World Trade Organization or Trade Regime

I decided to surf the internet for thing on the WTO and a happened to stumble upon an interview with Noam Chomsky on the WTO and what began to unfold in this interview was how the WTO essential devalues humans and focus on the well being of corporations. In essence the WTO has become a Trade Regime which consequently pushes free trade and thus we see the loss of democracy.

What is the WTO according to the WTO’s website which states that “The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business.”

The WTO is portrayed as in organization that protects all countries interest in regards to trade but in actuality it essentially only protects the interest of big corporations and banks. Chomsky speaks on how the WTO emphasizes trade as the superior values and in turn disregards human value. He states that WTO undermines the environment as well as the wealth and prosperity of third world nations. We see this taking place particularly when it comes to food security which is known as the availability of food and ones access to it. The problem with the WTO in regards to food securities is that when the WTO established free trade throughout nations of the world it opens up foreign markets to foreign imports. In countries such as the United States and Europe this is not necessarily a huge problem but for the third world counties. These foreign imports of food which is highly subsidized form the first world creates many problems. Seeing that food such as corn and soy are subsidized food which are produced and thus shipped to the third world. When this food is put onto the markets of the third world it can be sold at a much cheaper price than those who locally grow the same products thus driving local farmers out of the market. These food imports also have negative effects on the environment seeing that it is corporately grow with chemicals, and then shipped to other countries to be sold. This process denies the third world from cultivating their own food consequently driving these counties to become reliant on the developed world.

Another major aspect of the WTO that Chomsky speaks on is it negative effect on the world. Seeing that it establishes a one fits all motto.  When a regulation is are put into place all counties and their governments must abide to these regulations. One might ask how they decide on what regulations should be established and what ones should not. All nations involved in the WTO are at conferences and listen to speeches on different regulations that should be established. The countries that vote on what regulation become law and what do not are those that have the most trading power therefore any country that is not a major power player will not decide on whether a new regulation should become law. This plays into the hands of those who are in power and remain in power.

Chomsky also focuses on how the WTO promotes privatization as well as deregulation of corporations. It protects the interests of corporations and undermines the values of humanity. We see now a transfer of human rights away from people and into the hands of corporate entities. Corporations where granted the rights of people, thus they became private tyrannies where corporations have more rights than individual people. This is seen when a corporation goes into another country they are looked at as a business of that country and all laws thus apply to it in their favor.  With this we see wealth become much more highly concentrated then in the past. Chomsky states the free capital flow undermines democracy and unless a country can control its own capital the decisions on how the country will be run are under the control of international capital.  

http://www.youtube.com/watch?v=zLWXmUKzZWY

http://www.wto.org/english/thewto_e/whatis_e/whatis_e.htm

Here lies a country of fools who traded away their future.

In Chapter 5 Peng discusses International Trading. In particular he discussed the Theories of International Trade. Two of these theories spiked my interest, the Absolute Advantage theory and the Comparative Advantage theory. Both of which are very different. The Absolute advantage theory suggests that under free trade, each nation gains by specializing in economic activities in which it is the most efficient process. While Comparative Advantage suggest that a nations gains by specializing in production of one good in which it has comparative advantage.

Two very different and interesting suggestions of what exactly is the most beneficial for to a country in regards to trading. I found an interesting article on the Freemans ideas of liberty where Dwight R. Lee discusses how comparative advantage is overall more beneficial to a nation’s wealth on a global scale. He states that “The most straightforward case for free trade is that countries have different absolute advantages in producing goods (Lee).” With this said Lee goes in to distinguish how it is imperative to have comparative advantage seeing that “A country can have an absolute advantage in the production of a good without having a comparative advantage. Comparative advantage is what determines whether it pays to produce a good or import it (Lee).” What we see here that in essence Lee distinguishes that it is imperative to have a Comparative advantage in order to be the most efficient in production and trade. If we take an example it become more clear how this is evident. While in American let’s say it is very efficient in producing coats and can produce 5 coats in 1 hours. While in China it is not as efficient in producing coats where it China can only produce 3 coats an hour. It would seem that with the absolute advantage it would be more efficient for American to make coats and not import them from China. Although if you take into account that it cost more money to produce a coat in American then it does in China then it would be more efficient for American to import coats from China which thus allows for a cheaper product and a cheaper cost. This example involves both and Absolute Advantage in which American can produce at a quicker rate than the Chinese can, although China has the comparative advantage which is that it can produce coats at a cheaper rate than in American thus driving down the cost of the good.

Even more interesting below Lees article was comments on in particular that caught my eye was the comment made by Ron O where he indicates that while Lee does bring forth some interesting point it is only a hypothetical that he compares international trade to with this car and computer example that is much like my coat example. He states that there are many other factors to account for when discussing Comparative advantage. He attaches the idea that Lee states that Comparative Advantage does not account for lower wages and unemployment. His basis for this argument is that if like in Lee’s hypothetical everyone who was in the computer industry, in American, who lost their job because of the importation of computers, would not get jobs in the car industry just because that is where the works is. Ron argues that these people who were in the computer industry would not necessarily be able to get a job working on cars. Seeing that Lee does not know what the market demand for American cars will be, Lee also does not know if these computer techs if employed by international companies would make the same wages as they did previously. Ron states that “The mistake that comparative advantage makes is that it assumes that there is some kind of ‘invisible hand’ that will create an infinite amount of demand for any product or for the world. Does it even account for the price of oil in all of this or to the limits of economic activity the world can handle? Not everyone can be middle class. As a matter of fact, look at how the middle class is disappearing throughout the world (Ron).” Ron makes a interesting point here which displays the weakness in Lee’s argument as well as in the Comparative Advantage theory. He establishes the idea that no economy can survive without borders.

            On a large part I would have to agree with Ron and his arguments against the Comparative advantage as well as Absolute advantage, seeing that there are so many aspect of the economy that are unpredictable and over looked when it comes to applying these theories to real life. As we can see over the last few decades the American economy has become very unstable seeing that we rely highly on other countries for our goods putting us and our futures in the hand of others. It is in my opinion that free trade opens countries up to many unforeseen issues that can arise and as we have seen recently that it exactly what happens. With an ever so connected world much vulnerability occurs. It leaves us the people, the working class at the mercy of something that is uncontrollable and unforeseen. A bargain I don’t feel is in our best interest.  

http://www.thefreemanonline.org/columns/comparative-advantage/

Standardization of Culture

http://www.youtube.com/watch?v=dnca-FDLN-0&feature=related

I placed a short video above because it is extremely relative to what I am going to be talking about and that is Culture. What is Culture really, we hear it all the time in school, we read about it in books, and see it on TV but what is it really? Culture is the “inherited ideas, beliefs, values, and knowledge, which constitute the shared bases of social action” (Dictionary). Now that we have defined culture we can examine why it is so essential for international businesses to respect common cultures when spreading businesses around the world. International Business has take the world by storm with companies such as McDonalds, Starbucks, Walmart, and many more. It is ever present to understand to effects of globalization and international business on culture for two reasons. One being to keep large businesses in check form overstepping there bonds ethically and culturally and two to understand the importance culture has on people and society.

Culture is inherited ideas, beliefs, and values. These ideas, beliefs, and values are past down from generation to generation. It is important to understand that these core values that distinguish people to a particular group are fundamentally important to societies. Culture is what brings people together, it allows them have a sense of belonging. It also in some cases allows outsiders to understand others better, due to the engagement of the exchange in cultural knowledge.

Now when it comes to International business we can see how this can become a difficulty because when you establish a business take for instance McDonalds in another country, where let’s say they don’t eat beef, such as Iran (A Muslim country). There is a cultural issue here seeing McDonalds sells beef products. For those who live in this country and do not eat meat they would not purchase products form McDonalds due to the cultural back lash. Seeing many native Iranians would not be purchasing any products from this store McDonalds would thus not be making money and the point of a business is to make money. On the other side of the spectrum you would have natives of this country in arms seeing that it goes against their cultural values. It is not right for McDonalds to place a restaurant that sells meet in a country such as this unless it does shift to abide by their cultural values, which in fact is exactly what McDonalds has done in Muslim countries.

International Businesses deal with issues of cultural differences on a daily basis. It is a part of expansion.  A problem that still lies here for me is that although McDonalds may have shifted to cultural values in Iranian it has still done damage on cultural traditions. If we look from the transformation of companies spreading throughout the world we can begin to distinguish a common pattern and that is the pattern standardization. Which is in itself a whole other issue but standardization does have a major impact on culture because standardization slow begins to take away from traditional norms and replace them with new ones that are more standardized. Now I am not saying that International Business is a bad thing I am merely just stating that there are major negative effects of International business when it comes to the standardization of culture and societies and this is what need to be evaluated. Evaluated in the since of whether or not international business is an overall positive to societies and cultures or negative.

Are we to Dumb for Democracy

Chapter two in out books discusses at large Democracy and the finer details of it. As we know democracy is the citizens elect representatives to govern the country on their behalf. I have never fully understood how a democracy was run effectively, seeing that it is in my opinion that America does not run our democracy in a positive manner. While watching the State of the Union Address I began to feel even more disillusioned about America and democracy. As some of you may have watch the president speech on national concerns and so forth. It began apparent that the house was divided strongly due to partly lines. As the camera viewed representatives through the entire speech it was clearly seen that on many issues party members were not clapping while other member stood in applause. Not only was this division troubling but the fact that most representatives that where typing away on their phones during the closing of Obama’s speech. If was as if they cared less about what Obama was speaking about. Seeing that there opinion have already been formed and there is no changing their minds.

This is significant to what I really wanted to talk about seeing I am discussing how Americans are to dumb for democracy. I recently read an article by the Boston Globe about threats to democracy. This article being about how our brains are the biggest threat to democracy due to something known as “Backfire” Backfire is known as “Natural defense mechanism to avoid cognitive dissonance.” Cognitive dissonance “is the feeling of uncomfortable tension which comes from holding two conflicting thoughts in the mind at the same time.”

The article also on how democracy thrives on voters being blank states. A blanks state does not mean being ignorant it means being free of strong beliefs. Seeing most if not all voters have a strong form of beliefs it hinders our ability to distinguish fact from fiction. This is not to say that we do not understand some fact what we see in this article is that human base their beliefs on fact but in many cases these facts that we assume are true are misinformed information because of this out beliefs are formed about information that is misconstrued.

Joe Keohane the author of this article states “in reality, we often base our opinions on our beliefs, which can have an uneasy relationship with facts. And rather than facts driving beliefs, our beliefs can dictate the facts we chose to accept. They can cause us to twist facts so they fit better with our preconceived notions. Worst of all, they can lead us to uncritically accept bad information just because it reinforces our beliefs.”  

Thus when we do here facts that are true we are not likely to accept it as truth seeing it goes against our beliefs. Other things such as motive reasoning also are discussed in this article. Motive reasoning is understood as when a human has once adopted an opinion draws all things else to support and agree with it.

This thus effects democracy because it creates a situation here beliefs interfere with the facts, thus creating a populations that is self delusion holds precedence over all else.  

  http://changingminds.org/books/changingminds_book.htm

I attached the article below. I also attached a short video done by PBS on Threats to Democracy. Its only 3 minutes but it is a good video to help show how true this article really is. Take notice to Matt Bar a journalist as well as Congressmen Tom Feeney.

http://www.boston.com/bostonglobe/ideas/articles/2010/07/11/how_facts_backfire/

http://www.youtube.com/watch?v=VkeIsQQXVJs