We convened three experts for a discussion ofglobalization and its discontents.Our discussion moderator, James Glassman, residentfellow at the American Enterprise Institute, is a formereditor, publisher, and Washington Post columnist whonow hosts the Web site TCSDaily.com, which concentrateson the connection between high tech and public policy.Moisés Naím, currently the editor-in-chief of ForeignPolicy magazine, is a Venezuelan economist who hasserved as a World Bank official and as minister of tradeand industry for Venezuela in the 1990s. 

 

His justpublishedbook is Illicit: 

 

How Smugglers, Traffickers,and Copycats Are Hijacking the Global Economy.Claude Barfield is a trade expert, former consultant tothe U.S. Trade Representative, and resident scholar at theAmerican Enterprise Institute. He is the author of FreeTrade, Sovereignty, Democracy: 

 

The Future of theWorld Trade Organization. He is currently writing abook about China.While many see globalization as a recent development,our experts explain that it is a phenomenon that has beengoing on for a long time, in a variety of forms, virtuallysince people of one nation began trading with those ofanother. In fact, the period from the 1870s until the FirstWorld War, a time of tremendous change in transportationand communication, was once seen as a golden age ofglobalization. The wide-ranging discussion that followsalso touches on recent changes in China and EasternEurope, the future of the nation-state, counterfeiting andother forms of illicit trade, how globalization affects thedeveloping world, its connection to a resurgence in religiousfervor, and globalization’s effect on both democracy anddictators.

 

Glassman: Let’s start with a basic question. What isglobalization?

 

Barfield: Well, everybody has a different definition, Isuppose, but in the terms that I am comfortable with,I think it is the impact of changing technology onindividual countries, individual societies over time. AndI think globalization is very much technology-based.The tighter-knit globalization we are experiencing todaywould be impossible without the breakthrough over thepast several decades in transportation efficiency (just-intimemanufacturing and delivery), underpinned by thecommunications revolution that now allows for instant messaging toindividuals andorganizations allaround the world.

 

Glassman:Is this a newphenomenon?

 

Barfield: No, Ithink you cango back to theGreeks. Anytime you’ve gotcommerce amongdifferent nations or different societies, you’re beginning tohave globalization, because what you’re having are ideas,movements, transactions—commercial transactions—between different peoples. And that’s the beginning, as itwere, of globalization. You’re not in an isolated, humancommunity that has no other contact.

 

Glassman: So you’re defining it in terms of trade?

 

Barfield: Well, I’m trying [to define it] in terms of societalcontexts as well as trade. The two most recent periodsthat people look at are the late 19th and early 20thcentury, from roughly the 1870s to the First World War,where you had technology changes in transportation andcommunication, you had a knitting together of what wewould call the developed world very, very closely, in factmore closely than the developed world is today. And somepeople look back on that as a golden age, as it were, ofglobalization. And then you could just pick up graduallyafter 1945 the gathering force in the ’70s and ’80s into the‘90s, where you really have this burst of new technologiesin terms of instant communication and very quick travel.I think public policy certainly can have an impact onglobalization. If one looks at the policies after 1920-21 inthe United States, and then after the Depression began inthe early ’30s in Europe and the United States, as well asthose countries like Argentina—which was quite advancedat that point—all of those countries had policies that wewould call autarkical [aimed at creating self-sufficiencyor economic independence]. They drew back intothemselves. They cut trade and cut investment.

 

Glassman: So these “autarkical” countries—are there anysignificant ones that are left?

 

Barfield: You couldtake North Korea asthe obvious exampletoday, but even thatis breaking down.So that I thinkyou had autarkicalsystems that theSoviets set up inEastern Europe withinternal policieswhere you didn’treally have muchtrade.

 

Glassman: Some people say that globalization is anAmerican idea, that the rest of the world is adopting anAmerican concept. Is that accurate?

 

Barfield: Only to the extent that I think the UnitedStates, given its position as the 20th century evolved, wasalways on the cutting edge of technology. And that wastrue even during the Depression.

 

Glassman: What are the benefits of globalization?

 

Barfield: I think the main benefits are the ability toconsume better goods and better products at cheaperprices, to have a better quality of life. That begins ineconomics, but it doesn’t end there, because people haveother goals in their lives besides just economic goals. ButI think that globalization is a means by which they canreach those other personal and national and societal ends.

 

Glassman: Moisés, in your new book Illicit: HowSmugglers, Traffickers, and Copycats Are Hijacking theGlobal Economy, you talk about globalization in terms ofnot just technological, but also political, change: “Onemajor change that this most recent wave of globalizationoften brings to mind is the revolution in politics, asdeep and transformational as the one in technology.”Tell us, this revolution in politics, was this causedby the revolution in technology or the revolution incommunications? How has this happened?

 

Naím: I don’t think we know. All we know is that ithappened at the same time, and there is a very good,solid case to say that the more information people have,the more free they are to learn how others live. That has created strong incentives for them also to strive and fightfor freedom. And so there is a connection between newcommunication and transportation technologies and thepolitical revolutions of the 1990s that opened borders andcreated a wave of democratization. It’s going to be veryhard to really decide on causality, but it doesn’t matter. Allwe know is that these two things converged, and I thinkit’s very important.One of the things I try to do in the book is todecouple the very common association betweenglobalization and trade, or globalization and investment,or globalization and economics. I think it’s very importantthat we understand that the world now is connected inways that go beyond economics, and beyond trade. Youknow 9/11 is an example of globalization. The attack onthe World Trade Center was driven by political turmoilon the other side of the world. The terrorists relied uponthe tools and technologies of globalization. They alsotook advantage of the opportunities created by more openborders due to the political changes.

 

Barfield: I agree with that. And I’m not sure what thedimensions were of the political revolution. But I do havea cautionary note. And this is a puzzle that we will haveto work out in the next years, not just we, but all nations.With globalization you get technology coming over theborders, and governments not having as much controlover their populations as they did, but the nation-state isstill the only focus of democratic legitimacy. There is nodemocracy above the nation-state. It may be at some pointyou could have it. But you’ve got to work at this with theapproach of what is possible, or what is legitimate for anation to do, and what it should give up. And we argueabout that. I mean the U.S. administration’s position onthe International Criminal Court, or what powers weshould give to the United Nations, or the World TradeOrganization for that matter.

 

Glassman: A lot of people have said that withglobalization technology, the nation-state would witheraway. Now, maybe it’s a little early to see it withering away,but do you think that’s going to happen?

 

Naím: No. And I do agree that the nation-state is a core,central organizing element of the international system.There is a lot of discussion about the withered nationstate,and I frankly think that’s a silly conversation. Ithink the nation-state is going to be with us for a longtime. What is happening is that nation-states are beingtransformed by globalization, are being transformed by theliberal politics inherent in the new technologies. And theconstraints on nation-states are narrower and tighter thanin the past. You talk to any head of state today, even thosethat exercise the role of an authoritarian government, andthey will tell you that they’re very limited, or more limitedthan in the past.

 

Glassman: So what kind of constraints? Is it that thepopulation has more contact with the outside world, or is[it] also [the] flow of capital into countries?

 

Naím: All of that. Authoritarian leaders have to contendwith bond markets and international financial systemsthat constrain their economic choices. They have all sortsof trade constraints and possibilities. But also they haveinternational standards. They cannot torture as freelyand as openly as in the past. It happens, and it continuesto happen. But one interesting change we now have asa result of globalization and the changes of the ’90s, isthat dictators no longer sleep as easily at night as before.Dictators don’t always now go from the presidential palaceto houses and villas on the Riviera. They may end up likeMilosevic on trial.

 

Glassman: I’d like to talk about the downside ofglobalization since Claude had earlier talked about theupside, which is economic growth and more exposure tonew ideas and perhaps, as you say, more democracy, lesscontrol by dictators. Your book actually talks about oneof those deficiencies of globalization. You say that you’re convinced that more and more ideas and things are beingstolen or plagiarized. You begin with a terrific anecdoteabout how Bill Clinton’s autobiography was stolen inChina and rewritten to some extent. Is that somethingthat we really should be worried about? Is it a drain on theresources of countries that more and more are devoted toproducing intellectual property?

 

Naím: That’s a great question. When one thinks aboutcountries and the explosion of the international trade incounterfeits, the examples that come to mind are the veryexpensive sneakers that you can buy for a fraction of theprice if they are counterfeited, or the elegant ladies’ bags,or the DVDs of the movies and music that are constantlycopied and used without payment. And then the questionis, who is this, in effect, damaging?But one tends to forget several things. First is thatillicit trades are connected, and very often the personthat is selling you the elegant bag, the street vendor, is asillicit as the bag that he or she is selling you. He probablywas trafficked from another country, and he’s being usedand exploited by the networks that traffic in people topeddle these counterfeited items. He’s the equivalent ofan indentured servant trying to pay back the debt that heowes to the traffickers.Very often they are not the happy volunteers, theseworkers. Very often they have been—in the case ofthe international trade in women—enticed with theopportunity, with the notion that they’re going to betaken from Eastern Europe to Western Europe to workas domestic workers, and then they are coerced intoprostitution and exploited. And that is a huge element ofthat trade.Going back to the counterfeiters, we can joke aboutthe watch that costs $5,000 and one buys for $20 in thestreets of Manhattan and that’s fine, but there are otherthings that are counterfeited and they are very dangerous.There are counterfeit airplane parts that are defective andcause plane crashes. There are counterfeit medicines that,instead of curing, kill. There are all sorts of dimensionsassociated with these trades that are not as easy to tolerateas watches and handbags.

 

Glassman: Claude, let’s talk about some of the morepopular images of globalization. I just attended the WorldTrade Organization meeting in Hong Kong and there weresome South Korean rice farmers who got a lot of attentionfor their demonstrations, and their complaint was thatif South Korea opens itself up to trade in rice, then we’regoing to be out of a job. We can’t do anything but farmrice, they say. We’re not very good at anything else. They’reolder people. And rice doesn’t cost that much anyway. Sois the rice farmer’s dilemma part of the negative force ofglobalization, or is it actually ultimately positive?

 

Barfield: I think all nations are delinquent in dealing withthe negative sides of opening up your markets to tradeor investment basically because the policies are not verygood. Those South Korean farmers, that’s what they’vedone for generations, and nobody has stepped in to tryto—except by attrition, which is actually what’s happeningin Korea—to try to ease that change, the transition of theadjustment. I think all nations are delinquent. We don’treally have a handle on how you make this adjustment,but there certainly is a moral or a social obligation of thenation that is involved with this, whether it’s Korea or theUnited States or the British or the Europeans, to step in.And it can be a wrenching situation.

 

There is another side to this, though. When you getinto the anti-globalist movement, there is a lot of sortof romanticism that we should leave these tribes in theupper part of the Amazon or the impoverished farmersin Southern Mexico, that somehow this is a terrible thingthat’s happening to them, that Mexico is being openedup. Well, think of the life those people are living. Youknow, we think about the good old days here—a greatagricultural life in the 19th century. But even on ourAmerican farms in the Midwest and the South, those werelong days, people were not educated—there was drudgery. And so it’s the transition questions, in terms of publicpolicy, that I think are important. But as the other speakersaid, you’re not going to be able to stop it. It’s how do youmake the adjustment more socially acceptable, or morallyacceptable?

 

Glassman: Do you think that one way to make itacceptable, as some people say, is to have a different paceof taking down of trade barriers for developing countriescompared to developed countries?

 

Barfield: The United States and the Europeans and thedeveloped countries said, we just need a decade or decadeand-a-half on textiles and clothing, which are the mostprotected parts of many economies. So in the early ’90swe said give us that decade. The developing countries aresimilarly saying, well, give us that extra decade or decadeand-a-half, but the problem you face is nobody doesanything.So I don’t have any problem with giving more time,but it has to be a time certain set as much in concrete aspossible. And you have to also keep in mind that—whatthe developing countries often talk about when they talkabout so-called special and differential treatment—is toallow themselves to be plagued by their local monopolies,their inefficient industries, for a longer period. So you’renot really doing them a great favor.

 

Glassman: Besides this illicit trade in counterfeiting, doesglobalization have a downside?

 

Naím: It has negative consequences, and some of theconsequences we are already seeing. There is a generalizedsense of uneasiness in the population. You know, a lotof their resistance is the sense that something big isgoing on—changes that are very, very profound in theway people live, in which companies can survive or notsurvive. Entire sectors are being redefined. We just heardin this country, the United States, in the last year a veryfurious debate about outsourcing, about the whole idea ofutilizing employees in Asia, in India, to do work that usedto be done here, and you could detect a lot of anxiety thatwent way beyond the job losses. If you measure the joblosses with outsourcing, it’s very small. And then the bigdebate would lead you to think that we’re talking abouthundreds of thousands of Americans losing their jobs, andthat’s not the case.So there is a general anxiety about globalizationbecause there is a sense that there are changes going onthat are touching all of us, and we don’t know how, at theend of the day, our families, ourselves, our companies, ourcommunities are going to end up being hit or not hit.

 

Glassman: I always had the feeling that globalizationis an example of something where the benefits are verywidespread, and that the costs are very narrow and theyhurt specific industries—the American shoe industry orthe Korean rice industry—and those people are yellingand screaming, but you’re talking about something, amore widespread anxiety. Does that have a basis in fact?

 

Naím: The best example is an example you yourselfgave of the South Korean rice farmers, because I wonderwhere the consumers of rice were in those meetings? Ofcourse there is a whole generation of South Korean ricefarmers that are going to suffer from what’s happening tothe international trade rules in rice. But far more peopleare going to benefit from the opening of trade and theelimination of subsidies—the trade-distorting subsidies inrice. These are consumers that are not represented therebecause each one of them is going to benefit in a tiny way,in often an imperceptible way, whereas the Korean farmersare going to be hit right now in a very measurable way. Soit’s easier to mobilize them and organize them.Your point is that, yes, that is happening, but there issomething wider. And I think that we are still adjustingour minds to a new world where the traditional ideologiesof the past—you know, socialism or Soviet Union-typecommunism—gave a lot of people anchors on how tothink about the world and how to interpret changes, a world in which youhad two superpowersthat balanced eachother. Now there isonly one, and everyday we get newsof changes that wedon’t know how tointerpret, from cloningto things broughtby the Internet, tothe illicit trades, tothe war in Iraq, tointernational suicidalterrorists that arewilling to kill and die.

 

Barfield: But that’s not just true in the closed-off societies;it’s true in the United States, too. We are a society that hastraditionally been mobile, accepting new ideas, and [with]much greater capacity to do that and not be worriedthan other societies. But I do think that looking beyondeconomics, there is a greater sense now that there are a lotof forces that are out of your control. I’m talking aboutthe individuals; I’m not talking about governments. Andit would come from anything from biotechnology throughthe extraordinary impact of the information revolution.Young people, I think, accept a lot of this stuff andunderstand it. They understand how to deal with their cellphones and all the computers, et cetera, but they’re stilleven more aware of the fact that this is something whenthe technology is really mind-boggling, even for them.

 

Glassman: But are things really more out of people’scontrol than they used to be, or is it that we know moreabout what’s going on in the world than we used toknow? In other words, I’m bringing up again the role ofcommunications, which may have overall beneficial effectsbut could also produce a lot more anxiety. For example,we’ve seen the number of natural catastrophes is on therise, but actually a lot of scientists believe that it’s notreally on the rise, it’s just that we happen to know what’sgoing on.

 

Barfield: I think the combination. People talk—youget these stories in the early to mid-19th century whenpeople first saw a train and it scared the hell out of them.Or you first got a radio and you could get beyond yourown county or city in the United States. But I think—Ijust think it’s the scopeof change comingfrom all directions andfrom various kinds ofdisciplines—technologyas well as science.

 

Glassman: Moisés,is there a connectionbetween globalizationand the rise inreligious fervor—some people call itfundamentalism—thatwe see not just in theMuslim world but in other religions?

 

Naím: We see it in the United States. There is no doubt.The results are a movement toward more religiosity andmore formalized practice of religion, and even a biggerpresence of fundamentalist interpretations of religionin daily life, and even in politics. I think behind yourquestion there is a powerful hypothesis; that, as the worldchanges, either because of globalization or the informationrevolution, that as all of the changes you two havediscussed touch all of us, people are looking for anchors.What is happening is that predictability has declined.People used to have a sense that their lives could proceedmore or less like those of their neighbors and parents.Now the sense is that many things can happen to yourlives—many wonderful things but also some very terriblethings that will make your life and that of your family notlook like the ones of your neighbors or your parents oryour brothers or sisters.So with that sense of uncertainty, of anxiety aboutwhere this is going—people need to have something tograb on to, and I think there is a very forceful opportunityto do that through religion. 

 

That is in some countries.In other countries religion has replaced the hope forprosperity as a way of thinking. In a lot of the MiddleEast, as we know, the economic performance, even incountries that are wealthy, is dismal. And if you combinethat with the demographics where there are a lot of veryyoung people that essentially have no hope, no hope forbetter politics or for participating in the public life andthe political life of the country, or no hope for reallyprospering and having more material goods, then religionbecomes a very interesting option. It’s often the onlyoption in terms of devoting one’s life to a cause, to an idea, to a hope, or to a sentiment, a religious fervor.

 

Barfield: The really fascinating thing, though, I think,is the Middle East certainly has to be front and center. Imean, just think about what’s going on. We talked aboutlives being uprooted and changed. Think about a youngperson, let’s say in the 1960s or the ’70s or ’80s in China,what they’re saying. Then think of this generation that’scoming along, let’s say teenagers in China now. We havesome young people at my institute—young Chinese whoare convinced that there will be some form of democracy.These are practical MBA types, they’re not dreamers, andyet that transition is going to be very difficult.

 

Glassman: Let me ask that question, which is almosta cliché, but I’d still love to know the answer: Doesglobalization—let’s just define it in economic terms asmeaning a more open economy, a more market-orientedeconomy—does that naturally lead to democracy?

 

Naím: I think it’s too soon to tell. We don’t know.

 

Glassman: Not just in China but anywhere?

 

Naím: Anywhere. We don’t know. Remember, we havehad waves of globalization throughout history. This is notthe first time that the world has experienced a very intenseintegration of different economies. This one startedat great speed in the ’90s. It is, again, the informationrevolution coupled with the collapse of the Soviet Union,the opening of countries that were closed before. Andit’s happening as we speak, and it’s happening at a speedand in ways that we still do not fully comprehend. Insome areas globalization is creating better conditionsfor democracies. In others, globalization is hamperingdemocracy.

 

Glassman: Where is it hampering democracy?

 

Naím: I am thinking of, for example, oil countries whereglobalization has created very large markets. The price ofoil these days is in large part very high because of what’shappening in China and because the global economyis growing quite significantly. That creates a stream ofrevenue for authoritarian governments, and those veryhigh revenues are inhibitors of economic and democraticreforms.

 

Barfield: I don’t disagree except I think the unfortunatething for them is they have this one resource, so the forcesof globalization don’t hit them as much.

 

Glassman: I think the bigger problem is that one resourceis owned and controlled by the government.

 

Barfield: Well, that’s true, but the whole thing is thatthese oil countries don’t have to scramble as they hadto do in Brazil, Argentina, or Chile, for example. Thiswhole question—to go back to your original question,does globalization “naturally” produce democracy?—Theanswer is no. However, this is a fight that is going on inintellectual circles—that I think Mr. Naím’s book takeson—between realists and so-called liberal internationalists.And we have, at the institute at which I work, those whowork in security and diplomacy say that economists, orpeople who favor globalization keep saying it’s going tolead to democracy. 

 

Well, look at the Chinese; it doesn’tseem to have done that. And I agree with that. I do notthink there is a natural progression.However, it is also true that with globalization, andeven with the fact that the Chinese government cancontrol the Internet in part, and they control these otherinformation sources, it is just impossible today to controlyour population in terms of information, in terms ofsealing them off, as you could do in Eastern Europe, inHungary and Czechoslovakia in the 1950s and ’60s, orChina in the 1960s. And then you realize that the Chineseare also letting their students go all over the world. Ifyou’re an authoritarian at the top, you’ve unleashed forces that you will ultimately not be able to control.Whether it will produce democracy, I don’t know, but it iscertainly true that it is going to be unsettling for whatevergovernment is in power.

 

Glassman: Do you agree with that?

 

Naím: Yes, I fully agree with that. Let’s remember for asecond that the majority of mankind today lives in nondemocraticregimes. It is normal. A normal human beingtoday is a person that does not eat three meals a day, whodoes not get information from independent sources, ifat all. A third of humanity today doesn’t have a phoneand has never made a phone call, and most of humanitydoesn’t live in democracies.The majority of children in the world do not go toschool. The majority of people in the world don’t haveformal paying jobs.

 

Barfield: But I think we need to be careful. I think youwould have to say that more than any other time inhuman history, you’ve got people living under some kindof democratic state.

 

Glassman: I think the number of democracies hasactually tripled in the last 30 years, although the majorityof people don’t live in democracies, if we count China as anon-democracy, as most people would.Let’s just talk about where globalization is going. Isthis—well, we’ve had periods in history when there wasglobalization, but it did come to a screeching halt for afairly long period of time, for at least 40 or 50 years. Is itpossible that we’ll see the same thing again? Isglobalization here to stay or is it cyclical?What particularly concerns me is that inthe developing world, we’re talking about alot of people who have really not joined thisglobalization process. Is there anything thatcan be done about that?

 

Barfield: I think if you look at developingcountries—forget about what the politicianssay and what they will sign to, or the heads ofstate will sign to in Hong Kong trade talks.Just take East Asia or even Latin Americaand just go back to the question. They refuseto sign up to treaties that lock in investorrights or investment, but they’ve thrown theirborders wide open.And the other thing to keep in mind is that, intrade terms, the amount of just voluntary opening ofmarkets—forget about the negotiations—is enormous inalmost every region except maybe Africa or the MiddleEast. What Argentina did and what Indonesia has done ininvestment over the last 20 years is far beyond anythingthey would put on paper, but it’s happening. In otherwords, they are convinced. They see that this is the wayto go, but they’re very nervous about being hauled beforethe World Trade Organization or some other internationalorganization and being told you have to do this. Theywant to be able to throw it open to foreigners, toGeneral Motors, or General Electric, but they don’t wantsomebody to say that you have to have the same rules thatyou have in your autonomous company there in Brazil orin Chile or in Mexico.

 

Thanks to the spread of modern technology, Amina Harun can communicate on her cell phone while selling watermelons at Kenya’s largest fresh fruit and vegetable market.

Glassman: But you’re generally optimistic about thedeveloping world as well as the rest of the world?

 

Barfield: Yes.

 

Naím: Again, if you take the definition of globalizationand heavily imbue it with trade and investment, then it istrue. Trade cycles may go up and down, and we may havea spur of protectionism.

 

Glassman: By the way, do you think that’s happeningright now?

 

Naím: No. I think that trade is very strong and free. Everyyear international trade grows, and has been growing more than globalGDP. So, yes,there are allsorts of tradeimpediments,and there are allsorts of subsidiesand distortions,but trade ismoving.Take abroader definitionof globalizationthat includes notjust trade andinvestment, andyou compare itwith the 19th century. When the telegraph came, therewas this furor of communication around the world. Butthe telegraph was mostly used by institutions. Instead, theInternet is being used by teenagers that get together withlike-minded teenagers across the world. There are all sortsof like-minded groups, interest groups, people that shareinterests, passions, technologies, hobbies, who get togetheracross borders and create virtual communities that haveall sorts of activities and capabilities and develop all sortsof new politicaldynamics. Thatis irreversible,because as Mr.Barfield said, youcan control theInternet but thereare limits to howmuch you cancontrol it.So the catis out of thebag. People areorganizing. Wehave more—thisis more individualglobalizationthan we have ever seen in history. 

 

The prior waves ofglobalization were institutional, were commercial, wherethe central actors were trading companies. Today there isa globalization of individuals, and that is a very importantdifference. «±