Globalization and equality

Tom Miller points to evidence that globalization is increasing inequality, and asks what if anything the left can do to resist the tendency.
Plenty. A fantastic place to start is this paper (pdf) by the great Sam Bowles, called Does globalization preclude egalitarian redistribution?
There are (at least) five ways in which globalization is compatible with egalitarianism.
1. Egalitarian redistribution can attract inward investment by increasing the security of property rights. You get fewer riots, revolutions and less corruption in countries where workers are better off. Just look at FDI statistics. Latin America and sub-Saharan Africa get surprisingly little inward investment.
2. Spending on infrastructure, such as health and education, can attract inward investment by improving the quality of the workforce. For this reason, this paper (pdf) shows that there's a positive correlation in OECD countries between corporate tax rates and inward investment.
3. Higher wages can induce greater effort, thus allowing firms to save upon middle-managers who can extract rents at the expense of shareholders. "Supervisory labour input is strikingly lower in countries with more equal earnings distributions" says Bowles, pointing to Sweden and Japan.
I suspect a key mechanism here is trades unions rather than a minimium wage. Unions (at least in their traditional continental form) can help police workers and scrutinize or legitimate management.
4. A citizens' basic income can reduce poverty without blunting work incentives.
5. Globalization only prevents the high taxation of mobile factors of production. It doesn't stop the taxation of immobile factors like land. 
Certainly, there are many examples of how countries have successfully integrated into the global economy whilst having lowish inequality; think of Sweden, South Korea or Japan.

Comments

[dearieme]

Secure property rights, a well-policed work force and unblunted incentives? Hm: Sparta.

[Alex]

Or, say, modern Finland.

[cityunslicker]

Globalisation is the most egalitarian deveopment in the history of humanity. Literally billions have been lifted out of poverty.

That it is not perfect is akin to democracy as a form of government; the least worst option.

[Mark Wadsworth]

"Globalisation is the most egalitarian deveopment in the history of humanity. Literally billions have been lifted out of poverty"

I second that.

It stands to reason that if we import more stuff from e.g. Far East that their wages rise (otherwise they wouldn't take these jobs), and to some extent, wages at bottom end in the West fall. So this certainly leads to less inequality at the lower end.

At the upper end, globalisation allows the super-rich to become hyper-rich, but so what? Who cares what Bill Gates or Mick Jagger earns? It's the people at the bottom we should be worrying about.

Like this twattish comment that hedge-fund managers pay less tax than cleaners. It is very difficult to squeeze more tax out of hedge-fund guys, but dead easy to reduce tax burden on cleaners, for example via a Citizen's Income and lower tax rates on employment income.

[Lebatron]

You could get rid of price floors aka minimum wage and let the market do its own thing. Then again, that might only make the gap between the rich and the poor even worse, since it would be the lower stratum who would suffer most since they are the ones that generally hold the minimum wage jobs.

[tom s.]

On a similar note, see the fine book by Elliott and Freeman, albeit with the most boring title I have seen in a long time: CanLabor Standards Improve Under Globalization? (http://bookstore.petersoninstitute.org/book-store/338.html)

[Kevin Carson]

Mark Wadsworth,

That presupposes an orthodox model of economic development based on colonization by foreign capital, to produce giant blockbuster factories to serve primarily the export market.

How about an alternative form of industrialization, starting with small-scale production for local markets, using lower-cost, general-purpose production technology? Murray Bookchin's discussion of general-purpose machinery, and Jane Jacobs' of the origins of the bicycle industry, are relevant here. Industrialization of local economies might start with small machine shops, technically equivalent to those of a sophisticated American hobbyist, custom machining replacement parts for Western-made appliances in town or neighborhood repair/recycling/remanufacture shops. That might evolve into networked production with the individual stages distributed among a number of contracting shops (ideally worker-owned and self-managed). The end goal would be something like Emilia-Romagna, rather than Detroit or Pittsburg.

[el Tom]

Interesting stuff.

Will look at all of this in detail later.

[Air Conditioner Repair St. Pete]

I agree with this globalization is really increasing the inequality. Sad but true. :(

[אומנויות לחימה]

Higher wages can lead to extra work, allowing companies to save the middle managers are able to raise rents at the expense of shareholders.