Years of Poems and Spirits

Sat in COMM561 this evening. I knew I’d likely drop the class but had hoped to audit if it mattered. Boy, the class was a anti-globalization guerilla training camp: the students are partisans full of zeal but void of reason. All are eager to fight but none offers any idea how to run things once triumphed.

Not to say they must not be angry, or reason is the only means to achieve progress. But the problem is the debate develops in a closed sphere: a set of unchallengeable premises defines the boundry of the discussion–a feature that is more common among ideologies than science.

The premises are: globalization is a new form of imperialism; globalization is the source of alienation; globalization is a conspiracy. I tried to challenge those assumptions during discussion but didn’t go very far. Apparently, most of them have made the leap of faith and are beyond recall.

After the class, however, I thought of a new question–one that I like to pose to every globalization bashers: if you can do something to benefit one of your fellow country man who is wealthy, or you can do the same to benefit a poor foreigner (e.g. an indigenous Javanese), who would you choose?

If one is to answer the compatriot, then why anti-globalization? If it is the foreigner, doesn’t one take part in a form of globalization oneself?

The key is again, what one choose to identify with? The country one lives in? If not, how can one not call oneself a globalizationist?

According to Economist, India is slowly openning capital control. I suspect it is the first major economy to do so after AFC. So what it has learned from the AFC and how it will fare in the mid-run will be an interesting case study.

Some facts:
Manmohan Singh, India’s prime minister
Reserve Bank of India (RBI), the central bank.

As long ago as 1997, Palaniappan Chidambaram, then, as now, the finance minister, called capital-account convertibility “a cherished goal”. On his request, the RBI appointed a panel of experts to point a way there.

However, the Asian financial crisis broke out on July 1st, with the devaluation of the Thai baht, and condemned it to gather dust. India weathered that financial storm largely unscathed, for which its capital controls were given some credit.

The shelved report suggested some preconditions to liberalisation: that an inflation target be set; that the government’s big fiscal deficit be contained; and that the financial system be strengthened. It also called for monitoring of India’s balance of payments and the level of its foreign-exchange reserves. (All hit on the right marks: as from my own AFC study. However, the devil is in the details: strengthening financial system and monitoring may be too little too late if capital movement accelerates)

Red flag:
After three years of modest surplus is now in deficit—by as much as 4.6% of GDP in the third quarter of last year

Most interestingly:
India’s large reserves of foreign exchange (now about $137 billion) exceed by about $50 billion the sum of bank deposits held by non-resident Indians, foreign portfolio investment in India and short-term foreign debt. (Something I did not cover during my own research in Thailand or SK cases)

The book: In Defense of Globalization by Jagdish Bhagwati

About the author:
Jagdish Bhagwati has a distinguished academic career. On the short list of Nobel Award. He is the teacher of my Econ471 professor, Kar-yiu Wong, in Columbia.

About the book:
Why would any one who profited from Globalization bother to defend it? If he gains legit, why bother? If he profits unorthodoxly, why go public? After all, globalization is not a ponzi scheme like Amway or stock promotion, where the promoter has a personal interest in seeing more people participating. On the contrary, if all your competitors are outsourcing to India, you can’t underbid them anymore.

So who would bother to defend globalization? That is where the discussion is getting interesting. Because Bhawati speaks as if he is paying tribute to globalization on behalf of the folks on the receiving end of it.

Bhagwati was born in a colonized India and spent at least the early part of his career fighting wide spread poverty. In the book, he expresses deep sympathy for the poor. Although he discusses the impact global trade has on culture, women, democracy, wage and environment, inevitably, he circulates back to the subject of poverty. For women, it is about finding a job if she has to “walk out on her husband” (p240). For democracy, it is about gradually building up a substantial middle class (p94). To understand Bhagwati, one has to imagine oneself looking out from an apartment in New Delhi.

But for at least some of the polemicists Bhagwati tries to convert, they are looking out from a library or a Starbucks. Their concern is more likely about the alienating nature of capitalism: the spirited pursuit of material progress that is so essential to any social development in Bhagwati’s world is exactly what is giving them grief. And I would argue that such grief is just as valid as Bhagwati’s conviction, not some surplus sympathy or sentiment.

Recently, a reporter for the Los Angeles Times wrote a book (Enrique’s Journey) about a Central American boy’s journey to search for his illegal immigrant mother in America. His mother left him when he was still a toddler so even in his late teens he had never met his mother. After seven attempts and having endured unspeakable sufferings, he finally located her in North Carolina and settled down nearby. This may likely be another success story in Bhagwati’s account. However, this “all is well that ends well” attitude is rather limited. If one thinks of the boy’s journey as a whole, and as a pixel in the snapshot of humanity today, the irony starts to assert itself: before globalization, a poor child looking for his mother had to travel on foot, but would suffer no harsher humiliation than having to beg for food. Today, a poor child can travel by bus or train. At the same time, however, he must face the possibility of being attacked, robbed, raped and killed. One has to ponder not only the worthiness of such “success” but the value coordinates by which it is measured. Is consumable materialistic gain the only yardstick of man’s welfare? To what degree can we accept the degradation of humanity in exchange for utility improvement?

Having failed to acknowledge this non-material aspect of the globalization debate, Bhagwati is going to have to work extra hard to change the critics’ minds.

A quick and nasty comment on his prose–pompous, pretentious: like a servant becomes a master, schools his servant on how to wait on him then tip gratuitously. Yuk!