Evaluate the argument that economic globalisation has failed the world’s poor

Economic globalisation is the process by which the world’s economy becomes more closely connected. This can lead to the greater transnational flow of goods, services and capital. Economic globalisation is doing more harm than good as it can leave the already rich even richer, while also leaving the poor behind. The poor do not reap the benefits of economic globalisation as much as the already rich do, and globalisation can be considered as an unbalanced system. Unsafe working conditions, companies cutting corners and the low rates of pay, alongside economic imbalance between rich and poor all point towards it being seriously flawed and dangerous.

Economic globalisation harms the world’s poor because although jobs are being created for those who need them most, the working conditions in these sweatshops and the areas where the employees are forced to work in such low-pay labour occupations, are unsafe with deplorable conditions not fit for any person to be working in, particularly given the extremely low pay they receive whilst working there. The buildings these people are forced to work in are often not well kept and very unsafe. The maintenance is shaky, patchy and unreliable and rarely reviewed or kept up to date with safety regulations. An example of this is the ‘Rana Plaza’ collapse of 2013 that took place in ‘Savar Upazila’, Bangladesh, otherwise known as the ‘Dhaka garment factory collapse’. The accident was classified as a structural failure that occurred on 24 April 2013 when the 8-storey building collapsed, killing 1,134 (including a number of children) and with a whopping 2,500 (approximately) being rescued from the building injured. Overall, it is considered the deadliest garment factory disaster and the deadliest structural failure accident in modern human history. This is just one instance where it can be argued that global corporations, to cut costs, send job’s abroad without the additional safeguards and employment rights they are subject to in the west. These developing countries are encouraged to keep their legal systems weak to attract western multinationals.

Some incorrectly argue that an unsafe job is significantly better than having no job whatsoever and that at the end of the day people need money to cover basic human needs, such as food and shelter, irregardless of the conditions employees are put through to obtain said money. Also these dangerous and unsafe jobs may be the only jobs on offer and the only ones available in a particular area or to a particular set of people, so they may not even have a choice as to which jobs they can pick and choose from, as the selection may either be limited or they may not hold the particular qualifications or skill set. It can be argued that companies (especially multinational ones) that contract with the companies that run these sweatshops and factories, do have a moral obligation to the people that work in the supply chain, as they have more than enough money to provide a fair wage and safe working conditions, but they choose not to because they pick profit over people. Hence it is not economic globalisation at fault but some unscrupulous companies. There are many more companies that subscribe to ‘fair trade’ standards and help poorer workers with healthcare and education. Ben and Jerry’s Ice Cream, for example, sources its raw ingredients from farmers by paying a competitive wage and the Co-op, for example, only sources fair trade cocoa for its chocolate. That said, companies have gradually been put under more conditions and restrictions controlling things such as the safety of working locations and the minimum working age in places like Bangladesh. Another reason for improving working conditions is the fact that issues of corporate social responsibility are increasingly being highlighted in the media so companies feel obliged to ensure better working conditions and fair wages because it would damage their reputation and their profits if they didn’t.

It may be that some companies have become more conscious of their social responsibilities but economic free trade, encouraged by the IMF and World Bank, leads to weaker government controls and so it is left to the self-regulation of companies, most of whom are looking to drive down prices.

Another way in which economic globalisation adversely impact the world’s poor, is through multinational companies (or companies in general) being ‘sloppy’, resulting in accidents when working on sites that damage the environment with a knock-on impact on people’s livelihoods and income. In fact, the damage to the environment can directly result in a downward spiral that negatively affects people’s incomes and everyday life, especially in third world countries. This is because people’s income is often interconnected with the environment, and the way they earn their income is often from working off the land or water. An example of this is the ‘Deepwater Horizon’ oil spill, when on 20th April 2010, a huge blow out occurred killing 11 of the workers on board and igniting a huge fireball that could be seen from 40 miles away. 2 days later (April 22nd) the oil rig sank and left the well (about 5,000 feet underwater) spilling oil for 87 days until it was sealed off and declared ‘effectively dead’. As a whole, an estimated 3.19 million barrels (over 130 million gallons) of oil was spilled into the gulf of Mexico, and even though Transocean agreed to pay 1.4 billion dollars for violating the ‘US clean water act’ , the damage to the gulf and its wildlife was already done. The spill likely killed about 82,000 birds spanning across 102 species and it also killed a vast (but unknown) number of fish. And although the workers on the oil rig may not have been classified as ‘the world’s poor’ the people who lived in Mexico and the surrounding area and depend on the Gulf for their livelihoods could potentially be considered part of the world’s poor. As a result of the colossal oil spill (the largest in US history) lots of marine life died and in turn, people who relied on fishing for their main source of income would have had their income severely depleted due to the reduction in the number of fish caught, and the consequent decrease in the fisherman’s overall income. This would eventually lead to less money being available to cover basic human needs such as shelter and food which would significantly impact on the quality of life. This is just one example of how economic globalisation in general has failed the world’s poor.

Companies (especially those which are classified as multinational) are now being put under stricter regulations in all aspects such as safety regulations, workers’ rights, minimum wage, environmental regulation e.g. the ‘Health and Safety at Work Act’ established in 1974. It is now much harder for companies to cut corners and in turn, it is less likely that such incidents will take place. However if an incident does take place, the company deemed responsible for it can now be sued by any people affected by it and they can also be legally obligated to pay a vast amount of money in compensation towards the damaged environment, injured people, ruined livelihoods, and any distress caused by the accident (to the grieving families for example). An example of this is Transocean agreeing to pay 1.4 billion dollars for violating the ‘US clean water act’. The prospect of losing vast amounts of money and profit to an avoidable incident, can act as a great driving force for these companies to take care and ,as a whole, be more conscious of their actions and decisions, because many companies want a high bottom line and large profits, so anything to avoid jeopardising this is often taken very seriously. As a result, conditions are starting to improve and less and less avoidable incidents are taking place. Also, if a company gains bad publicity or media coverage as a consequence of an incident such as Deepwater Horizon, it gives the public a negative opinion of said company and means they may have a drop in profits, a thing that all companies wish to avoid.

Again, this depends too much on the world actually acknowledging the misdeeds of a company. All too often, companies like Glencore pollute local drinking water and the atmospheric air but due to the lack of domestic enforcement and media attention, they can get away with it.

Finally, it can be argued the rate of pay and the unbalance between the rich and the poor creates an imbalance between the two groups’ incomes, which accumulates then creates a bigger wedge between the two groups and further highlights the inequality between them. The richer benefit more from economic globalisation than the poor do who live under the poverty line, and although the poor do benefit to an extent, this is usually just enough to get by. The richer benefit much more overall and they are able to take advantage of economic globalisation and the opportunities that come with it. As the rich tend to be much more qualified and are more skilled, as they have access to better education, as a result they possess the skills and qualifications that make them able to take the full advantage of economic globalisation. Whereas the poor don’t have access to the same level and quality of education that the rich receive, and as a result those that are poorer tend to have worse education, as they either can’t afford it or don’t have access to it. This can greatly depend on the country you live in, as countries such as England have a much better education system than those such as Somalia or Yemen. So, if you are underprivileged in England you are much more likely to get a better education than those who are underprivileged in Somalia. Even then, in the last 30 years, the most accelerated period of globalisaiton the world has seen, the bottom 50% of US blue-collar workers have had their real wages reduced. This is largely down to the outsourcing of their jobs to the developing world. Last year, Oxfam reports, the poorest half of the world became 11% poorer, while billionaires’ fortunes rose 12% – or $2.5 billion every day. Just 8 men own more wealth than half the world and 1 in 10 people survive on less than $2 a day. Seven out of 10 people live in a country that has seen a rise in inequality in the last 30 years.  Between 1988 and 2011 the incomes of the poorest 10 percent increased by just $65 per person, while the incomes of the richest 1 percent grew by $11,800 per person – 182 times as much.  Oxfam calls it An Economy for the 99 percent. Furthermore, as a rule of thumb, you’re much more likely to get a high paying job if you possess qualifications that make you best suited to that job, so if you don’t have access to institutions which mean you can earn those qualifications, the result is you are unlikely to earn a high paying salary. In other words, those who are born into an underprivileged lifestyle are more likely to stay that way and eventually start a low paying job themselves, leaving the poor behind as the rich continue to reap the benefits of economic globalisation in a way that the poor are unable to.

It is claimed by those that champion economic globalisation that there is significant evidence supporting the idea that globalisation is genuinely benefiting the worlds poor. In 1990, 43% of the population of developing countries lived in extreme poverty (then defined as subsisting on $1 a day); the absolute number was 1.9 billion people. By 2000 the proportion was down to a third. By 2010 it was 21% (or 1.2 billion; the poverty line was then $1.25, the average of the 15 poorest countries’ own poverty lines in 2005 prices, adjusted for differences in purchasing power). The global poverty rate had been cut in half in 20 years. However, this cut has largely been because of China and India. China, for example, has a huge successful manufacturing sector which employs millions of people, but this may not be the case for other countries such as Madagascar or Haiti. Sub Saharan Africa’s poverty has increased in the past 30 years.

It may be that there have been increases in incomes, but 60% of the world live on less than $5 per day and so wages remain very low, excluding large numbers of people from living fulfilled lives as explained by Amatya San, who claims that most people still live on subsistence levels and can never buy homes and live rounded lives.

As a whole, it is clear that economic globalisation, in fact, is failing the worlds poor because many of these developing-world countries still live in extreme poverty, at least 80% of the worlds population lives on under 10 dollars a day. Countries like China and India are lucky to have a thriving manufacturing sector however they are the exceptions not the rule and have reached to where they are by selectively accepting free markets and regulating their economies. Most of Subsaharan Africa and Latin America have not had that luxury. Countries within Africa or countries such as Chile, Haiti or Nigeria still have the majority of their populations living in poverty as they are left further behind without a thriving, successful economy to fall back on.

Molly Davenport

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