January 10, 2008
Harford provided me with an edifying yet honest look at the effects of globalization and differing attitudes towards it, but moreover gave me an inside look into the forces of self-interest that are pulling people down like the anchor of a ship - going nowhere - just rusting. Harford describes the "catch-up effect" that should apply to developing countries were it not for forces out of our control. Creatively using the story of Bruges, Belgium, Harford cites the natural path of our earth and how it tranforms everything about our lives - trade, commerce and vitality- in this case the drying up of a river. As Harford eats his fries smothered in mayo, i get hungry, but it also takes me back to learning about the Irish potato famine, and how a small blight originating in North Carolina set off a chain reaction for mass migrations to our land, helping build us to where we are today. I think of this blight as those corrupted officials in power in countries like Camaroon or North Korea, who as Harford views, seem to get their thrills off of mass suffering. Harford explains the pervasive problem of poverty in the developing world as a result of corruption, frivolous pursuits (such as the library in Camoroon), but also examines the backbone of a healthy and prosperous economy, the efficiency of the beauocracy, gov't ensured protection, and a strong infrastructure where seeds of wealth can be sown. The similarities in countries such as these are frightening, he explains, as the red tape for entrepeneurs to reach success are basically impossible to surpass. Such statistics include up to 4 years pay to process business applications, rendering many unable to pursue their dreams. Those who do acquire liscensure to provide business to others are not protected by the government and face a roughing up from government officials for what little they do gain. There is no incentive to improve schools, healthcare, or infrastructure, if there is no common goal to acheive. Harford explains "diminishing returns" in improving a nations infrastructure and how radical an effect it can have a nations prosperity. "New investments have the greatest rewards," basically saying that the most developed nations have reached our diminishing return because we have further maximized our capabilities, whereas those with weak abilities to transport workers and goods and poor means of communication are stuck in a downward spiral, yet do have the inherent potential to improve. There is less incentive for us to invest or provide loans, if there is no certainty that they will reach the people and not the despots. For countries like South Korea, whose income has doubled every decade or so, foreign investment is high because productivity can be acheived and backed by all parties involved and labor is viewed as an essential component to their economy. As eduction becomes unstoppable, so does a nations economic wealth and standard of living, as South Korea has shown. The last thing that caught my eye was Harford's look at trade restrictions and their dual impacts on job growth and environment. He illusrates that although the U.S. lost many jobs due to globalization in the 90's and early 2000's, it was offset by more job creation in different areas. In order for nations like ours to be further integrated, structural unemployment must be embraced with open arms and there must take place a retraining of skills to meet future expectations of global demand. He doesn't quite explain how immigration factors in to job growth, but his message still resonates within me, being that comparative advantage in free trade can work for all players if each one focuses on what they are good at. His argument tests the will of even the most ardent of those opposed to free trade, and that of course is that trade restrictions and protectionism can have a ripple effect here and elsewhere that may effect the ability of another to earn an income, regardless of how little it seems in the eyes of an American.