of the family? One of the traditions challenged by globalization is the long-standing subjugation of women. Through cultural contacts and the interchange of ideas, new hopes and ideals are disseminated."

That's Capitalism for You!
"The growth of world prosperity is not a 'miracle' or any of the other mystifying terms we customarily apply to countries that have succeeded economically and socially. Schools are not built, nor are incomes generated, by sheer luck, like a bolt from the blue. These things happen when people begin to think along new lines and work hard to bring their ideas to fruition. But people do that everywhere, and there is no reason why certain people in certain places during certain periods in history should be intrinsically smarter or more capable than others. What makes the difference is whether the environment permits and encourages ideas and work, or instead puts obstacles in the way. That depends on whether people are free to explore their way ahead, to own property, to invest for the long term, to conclude private agreements, and to trade with others. In short, it depends on whether or not the countries have capitalism. In the affluent world we have had capitalism in one form or another for a couple of centuries. That is how the countries of the West became 'the affluent world.' Capitalism has given people both the liberty and the incentive to create, produce, and trade, thereby generating prosperity."

Property Rights—For The Sake of the Poor
"Capitalism is not a perfect system, and it is not good for everyone all the time. Critics of globalization are good at pointing out individual harms—a factory that has closed down, a wage that has been reduced. Such things do happen, but by concentrating solely on individual instances, one may miss the larger reality of how a political or economic system generally works and what fantastic values it confers on the great majority compared with other alternatives. Problems are found in every political and economic system, but rejecting all systems is not an option. Hunting down negative examples of what can happen in a market economy is easy enough. By that method water or fire can be proved to be bad things, because some people drown and some get burned to death, but this isn't the full picture."

Mutual Benefit
"Trade results in the person who has a knack for making bicycles doing just that, the person who is best at cutting hair working as a hairdresser, and the person who is best at manufacturing television sets taking a job in the TV factory. Then those workers exchange, so as to get what they each want. Through free trade, we can consume goods and services that we could never have produced ourselves. The possibility of free choice means that we can choose the best and cheapest goods possible. Free choice gives us access to goods that we cannot procure by ourselves. In a Minnesota grocery we can buy bananas and pineapples, even though neither is likely to be found on a Minnesota farm. Even in northern latitudes, fresh green vegetables are on sale all winter, and people in landlocked countries can buy salmon from Norway. Free trade results in goods and services being produced by whoever is best at producing them and then being sold to whoever wants to buy them. That's really all there is to it."

Freedom of Movement—For People As Well
"Openness to immigration and emigration is also important for the sake of a living society. A diverse population, comprising people with different starting points and values, provides a greater variety of perspectives on long-standing social problems, and perhaps also a better chance of finding creative solutions to them. Immigrants can take what is most viable in American culture and combine it with traditions of their own, and native-born Americans can do likewise. Cultural innovation almost always flows from the contact or fusion of different cultures. It is no coincidence that the United States, the most dynamic society in history, was built by immigrants… In this way the [U.S.] is constantly renewing itself and laying the foundations of continued global leadership—economic, cultural, and scientific."

Let Them Keep Their Tariffs
"If we in the affluent countries truly believe in free trade, we must abolish our tariffs and quotas without demanding concessions from others. Forbidding the poor of the world to develop is immoral. Besides, we ourselves stand to benefit from freer imports, even if others do not want to import from us. But that does not mean it is wise of the Third World to protect its own industries with trade barriers. On the contrary, the best thing for their populations is for their tariffs also to be abolished. Those who want them to preserve their tariffs may constitute an inverted, mirror image of traditional protectionists, but the face in the mirror is no more attractive than the original."

Big is Beautiful
"What has happened in the age of globalization is not that corporations have acquired more power through free trade. They used to be far more powerful—and still are—in dictatorships and controlled economies. Large, powerful corporations have always been able to corrupt public institutions by colluding with rulers and hobnobbing with them on luncheons and dinners. They have been able to obtain protection through monopolies, tariffs, and subsidies just be placing a phone call to political leaders. Free trade has exposed corporations to competition. Above all, consumers have been made freer, so that now they can ruthlessly pick and choose even across national borders, rejecting those firms that don't measure up."

The Right to Choose a Culture
"The cultural encounters of globalization reduce the risk of people being trapped in one culture. This may come as bad news to the guardians of tradition, but many people can imagine no greater triumph than escaping from the stereotypes and constraints of their own cultures. Globalization may be necessary in order to escape hidebound gender roles, to be allowed to live according to one's own values, or to break the family traditions and enter a career of one's own choosing. Having other cultural expressions to refer to can help. How can the elite maintain that their own way of life is the only possible one when television and the Internet carry so much information about an infinite number of alternatives?…Regularly meeting people who do not think and live like oneself is an effective antidote to narrow-mindedness, parochialism, and smug complacency."

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