The Stone City

Words Made to Last

Wednesday, January 12, 2005

Distilling Wealth

The excellent Coyote Blog (newly blogrolled), in a thoughtful and comprehensive post on Respecting Individual Decision Making, accurately deconstructs anti-globalization:

Progressives do not like American factories appearing in third world countries, paying locals wages progressives feel are too low, and disrupting agrarian economies with which progressives were more comfortable. But these changes are all the sum of actions by individuals, so it is illustrative to think about what is going on in these countries at the individual level. One morning, a rice farmer in southeast Asia might face a choice. He can continue a life of brutal, back-breaking labor from dawn to dusk for what is essentially subsistence earnings. He can continue to see a large number of his children die young from malnutrition and disease. He can continue a lifestyle so static, so devoid of opportunity for advancement, that it is nearly identical to the life led by his ancestors in the same spot a thousand years ago.
Or, he can go to the local Nike factory, work long hours (but certainly no longer than he worked in the field) for low pay (but certainly more than he was making subsistence farming) and take a shot at changing his life.

I agree with Mr. Meyer about the contemptible, patronizing and casually evil nature of the anti-globalization movement, which is largely based on the feeling that subsistence farmers in faraway countries are cute. The hopeless reality is too distant to be considered. "The seasons pass today over the toil of the peasants, just as they did three thousand years before Christ; no message, human or divine, has reached this stubborn poverty." [Carlo Levi, in the preface to Christ Stopped at Eboli, 1945.] However, there is another facet of globalization, less visible when we zoom in on the individual opportunity seeker; I call it distillation of wealth.

First, consider the situation of a wealthy agrarian, or even of a wealthy nobleman at Versailles, in the 18th century. What could their wealth buy? At a guess, their largest expenditures would be on house, transportation, furnishings, and clothing, probably in that order. That is, they would require the services of masons, carpenters and joiners, grooms and ostlers, wheelwrights, smiths and more carpenters, tailors and seamstresses. The key here is that, once Europe escaped from the largely non-monetary feudal economy, the enjoyment of wealth necessarily entailed its dispersion. [Jewelry is the obvious exception, but I assume it was substantially less than those named.]

For the wealthy few in today's poor countries, this dispersion mechanism is no longer operative. Wealth, once gathered, is not dispersed back into the country, but instead is exported in exchange for highly concentrated luxuries (e.g., private jets). This is even more deleterious than the hoarding of hard valuables would be, because these luxuries deteriorate with time and depend on skilled labor for their maintenance. The wealth of poor nations is distilled into a concentrated form, and in that form it tends toward the further impoverishment, not the enrichment, of that nation.

The poor of the third world, thanks to globalization, have the opportunity to compete for the business of the first world's wealthy masses; but, thanks to globalization, they must also compete (against long odds) for the business of their own wealthy few.

Of course, the current "anti-globalization" protesters are not motivated by this knowledge, nor would their policies prevent the distillation and export of wealth. They want to throw out the baby and keep the bathwater.