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Globalization’s Up & Down Sides, Part 2

December 19, 2006


Yesterday’s blog mostly discussed the upside of globalization and how it can create an affluent and connected middle class in population’s that once struggled in poverty. The post focused on a New York Time‘s article by Howard W. French about the southern Chinese city of Shenzhen, which has been building at a phenomenonal rate of 28 percent since being established in 1980. In a follow-up article, French describes the seedier side of this unchecked growth [“Chinese Success Story Chokes on Its Own Growth,” 19 December 2006].

“Few cities anywhere have created wealth faster than Shenzhen, but the costs of its phenomenal success stare out from every corner: environmental destruction, soaring crime rates and the disillusionment and degradation of its vast force of migrant workers. … Shenzhen was a sleepy fishing village in the Pearl River delta, next to Hong Kong, when it was decreed a special economic zone in 1980 by the paramount leader Deng Xiaoping. Since then, the city has grown at an annual rate of 28 percent, though it slowed to 15 percent in 2005. Shenzhen owed its success to a simple formula of cheap land, eager, compliant labor and lax environmental rules that attracted legions of foreign investors who built export-based manufacturing industries. With 7 million migrant workers in an overall population of about 12 million — compared with Shanghai’s 2 to 3 million migrants out of a population of 18 million — Shenzhen became the literal and symbolic heart of the Chinese economic miracle. Now, to other cities in China, Shenzhen has begun to look less like a model than an ominous warning of the limitations of a growth-above-all approach.”

Proponents of globalization are not all motivated by the same objectives. Those motivated by greed have followed the “growth-above-all” approach which has given globalization’s opponents all the fuel they need to keep the protesters coming to Davos, or Seattle, or wherever developed countries decide on meeting to discuss economic matters. Other proponents of globalization, however, have watched as globalization’s advance has brought billions out of poverty and dramatically improved their quality of life. I call this the “Development-in-a-Box™” approach. It is motivated more by pragmatic idealism than unchecked greed. It’s pragmatic because the approach recognizes that only sustainable economic growth can foster the benefits that improve the health, living and working conditions of those currently trapped in poverty. The Development-in-a-Box approach involves groups that are watch dogs for the poor, but are willing to work with socially responsible corporations and governments in fostering what some call sustainable development. Unfortunately, for some that is a loaded term. Enlightened growth might better describe this higher road. The growth-above-all path does not lead to sustainable growth, but to the conditions that caused violent labor disputes at the end of the industrial revolution and the rise of labor unions. You already see this happening in Shenzhen.

“While grueling labor conditions exist in many parts of China, Shenzhen’s gigantic plants, employing as many as 200,000 workers each, have established a particular reputation for harshness among workers and labor advocates. Monthly turnover rates of 10 percent or more are not uncommon, labor groups say. The tough working conditions, in turn, have helped spawn one of the most important labor developments in China in recent years: large-scale wildcat strikes and smaller job actions for better hours and wages. The Guangdong Union Association, a government-affiliated group, said there were more than 10,000 strikes in the province last year. Among Chinese economic planners, Shenzhen’s recipe is increasingly seen as all but irrelevant: too harsh, too wasteful, too polluted, too dependent on the churning, ceaseless turnover of migrant labor. “This path is now a dead end,” said Zhao Xiao, an economist and former adviser to the Chinese State Council, or cabinet. After cataloging the city’s problems, he said, “Governments can’t count on the beauty of investment covering up 100 other kinds of ugliness.” As the limits of the Shenzhen model have grown more and more apparent, other cities in China’s relatively developed east are increasingly trying to differentiate themselves, emphasizing better working and living conditions for factory workers or paying more attention to the environment.”

When workers are viewed as a commodity to be exploited rather than a resource to be cherished, the dark side of capitalism always emerges. Almost always migrant labor will be somewhere in the mix. The results are never desirable. French notes that in Shenzhen the”resulting rootlessness has fed a wave of crime of a sort hardly ever seen elsewhere in China. Gunfights, kidnappings and gang warfare are rife, and crime rates are skyrocketing.” Creating conditions that foster unrest and violence is in nobody’s best interest since they only lead to work stoppages, increased violence, and acrimonious labor relations that linger for generations. It needn’t be that way.

“‘Some inland cities have started to provide migrants social security, including pension and other insurance,’ said Wang Chunguang, an expert in class mobility at the Chinese Academy of Social Sciences in Beijing. ‘In Chengdu, in Sichuan Province, residency controls are loosening up and education for migrant children is getting more attention.'”

French describes the pitiful conditions of most workers in Shenzhen who have yet to break poverty’s tight grip. Such workers will never become part of the consuming middle class upon which most businesses rely. Globalization’s true promise is realized when workers begin enjoying the items they manufacture. This can be achieved faster and more humanely when a Development-in-a-Box approach is used since it relies on best practices, accepted international standards, and the participation of all stakeholders, including the working class.

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