Re: WTO the rampage! (fwd)

Ernest N. Prabhakar (
Fri, 10 Dec 1999 10:03:16 -0800

I think there's a couple of key issues.

1. Is life a zero-sum game, or does capitalism really create wealth?

2. Is long-term gain are worth certain types of short-term suffering?

3. Is planning deterministic, or is it all a matter of managing risk?

4. Is there a moral preference (even if not absolute) for efficient

I agree that globalization can create hardships. The question is whether
the end result is a bigger pie for everyone, *and* whether the kinds of
hardships created are "morally positive". Some short-term hardships are
inappropriate, but other arguably have moral value, even if they're
economically unfavorable.

> Many governments, at least in contemporary Europe, are (and probably
> have to be) more open to the tangible argument of domestic unemployment as
> they are to the philosophical arguments of free trade or environmentalism.> At
structural (!) unemployment rates between 10% and 20% and most cosmetics
> already applied to the statistics, they may not have much choice, as hard as
> it may be for other parts of the world.

But the real question is whether they have any choice in the other
direction. Does artificially protected domestic employment really help
people in the long run, or does it just make things worse?

As I always say, there is an "essential pain" which is conserved. If you
decrease pain now, it will just last longer. Conversely, you can speed up
the process, but only at the cost of increased intensity. Just ask any

I'm no economist, but my simplistic interpretation of the past 30 years is
that U.S. decided to "bite the bullet" and restructure its economy to
compete globally. This caused an enormous amount of pain during the
seventies, but the end result is probably the longest economic expansion on
record. Conversely, Europe largely focused on protecting itself, which many
would argue is more a cause than an effect of high unemployment!

I really see only two alternatives. One is to attempt self-sufficiency and
maintain some sort of internal status quo. The other is to do whatever it
takes to become competitive in the global marketplace, and have faith that
it will work out in the end, even if certain people end up losing while the
majority gain.

To wit: As someone pointed out, big business always screams about the
minimum wage hike, but in practice it doesn't really seem to slow down
economic expansion. But the same confusion exists on the other side. The
protectionists always scream about the loss of jobs to free trade (cf.
NAFTA). However, I think it is demonstrable that the end result of all
those opened barriers has been an increase in total employment, even if it
is a shift from unionized manufacturing jobs to service jobs.

As I said, it gets back to what you believe. Is life a zero-sum game, where
I have to make sure I grab my piece? Or is it a game of risk and reward,
where if you give up something today you have a chance (but no guarantee) of
a much greater prize in the future? Or more extreme, is it an inverse
payout, where "He who seeks to save his business will lose it, but He who is
willing to lose his business will save it."

The latter is surely the case in Silicon Valley, where companies that try to
protect their existing market end up being swallowed by those who create new
markets, and only those which "self-cannabalize" can survive. The question
is whether this is an aberration, or the general rule merely speeded up so
its easily observable.

-- Ernie P.

> Ernie,
> thank you for your reply. I fully agree that, once we leave the ground of
> economics, there are a lot of moral philosophy discussions to be pursued. I
> also agree that if people are fighting for self-interest, they should say
> so. Many governments, at least in contemporary Europe, are (and probably
> have to be) more open to the tangible argument of domestic unemployment as
> they are to the philosophical arguments of free trade or environmentalism.
> At structural (!) unemployment rates between 10% and 20% and most cosmetics
> already applied to the statistics, they may not have much choice, as hard as
> it may be for other parts of the world.
> So, all that remains undisputed, but there is a question of implementation:
> the "economic part" of my argument: globalization creates a "valley", a span
> of time during which companies are able to benefit from it, but individuals
> are not, because labour markets collectively compete for the attention of
> multinationals, but multinationals are not yet involved in price wars in
> these countries. As this valley may well last for the duration of an average
> work-life in the so-called civilized world, I wonder whether there are ways
> to reduce this valley in duration or intensity.
> In other words: I'm not arguing the moral right to a well-paying job,
> because the term "well-paying job" is defined only relative to the regional
> standards and costs of living. When I use the term "relative" below, I mean
> to say "relative to their regional standards and costs of living". And
> "well-paid" is more than I'd fairly expect, "normal" is probably more up to
> the job. Normal means: it is possible within the regionally usual working
> hours for the parents to earn enough money to provide food, shelter,
> clothing, health care for their families and for their own future to feed
> them to the end of their life expectancy.
> That said, I think everybody has a right to
> - a "fair chance"
> - to get a relatively normally paid job.
> [This cries for a definition of "fair chance". What about the following:
> without leaving his natural habitat and move into other language /
> significantly different climate / fundamentally different cultural zones.
> Requiring additional or different education is OK within reasonable
> limitations. Trying to "upgrade" a steel worker to university professor is
> IMHO not reasonable and marks the "black end" of the scale, giving everyone
> the job he has learned at age 16 is the "white end". Everythig in the middle
> is up for discussion.]
> It is the local relativity that is temporarily but significantly distorted
> by globalization. I know that working for US$1 a day is perfectly reasonable
> in some regions on this planet, but I also know that the unemployment that
> would result from naive opening of the markets in some first world countries
> (Europe...) can create huge national political tension, affecting foreign
> policy as well.
> I agree, Ernie, that much of that is people's own fault: rejecting job
> offers that would require to move home within the limitations above, or
> negligence to pursue education opportunities is their own fault, like plenty
> of other, similar examples of bone-headedness. But ...
> Now into the religious bit of the debate (in other words: please add "IMHO"
> to every sentence): I do not believe (sic) that we should try to achieve
> that through a trade among the poor. The right mentioned above is not
> negotiable and not tradable. I don't see why the poorest in the "civilized
> world" have to become poorer again (even if only temporarily) for the
> benefit of the poor somewhere else, when both in the "civilized world" and
> "somewhere else" there is a relatively small (relatively small here means:
> few people if compared to the number of "poor" people by the above
> definition in their own country) group of people holding the majority of the
> capital. As a rule of thumb, access to capital is distributed by an 80-20
> rule: 80% of the capital are controlled by 20% of the people, give or take
> (obviously) up to 20% on both counts. You have acknowledged this fact among
> others in your message yourself, but you may disagree on the argument at
> large. Do you?
> The social tension growing for example in Europe may well spoil the process
> as a whole (among other undesirable side effects like generally nurturing
> extremism etc.), so the integration of their needs is vital to making the
> process as a whole work: For the benefit of people in the "third world",
> people in the "civilized world", governments and companies.
> Any ideas on that one? I have been talking about education and motivation to
> pursue it, willingness to move home and access to capital (in other words,
> contemplating redistribution by other means). Implementation suggestions,
> anyone?
> Josef

Ernest Prabhakar <>
Darwin Product Manager, Apple Computer, Inc.