White man's burden

Ever since former World Bank chief economist Joseph Stiglitz tore into the Washington Consensus a year and a half ago, there’ve been various attempts to explain away Stiglitz’s examples of countries who’ve got shafted by globalisation.

Most, like economist-investment analyst Surjit Bhalla or Prof T.N. Srinivasan have chosen to stick to figures, figures of how GDP has grown in countries that have globalised versus that in countries that didn’t. And how, consequently, poverty has reduced the most in countries (country actually, since it’s really China everyone’s talking of) that were not able to take advantage of globalisation.

Prof Bhagwati’s book, as the title itself suggests, is clearly aimed at the Stiglitz converts, but in a different sort of manner.

For one, barring the odd (as in occasional) chart, Bhagwati’s steered clear of heavy-duty data, and the interested reader is referred to various citations in the book. Bhagwati contents himself with taking up some of the major attacks on globalisation (it-results-in-sweat-shops kind of arguments) and deals with them in a very relaxed manner, and isn’t averse to making a few digs at the anti-globalisers’ lack of intellect.

As for Stiglitz’s attack on the International Monetary Fund (IMF) for forcing countries to open up their capital accounts (IMF deputy managing director, Stiglitz says darkly, left the IMF to become a vice-chairman at Citigroup) due to an ulterior motive, Bhagwati simply agrees with the point that fully opening up capital accounts was, and remains, a bad idea for various reasons.

To the extent the book is trying to take on anti-globalisers, several of the points have been made before, but that doesn’t detract from the work.

From what I recall, using growth data over the past few decades, it was Bhalla that first came up with the concept of the white man’s burden revisited — that, since growth has been concentrated in yellow-brown countries (China-India) and has fallen in the Organisation for Economic Cooperation and Development (OECD) ones, it is only natural that all anti-globalisation protests (Seattle, Davos) should take place in white countries!

And it was Peruvian economist Hernando de Soto who first came up with an answer to the conundrum why-does-capitalism-succeed-only-in-capitalist-countries? Because, as de Soto argued, developing countries with their poor property laws, and miles of red tape, don’t allow entrepreneurs to grow their businesses.

With others having done a lot of work, Bhagwati leans on their work to make his point — the reason why Africa hasn’t really benefited from the promised returns from globalisation, he cites de Soto-type arguments, is because the continent doesn’t have the kind of policy framework required.

Perhaps this is why the latest buzzword in multilateral institutions like the World Bank and the IMF these days is ‘capacity building’, or teaching the natives how to change their policy/institution structure in such a manner that it ensures locals can participate in globalisation — unless you allow industries to expand capacity quickly, for instance, how can they produce more for the export market?

Globalisation is a form of cultural imperialism, the critics shout, a form of McDonalisation of the world. Well, if Bhagwati is to be believed, “the irony is not that McDonald’s has destroyed French culture, but how French culture and French consumers have decimated instead the mold that marks its American restaurants.” Apart from serving expresso and brioche, the company’s traditional red-and-yellow have even given way to muted maroons and mustards. And, yes, the famous arches have gone from many McDonald’s restaurants around Paris.

We, in India, of course Indianised would-be cultural colonisers by forcing them to serve paneer pizzas and fully vegetarian meals.

Globalisation leads to sweat shops and exploitation of child labour in countries from Latin America all the way till China, shout anti-globalisers like Naomi Klein. Greedy parents pull out children from schools to stitch T-shirts for the US market, say others equally passionately, though without the same degree of fame. Actually, says Bhagwati, when incomes rise (as they do during periods of export boom), parents actually put more children into school. For two reasons. One, they can afford to. Two, with globalisation, not only do wage rates go up, they go up more for those with a higher education, so parents even have an economic interest in educating their children more.

Bhalla has found this to be true empirically — NSS data show that a secondary school graduate gets four times the wages given to someone who’s done just primary schooling, and a college graduate gets eight times the salary of a primary school graduate.

In India, Bhalla has shown, this is the reason why there’s been a sharp increase in private expenditure on education — at the same time, by the way, that India’s export-to-GDP has been rising. Bhagwati doesn’t quote Bhalla, but he quotes a study by Eric Edmonds and Nina Pavcnik which shows that as the Vietnamese exported more rice, they educated their children more.

Will all this convert the non-believers into believers? Probably not, for as Bhagwati himself shows, the anti-people (anti-nuke, anti-trade, anti-abortion, etc) don’t always know what they’re protesting about.

In 1999, at Seattle, Bhagwati saw lots of kids dressed up as turtles protesting against the WTO and the Appellate Body’s decision in the shrimp-turtle case. Since the case revolved around the US decision to unilaterally ban shrimp imports from countries that did not use turtle-extruding devices (nets with narrow necks) as this caused turtles to die needlessly, one would have thought turtle lovers would have been overjoyed that the Appellate Body upheld the decision.

Bhagwati asked one of the protesters why he was protesting since the turtles had won the day.

He hadn’t a clue. Moral of the story: ignoramuses rule. For the rest, you can read this book.

(The book under review is the UK edition. The Indian edition will be available shortly)