Transcript Slide 1 - Baylor University

CHAPTER 1
GLOBALISM
GLOBALISM > LOCALISM =
the emergence of:
1. An integrated world
economy
2. A universal Westernized
culture (individualism +
capitalism)
3. Diminished Western
nationalism
WHO IS
RESPONSIBLE
FOR
GLOBALISM?
1. Companies that sell outside
their home market.
2. Companies that offshore
(manufacture abroad)
3. Companies with foreign
suppliers
4. Companies that hire illegal
aliens & the consumers who
use the products & services of
these companies.
5. Stockholders who invest in global
companies.
6. Nations dependent on foreign
natural resources.
7. Nations that join the World Trade
Organization, International
Monetary Fund, or free trade
agreements.
8. People who buy foreign owned
brands & don’t even know it
9. YOU!
GATEWAYS TO GLOBALISM
1.
2.
3.
4.
5.
Global proliferation of
individualism culture & the
emerging universal generation
Digital communication technology
Turbo-capitalism
Media
World Trade organization,
International Monetary Fund,
International Standards org.
6.
7.
Oil
Outsourcing of Western
manufacturing & computer
services to Asia & other
developing nations
8. Asian financing of Western
government fiscal deficits
9. Economic power > Military
10. Free trade agreements
COMPONENTS OF
GLOBALIZATION
THE IDEOLOGICAL ASPECTS OF
GLOBALIZATION
1. The ideological exports of powerful
nations often include their government
& economic system (such as
representative government & profitmaximization capitalism for the USA),
as well as their culture (American pop
culture).
2. Such exports are designed to advance
the nation’s nationalistic agenda &
open new export markets.
TECHNOLOGICAL ASPECTS OF GLOBALIZATION
1. Global telecommunications
infrastructure
2. The Internet & e-commerce
3. Cross-border licensing of
patented technology between
corporations
4. A universal computer operating
system in place (Microsoft
Windows)
POLITICAL ASPECTS OF GLOBALIZATION
1. Power of global government
organizations (GGOs) over nations
2. Rise of non-profit governmental
organizations (NGOs) to represent
non-business interests around the
world
3. Emergence of the International
Criminal Court
4. Proliferation of regional free trade
agreements (EU, NAFTA, etc.)
FINANCIAL ASPECTS OF GLOBALIZATION
1. Worldwide integrated financial markets
2. The World Bank and International
Monetary Fund
3. Instantaneous electronic transfer of
funds across borders
4. Dollarization: consolidation of the
number of currencies used throughout
the world
5. “Hot money”--$3 trillion crossing
borders daily
CULTURAL ASPECTS OF GLOBALIZATION
1. Global consumerism spurred by giant
global corporations & the advertising of
global brand names
2. Emergence of middle class social
structure in a growing number of
developing nations
3. Greater international tourism &
immigration
4. The emergence of a universal generation
of young people who share more
cultural similarities than differences
ECONOMIC ASPECTS OF GLOBALIZATION
1. Relatively easy movement of
people, merchandise, technology, &
capital across borders
2. Rising free trade in large part due
to regional free trade agreements
and the World Trade Organization
(WTO)
3. Spread of capitalism to China, the
former Soviet Union, & to
developing nations
MARKETING ASPECTS OF GLOBALIZATION
1. Rise of the service sector, backed by
intellectual capital (patented,
copyrighted products) among developed
nations
2. Sales of global brands with global
product designs around the world
3. Emerging consumerism in former
Communist nations
4. Rapid increase of joint ventures
between companies in different parts of
the world
OPERATIONS ASPECTS OF GLOBALIZATION
1. Off-shoring of manufacturing from
highly industrialized nations to
developing nations
2. Standardization of business
technology & operations practices by
the International Standards
Organization (ISO)
3. Rapid informational flows across
borders
4. Emerging ecological problems
requiring proactive global cooperation
Fat Kodiak bears have a system
working for them because they
live near GOLDilocks. The
system satisfies both their
needs AND their wants. These
fat bears have so much that
they waste a lot of the luscious
salmon scooped out of the
gorged streams.
Mother nature has provided
these bears with a system
that takes care of their
needs, but not necessarily all
of their wants (they'd rather
eat salmon than berries).
They are not quite as big or
fat as the Kodiak bears, but
they are in good health.
THE
GARBAGE
CAN
BEARS
Human land encroachment
(colonialism & “turbo” capitalism)
has ruined the feeding system of
these bears, so they fend for
themselves as best they can out of
garbage cans. The garbage can
bears aren’t served by GOLDilocks.
They long to visit their kindred
bruins who have it made in a
better system, but those bears
don’t share; they want MORE from
GOLDilocks.
FOUR WORLDS
World #1:
Affluent Middle Class
(“Godzilla” nations):
USA, Western
Europe, Japan, Hong
Kong, Taiwan
Pop culture exports (media,
music, lifestyles), service
sector, patents & copyrights
Who made Jerry’s clothes &
cell phone? Who takes care
of his luxstadium? House?
Swimming pool? Lawn? Car
maintenance? Shopping?
Taxes? Laundry?
Cooking? Crashed
computer? Xmas presents?
World #2:
Rising middle class
(large “Tiger”
nations): Mexico,
Chile, Singapore,
Taiwan, etc.
1. Skilled labor
manufacturing
2. Computer hardware &
electronics
3. Cell phones
4. Medical equipment
World #3:
Emerging middle class
(“Tiger cub” nations):
China, SE Asia, India,
some of South America
1. Low-skill labor assembly
(sports equipment, shoes,
bicycles, etc.)
2. Local, non-exported
agriculture
3. Under-employment &
unemployment
World #4:
The nondeveloping world
(“zebra” nations):
Africa, Middle East
1. Small farm agriculture
2. Oil, gas, minerals &
other earth exports
3. Social problems
stemming from historical
colonialism, religious
intolerance, & political
dictatorships
•How can impersonal, invisible,
uncontrollable capitalism be
managed in C21 to bring its
potential benefits to more of the
world’s people?
•Currently there is no agreed upon
answer to this question.
•Something is going to have to
happen in C21 that didn’t happen in
C20 for capitalism to serve ALL of
the world’s people, not just a few.
UNBALANCED
GLOBALISM
GLOBAL CONSUMPTION PATTERNS
The USA (4.5% of population),
Europe, & Japan currently consume
68% of the global economy, while
the “BRIC” (Brazil, Russia, India, &
China) consume only 10%.
Obviously, global consumption
patterns are not balanced, equitable,
or stable. The 21st century will be a
time of fluid change in global
consumption & the capitalist system.
THE TWO-EDGED SWORD OF GLOBALISM
“There is no question globalism has
been responsible for flourishing
international trade and foreign direct
investment, particularly for China,
Brazil, India, and Turkey, to name just
a few. But globalization has also
generated imbalances in the market
that have resulted in disastrous
consequences both in the developing
& developed worlds. Globalism ought
to be good for all countries.”
UNBALANCED WORLD POPULATION
1. Current estimated world population:
6.3 B; 10.5B predicted by 2050
2. Asia, including India: 60% of global
population
3. Africa: 15%
4. Europe: 11%
5. Latin America/Caribbean: 9%
6. North America: 5%
7. Oceania: less than 1%
THE POSTAMERICAN
WORLD
(a book by Fareed Zakaria)
Fareed Zakaria (foreign news editor for
Newsweek magazine) says his new book
is “not about the decline of America, but
rather about the rise of everyone else.”
This rise of “emerging” global economies
(especially China, India, Brazil, Russia, &
Mexico) has accompanied the 21st century
decentralization of global power, the
natural outgrowth of the fall of
Communism in the late 20th century.
“Power is shifting away from nation
states, & the traditional application of
both economic & military power have
become less effective.”
KEY OBSERVATIONS BY ZAKARIA
1. The biggest challenge stemming from
the “rise of the rest” is to “stop the
forces of global growth from turning into
the forces of global disorder and
disintegration.”
2. Because the U.S. is the top world power,
it will be most challenged by this new
global era.
3. With so many other nations on the rise
economically & politically, the U.S. must
allow other nations to participate in
running the world’s affairs.
4. American culture is not sufficiently
globalized to deal with shared
governance. Americans are “increasingly
suspicious” of the new global order & are
encouraged in their ethnocentrism by an
“irresponsible national political culture.”
5. China currently has a larger supply of
global currency assets than any other
nation, reflecting its rising global status.
6. By 2040, India will be the 3rd largest
global economy, behind the U.S. & China.
7. America faces a serious future growth
dilemma stemming from its high
indebtedness. “Americans are
borrowing 80% of the world’s surplus
savings and using it for consumption.
We are selling off our assets to
foreigners to buy a couple of lattes a
day.”
8. “The American political system has lost
the ability for large-scale compromise,
and it has lost the ability to accept
some pain now for much greater gain
later on.”
9. “For the past 2 decades the growing
integration of the world economy has
coincided with the intellectual ascent of
the Anglo-Saxon brand of free market
capitalism. The freeing of trade and
capital flows and the deregulation of
domestic industry and finance have both
spurred globalization & come to symbolize
it.”
10. “America is losing economic clout and
intellectual authority, as emerging
economies are shaping the direction of
global trade so they will increasingly
shape the future of global finance.”
11.“More than a new capitalism, the world
needs a new multilateralism.”
12.“Critics claim that the Washington
consensus or deregulation and
privatization, preached condescendingly
by America and Britain to benighted
governments around the world, has
actually brought the world economy to
the brink of disaster. If this notion
continues to gain ground, politicians from
Beijing to Berlin will feel justified in
resisting moves to free up the movement
of goods and services within & between
their economies.”
Not too many years ago, a sports team was sold
to a foreign entity. I wondered, how much did
these people know about baseball? It’s been
happening, this selling off of America, for
several years. I don’t know all that has been
sold to foreign nationals and I doubt the
average citizen is aware of this selling off of
America. Not too long ago, some wanted to sell
an American port business to a foreign nation.
Recently, the Chrysler building was sold to
another foreign concern. Now Budweiser is to
be sold to Belgians. What’s left? If we average
American knew what has been sold to
foreigners, I would say we would not at all be
pleased. (Letter to the editor)
st
21
THE
CENTURY
DRAMA OF
GLOBAL
BUSINSS
Click for
CHARACTERS
in the global
business drama
PREVIEWS OF THE
ST
COMING 21
CENTURY
GLOBAL DRAMA
?
TOP 10 ECONOMIC
REVERBERATIONS
OF THE
CAPITALISM
GLOBAL DRAMA:
1. Currency values
2. FDI flows
3. Geo-political power &
interdependencies
4. Importing & exporting
patterns
5. Industry/corporate
profitability
6. Interest rates
7. National
protectionism
8. Stock prices
9. Taxes
10.Unemployment
BUCKLE YOUR SEATBELTS!
ST
21
century global
megatrends usually
arrive unannounced,
unexpected, & leave
a trail of uncertainty.
1. Global mortgage
financing meltdown
2. EU member bail-outs
3. Currency protectionism
4. Chinese defective
exports
5. Rebuffing of Western
financial policy by China
GLOBAL
DRAMAS
DRAMA #1
Large nations
end agricultural
subsidies
1.Domestic
unemployment in AG
industry
2.Decline in AG exports
& increase in imports
3.Standard of living
benefits to DCs
DRAMA #2
Asia cuts its USA
investments by
20-25%
1.Hiking USA
T-bond interest
2. Rising USA taxes
3. Decline in USA
dollar
4. Recession
DRAMA #3
Significant new
global tax hikes on
natural & resource
consumption (gas,
wood, water)
1.Declining profits &
stock prices in
connected industries
2.Increased R&D for
alternative resources
3.Decline in USA dollar
DRAMA #4
China gains control
over the global
supply chain for all
digital products.
1. Increased consolidation
& concentration of
digital industry
2. Disruption of industry
price declines
3. Digital manufacturers
increase influence over
software developers
DRAMA #5
Expansion of NAFTA into
the free trade agreement
of the Americas
eliminates all trade
barriers in North, Central,
& South America
1. Rise of corporate
liquidations,
concentration, &
privatization in Americas
2. Rising FDI flow to
Americas
3. Impetus for global free
trade triangle
DRAMA #6
The WTO
mandates global
sustainable
income standards
1. Employee lay-offs in
developing nations
2. Stock price declines in
outsourcing corps
3. Increase in “shadow” (illegal
underground) corps
4. Longer worker
hours in nations lacking overtime
pay
DRAMA #7
EU ratifies a
constitution that
significantly
expands
government power
1.Rising EU taxes
2.Increased EU mixed
capitalism
3.Rising stock prices
in EU’s larger
companies
DRAMA #8
The WTO, IMF/World
Bank merge into a
single economic global
government
organization
1.Increases in FDI
flows to
individualism
capitalist ecos
2.Power surge for
Western global corps
DRAMA #9
Asian nations pledge to
base their future
economic growth on
trading within Asia
more than with the
West
1.Fall of Western
currencies
2.Rise in stocks of
Asian-based corps
3.Rise in Chinese
geo-political influence
DRAMA #10
EU accepts
Turkey as a fullfledged member
1. Increase cooperation
between largest EU
economies
2. Rising FDI into Turkeybased corps
3. Rise of Euro
4. Backlash of European
racism
DRAMA #11
The world’s existing
regional free trade
agreements
consolidate into a
single, integrated FTA
1. FDI, stock price, &
currency declines in
protectionist & mixed
capitalism nations
2. Stock price increases in
Godzilla corps
3. New pockets of
unemployment & “creative
job destruction"
DRAMA #12
Faster than
predicted middle
class growth in
China & India
1. Rising FDI &
outsourcing in both
nations
2. Rise in C & I domestic
corps
3. More mergers between
Western & Eastern
corps
DRAMA #13
Trade wars
among Asia
nations
1.Eco destabilization
of entrepot Asian
nations
2.Greater influence
of China over
Japan & region
DRAMA #14
The Kyoto global
warming protocol
mandates that all nations
must cut CO2 emissions
10% annually for 10
consecutive years
1. Fall of profits & stocks
of CO2-heavy corps
2. Fall of FDI & currencies
in “red bulls” (nations
living beyond their
means) & rise in “green
bears” (nations with
resources to spare)
DRAMA #15
Joblessness
soars in
Mexico
1. Increased USA taxes
for law enforcement
bulk-up
2. Rise of American
racism
3. Increased drug cartel
violence in both MX %
USA
DRAMA #16
Permanent free
trade agreement
between USA &
EU
1.Rise in FDI &
Godzilla corp.
stocks
2.Hypocritical
controversy over
mixed capitalism
DRAMA #17
China becomes
world’s largest
economy and
market
1. Increase in C. domestic
corps
2. Increased FDI for entire
region, especially for Asian
entrepot nations (those
who ship global exports to
China)
3. Empowering Chineseowned domestic corps
USA
GB DRAMAS
USA DRAMAS
DEALING
WITH TRADE
DEFICITS
DRAMA #1
USA mandates 5
years to turn
trade deficits
into surpluses
1.Legislation to curb
outsourcing
2.Devalued dollar
sparks global
currency conflict
3.Rise of global
protectionism
DRAMA #2
America
devalues $ to
stimulate
exporting
1.Complaints from
Asian investors
2.More expensive
imports
3.Subsidizing corps
who manufacture in
USA
DRAMA #3
Interest rates on
government bonds
hiked to attract more
incoming FDI
1.Slowdown of
domestic borrowing,
investment, new job
creation
2.Increased sale of
treasury bonds
DRAMA #4
America imposes
high “luxury” taxes
on imported
products
1.Trade wars & WTO
suits
2.Violation of NAFTA
3.Complaints of USA
outsourcers who
import to USA
Drama #5
USA subsidizes
America corps
that don’t
off-shore
1. Hiking of USA
T-bond interest
2. Rising USA taxes
3. Decline in USA
dollar
DRAMA #6
NAFTA
repealed
1.Fall in FDI to NAFTA
zone
2.Rise of Mexican
protectionism
3.Decline of USA
exports to MX &
Canada
USA DEALING
WITH GOVT.
SPENDING
DEFICITS
DRAMA #1
New USA legislation
mandates permanent
balancing of the
federal government
budget within 5 years
1.Tax increases at
national & local
levels
2.Decreases in govt
programs & rise in
social problems
3. Prolonged recession
DRAMA #2
New financial
legislation & higher
interest rates
encourage Americans
to save more, consume
less
1. Rising corp. equity
but falling revenue
2. Declining dollar,
eco growth,
importing, FDI,
Asian stocks
USA DRAMAS
DEALING
WITH
FEDERAL
BUDGET CUTS
PRICE OF THE BUDGET CUTS AHEAD
1. Dampened eco growth
2. Higher unemployment
3. Declining value of stocks,
currency, FDI
4. Gradually balancing the
budget
5. Rise in social problems
DRAMA #1
2% annual increase in
federal taxes for 5
straight years to
finance temporary aid
program for eliminated
govt. workers
DRAMA #2
USA to cut military
budget 1/3 over 10
years while
withdrawing as
“policeman of the
world”
DRAMA #3
Most forms of
subsidized health
care eliminated
over 7 years
DRAMA #4
Govt. privatizes
Social Security
system
DRAMA #5
Agricultural
subsidies
eliminated over 7
years
DRAMA #6
Federal food
stamp programs
eliminated over 3
years
DRAMA #7
All federal aid to
public schools
eliminated over 6
years
DRAMA #8
Post office
system
privatized over 3
years
DRAMA #9
Federal
education loan
program
truncated
DRAMA #10
Privatization
of national
parks system
DRAMA #11
States given mandate
to consolidate or
eliminate 1/4 of higher
education institutions
within 10 years
DRAMA #12
Legalization of
most illegal drugs
to cut state & local
law enforcement
budgets in half
DRAMA #13
Crackdown to
expel all illegal
immigrants
DRAMA #14
Official adoption of
the metric system
to cut costs of noncompliance with
ISO standards
????????????
THE UNKNOWN
ZONE
????????????
OECD undertakes longterm program of
significant economic
subsidies to the world’s
least developed
economies (due to
continued ineffectiveness
of GGOs)
Global insurance
companies drop
coverage of all “acts
of God,” including
hurricanes, tornados,
& floods
Swiss banks open
secret accounts for
review by world
governments and
judicial authorities
WTO regulates
Internet &
taxes Internet
sales
WTO grants
Microsoft legal
monopoly to become
the world’s official
computer operating
system
Nuclear war
in the
Middle East