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Globalization

American ambition has never failed to achieve the extraordinary. With American ambition, settlers forged west and explored new lands that would soon comprise of the United States. With such ambition, the Americans were the first to put a man on the moon and invented the cotton gin, steam engine, and assembly lines. Even today, American ambition thrives as companies seek to expand their reach across oceans and to other companies. Globalization is currently an important item on the agendas of business leaders across the country. Discussion about the aims and goals of corporations and their plans to globalize has prompted four writers to cover the issue, each offering their take on the expansion of business.

In the article, “America’s Truth Deficit,” written by William Greider of the New York Times, it is argued that America is unprepared for the shift towards globalization. According to Greider, the United States’ “weakening position in the global trading system is obvious and ominous.” To prove his point, Greider brings in evidence about America’s trade deficit and contrasts it to the trade surpluses experienced in other global business powers such as Japan and Western European countries. His main line of argument is American leaders are unwilling to face the fact that the country’s habit of spending and operating will not withstand the demands of globalization. The idea of free trade to facilitate economic growth is reasonable in theory, but in reality it is more of what Greider describes as “managed trade,” in that countries pursue their own national interests. Greider, however, believes that this is not what causes the United States trouble. He proves this by mentioning that despite pursuing their own national interests, Japan and several Western European countries are able to maintain trade surpluses, something the United States cannot seem to manage. Instead, the United States’ priorities are not in order, as the government defines national interest “primarily in terms of advancing the global reach of our multinational enterprises.” This is good for investors and companies, but not for the social health of the nation. As the trade deficit increases in America, the United States finds itself not as a leader or provider, but rather as a follower and a country that relies on the exports of others to survive. The ill health of America’s economic system also results from companies seeking more inexpensive labor outside of the country, driving the American working class into poverty in the drive to increase profits.

Daniel Yergin, in his article, “Giving Aid to World Trade,” argues not necessarily a different stand on the issue but rather a more optimistic outlook on globalization. He believes that global trade will foster growth in the poorest countries of the nation, aiding political and economical development. In ways, he has the idea that the United States maintains a healthy in the world market by including, “In the 1990’s, world trade, American imports and American exports all doubled. In that same decade, 17 million new jobs, on a net basis, were created in the United States. By any calculation, that’s a pretty good deal, and one well worth remember in these troubled economic times.” Unlike Greider, Yergin seems convinced that in no way is America in a distressed, disadvantageous state. In fact, he believes that the United States should use its status and resources to help other nations as a means to end poverty in developing countries. He offers compelling evidence to show how expansion trade in poorer nations has rejuvenated their economies, citing examples of Asian countries such as Singapore and South Korea and the rise in per capita incomes among their citizens. More so than in Greider’s article, this piece appeals strongly to the American sense of ambition and success as it urges the reader to rally behind the globalization cause. Yergin glorifies the benefits of global trade between industrialized and developing countries. Together, the articles written by Greider and Yergin provide readers with different opinions about globalization, ranging from wary hesitation to optimistic confidence.

In comparing the first two articles to the article written by Milton Friedman, it is evident that the ideologies of all of the writers align in some way. Friedman contends that the only responsibility businesses have is to make profits. From earning profits, good should naturally result. By focusing attention on addressing social responsibility, whether through contributing money to charity or improving the community in which the corporation is based, corporate executives levy unnecessary taxes on the earnings of the shareholders and take on roles of greater power than initially prescribed to them. Furthermore, Friedman contends that this is undemocratic and goes against the American ideals of a free, democratic society. Friedman’s view that profit is the only important aspect of business contradicts Greider’s conception of how the pursuit of profits alone can cause irreparable damage to the national economy. In this sense, Yergin and Friedman’s ideologies are more similar in the fact that both believe that the natural pursuit of profit only causes good for the society as a whole. In addition, Yergin and Friedman agree that in order to achieve ultimate globalization success, free trade must exist and thrive. According to Friedman, “[T]here is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”

Freeman puts a more heavy emphasis on taking into consideration the welfare of the stakeholders and those closely related to the workings of major corporations. According to Freeman, when the interests of the stakeholders are taken into consideration, the stakeholders respond in a positive way. He writes, “By paying attention to customers’ needs, management automatically addresses the needs of suppliers and owners…and it should come as no surprise that persons respond to such respectful treatment, be they customers, suppliers, owners, employees, or members of the local community.” Freeman also believes that as a result of the implementation of the stakeholder policy, less governmental intervention and regulation will be needed as corporations are more likely to look after the welfare of the stakeholders, minimizing complaints and calls for regulated trade. While Friedman advocates that the only responsibility a firm has is to earn profits, Freeman calls for corporations to regard the welfare of the stakeholders as the top priority. In some ways, Greider’s and Freeman’s business ideologies align in that both value the interests of outside stakeholders. Greider writes, “Companies regularly [shift production to low-wage locations] as a competitive weapon without regard to domestic consequences. The practice works for companies and investors, but not so well for a nation.” He refers to the fact that the competition to find cheap labor has driven wages down, so much so that the general working class is suffering from low pay that does not keep up with the rise of inflation and living standards. In this case, people are being negatively affected by corporations’ sole aim of increasing profits at all costs. Freeman agrees, as he writes that “externalities, moral hazards, and monopoly power exist in fact, whether or not they exist in theory.” He means that even though a free market society with pure competition is ideal, in reality many negative side effects arise when corporations disregard the plights of others. Freeman likens corporations to people—“the firm is expected to be a good citizen, as is any person, either ‘natural or artificial.’” This indeed completely opposes what Friedman argues, that “[a] corporation is an artificial person and in this sense may have artificial responsibilities, but ‘business’ as a whole cannot be said to have responsibilities, even in this vague sense.”

Opinions on globalization and the true responsibilities of corporations vary greatly among these writers. On one end, Friedman believes that the sole purpose for corporations is to produce profit, which leads into to Yergin’s view that through globalization and increased trade, nations all over the world will earn more money. Then on the other end of the spectrum, Greider maintains that the pursuit of profit and the national interest of extending the reach of multinational corporations hurt the United States as a whole; therefore, remedies must be prescribed to mitigate the situation. Freeman takes it a step further, insisting that corporations look after their stakeholders rather than solely their stockholders in order to alleviate the ailments of American economy. The most convincing article out of the four is the one written by Greider. Greider incorporates many relevant pieces of evidence in describing the trade deficit existing in the United States, then stringing his argument along into what the cause of the problem might be (free trade is more like managed trade with each country employing policies to further their own personal interests), but then shows that the blame of the economic problems in the United States result can only be placed on America itself. Greider compares other countries, whose policies contribute to the success of their economies, to the United States, which despite implementing policies to further its own interests fail to improve the economic situation because its focus is incorrect. Through this line of argument, Greider shows that America has a grave problem on its hands which requires immediate attention. Unlike Friedman’s article, which was too cynical and theoretical, Yergin’s article, which was blithely ignorant of the complexities of global trade and supported by weak examples, and Freeman’s article, which was well-organized but too lofty to be practical, Greider’s writing combines evidence, examples, and a realistic point to create a convincing piece that offers readers an honest review of the state of the American business world.