1. Globalization, Outsourcing and Economic Development Presentation copyright © 2006 by Barry Brownstein

2. An Ethical Dimension  Is a legal action always a moral or ethical one?  Coerce: 1. To restrain or dominate by nullifying individual will 2. To compel to an act or choice 3. To enforce by force or threat  Can monetary and ethical questions be separated?  Does an ‘ethical’ decision conflict with your ‘best interests’?

3. Assumptions Underlying Barriers To Trade  Coercion is acceptable.  The market can be ‘managed’  Some countries cannot compete  Us vs. them thinking Belief in one country’s interests is separate from another win-lose model of the economy  A static, materialistic view of the world

4. Globalization and the Stock Market  “Major bear markets are accompanied by a reduction in the size of people’s unit of allegiance, the group that they consider to be like themselves. At the peak, it’s all ‘we’; everyone is a potential friend. At a bottom it’s all ‘they’; everyone is a potential enemy. When times are good, tolerance is greater and boundaries weaker. When times are bad, intolerance for differences grows, and people build walls and fences to shut out those perceived to be different. Ultimately, persecution and war result.” - Prechter

5. Globalization  Imports do not cost jobs: capital and labor are freed for higher valued uses. For instance before the automobile many people had “good” jobs as stable hands Most Americans in the 1800s lived and worked on farms each new opportunity creates even more opportunities.

6. More on Globalization  There is no such thing as fair trade should Florida have to buy oranges from Minnesota? free trade benefits a country no matter what the other country does.  Fear of Wal-Mart and cheap Chinese goods. What do you do with the money that you save – this creates unseen jobs Do we fear Safeway? At one time Americans shopped in small grocery stores

7. Effects of Trade Barriers  By reducing specialization the standard of living is reduced. are you wealthier if you grow your own food?  Higher prices, higher taxes  Economy grows at a slower rate  Threatens world peace

8. Example of Outsourcing  In October 2004 Travelocity, the online travel company, moved 250 mostly call- center jobs from Clintwood, Virginia, to India. The company is losing more than $50 million a year.  “If outsourcing were not an option, Travelocity would have no alternative but to go out of business -eliminating jobs for workers up and down the pay scale, not just the $8-an-hour jobs being outsourced.”

9. Taxes and Outsourcing:  Look at the relationship between companies moving plants overseas, and the kinds of tax and regulatory policies employed by the states they're moving away from.  States losing most jobs: California, New York, Michigan, Texas and Ohio, New Jersey, Pennsylvania, Illinois, and Massachusetts.  Survey: most business unfriendly states: California, New York, Michigan, Texas, Ohio, New Jersey, Pennsylvania, Illinois and Massachusetts

10. What Free-Markets Can Do  “There has been more material progress in the United States in the 20th century than there was in the entire world in all the previous centuries combined.”  Strong association between life expectancy and human freedom.  No amount of wealth could have purchased a 100 years ago what we take for granted today.

11. Progress in Closed and Open Societies  Per Capita GDP (Gross Domestic Product) 1820 ; 1900; 20041820 19002004  In 1000 Cordoba (Spain) was a great and prosperous melting pot. In the 1300s Samarkand played a similar role.  In 1962 Burma (present-day Myanmar) was the richest country in Asia.

12. Developing the Third World  Private property and market exchange are not tools of oppression  “Without the rule of law, private property rights, an independent judiciary, limited government and an infrastructure for basic transportation, water, electricity and communication, (America) would also be a diseased, broken and starving people.”

13. Foreign Aid  “What can the West do to help? The worst thing is more foreign aid. For the most part, foreign aid is government to government, and as such, it provides the financial resources that allow s corrupt regimes to buy military equipment, pay off cronies and continue to oppress their people.”  “Most of what (the third world needs) the West cannot give, and that's the rule of law, private property rights, an independent judiciary and limited government. The one important way we can help is to lower our trade barriers.”