Globalisation documents: PART 2.











Wages for footwear workers in China and Thailand were 23 — 46 pence per hour. 106. In Indonesia "…to attract foreign investment, the minimum wage is set at just 6% above the poverty line." 107.

J. Madely, Big Business, Poor Peoples, Zed, 1999.

(Increasing competition...between workers,)

In the drive to become "competitive", companies are restructuring their operations on a global scale. It is not companies which are competing, however but workers and communities.

Workers are being pitted against workers and communities against communities as companies relocate from one country to another in search of new markets, the weakest trade unions, the most flexible rules on working conditions and the largest subsidies.

T. Hildyard, C. Hines and T. Lang, "Who competes?", The Ecologist, 26.4. July/Aug, 1996, p. 123

Corporations have been steadily "downsizing" their workforces. Information technology is making middle managers expendable along with clerical and assembly workers. Between 1979 and 1992, the total worldwide employment of the Fortune 500 companies dropped from 16.2 million to 11.8 million.

The Ecologist, 26, 4, July/Aug, 1996, p. 187.

In all OECD countries there has been in recent years a sharp fall in labour’s share of the gross domestic product, and a parallel rise in the share of profits.

F. Clairmont, The Rise and Fall of Economic Liberalism, Third World Network, Penang, 1966, p. 48.

"Throughout the 1980s and 1990s incomes declined or were stagnant for the poorest 60% of Americans,…judged by stock market capitalisation alone, the rich became fabulously richer."

F. Clairmont, USA; The making of the crash, THIRD WORLD RESURGENCE, 125-126, 2001, P. 45.

Between 1980 and 1993 the top 500 US corporations shed 4.4 million jobs. In the same period their sales volume increased 1.4 times, assets increased 2.3 times, and payments to CEOs increased 6.1 tim es.

D. Korten, "The failures cf Bretton Woods", In J. Mander and E. Goldsmith, Eds., The Case Against The Global Economy,

1997, p. 27.

Transnational corporations only employ 12 million people in the Third World, which is 2% of Third World labour. And many of these jobs have displaced local jobs that used to exist in firms bankrupted by the coming of the transnationals. c.xiv.

J. Madeley, Big Business, Poor People, Zed Books, 1999.

Evidence of falling real wages in Australia:

Between 1983-84 and 1995-96 award rates pay increased by 58.6% while prices increased by 76.6% (ABS, 1997, 1993). So there was a fall in real wages during the period while the unemployment rate fluctuated but remained relatively high. Over the same period of time, the profit share of national income (corporate gross operating surplus as a percentage of gross non-farm product at factor cost) increased by nearly 15C/c while the wage share (comprising non-farm wages, salaries and supplements) decreased by 5% (ABS, 1997, 1993.) _ ,

The OECD's own study of unemployment (OECD, 1994) points to the increased wage dispersion that has occurred in English-speaking countries in recent years. In the case of Australia, the real wages of low-paid workers (workers in the tenth percentile of the overall earnings distribution for males) fell over the 12-year period under consideration, 1980 to 1991.

M. Lombard, "Excessive real wages?", Good Government, Aug., 1994, p. 5.

"…wages have been on a downward trend in many developing countries for more than a decade. This is certainly the case in Mexico where minimum wages dropped in real terms y more than 80% since 1981….It is also the experience of much of Latin America (with few exceptions).

W. Nadel, "World Investment Report, 1999; Flawed on Many Fronts, Third World Resurgence, 110/111, p. 33.

However, while TNCs control 70% of world trade and 80% of foreign investment, they employ less than 3% of the world's workforce. (In1998 this was estimated at 73 million people.)…while the sales of the top 100 TNCs grew by15% from 1993 to 1996, not one new job was created.

"Globalisation and unemployment", The Big Picture, Aug., 2001.



Changes since the mid-1980s include the following: the universal family benefit was abolished; eligibility for income or means-tested programs! such as unemployment, sickness and widowhood has been tightened considerably and the level of benefits reduced, resulting in up to 30 per cent reduction in benefits for the unemployed. Universal retirement pensions have become subject to a 25 per cent surcharge for higher income seniors and the age of retirement is to rise from 60 to 65 by 2001. p. 48.

R. Mishra, Globalisation and the Welfare State, Elgar, 1999.

Between 1981 and 1992,federal spending for subsidised housing fell by 82%; job training and employment programs were cut by 63%, and the budget for community development and social service block grants was trimmed by 40%. Between 1972 and 1992, welfare and food-stamp benefits for single mothers declined by an average of 27% nationwide…no state in the early 1990s …provided grants and subsidies equal to 100 percent of the poverty level."

G. Winslow, Capital crimes; The political economy of crime in America, Monthly Review, Nov., 2000, p. 45.




Given our geography, our population size and the strengths and weaknesses of our people the old economic policy of the 50s and '60s , was roughly right.

It depended on developing a manufacturing industry behind a protective shield of a mixture of tariff quota and currency control. Different cases were taken on their merits.

The policy was a muddle of anomalies, inconsistencies, the giving in to certain pressure groups -and a lot of discretion in the hands of the Department of Trade and - the Reserve Bank. But it worked. , The free market orthodoxy that ruled from the early '70s to today assumes that any form of protection Is bad Governments have worked to reduce protection and deregulate financial markets.

our overseas debt is a tribute to the fact we cannot earn enough from our exports to pay for the demand for imported goods now that a large proportion of our own manufacturing industry has -been destroyed.

Australia needs to return to the state of 10 years ago when for Instance about half the goods in the local hardware shop were locally made; today it is more like 5 percent or even less.

We have to accept that our manufacturing industry will never be internatlonally competitlve except tn unusual cases which we should take as a bonus, not as the staple.

In a world in which our wage rates are 20 times those of some of our Asian competitors, no degree of politlcal tinkering to reduce real wage rates, or to remove government charges on business, will balance the equatlon.

Economic rationalists wlll reply that protection introduces inefficiency, facilitates corruption and requires thousands of bureaucrats making sensitive economic decisions for which they are ill-trained. Maybe. We have no choice.

Australia will never export manufactured goods on a significant scale.

Consequently a return to protection has to be seen as building a wail behind whlch a sound industrial base is restored, one which manufactures predominantly for the home market,

Import substitution is the only practicable policy given the $25 billion figure. It goes without saying that the export of manufactured goods is to be welcomed, but it is a delusion to think this might happen on a scale to make a worthwhile contribution to the balance of payments equation.

Simple arithmetic tells us that purist dedication to international free trad e and letting every company prove itself in the tough world of open international competition is a luxury which economic reality has closed off. The real choice is between two types of protection: protection done badly and protection done reasonably well.

Many economic rationalists still claim, that the policies of the 1980s were right, they were just not given time to work. Wait another five years, or 10, and Treasurer Paul Keatlng s "beautiful trend" upwards will appear, by which is meant a significant number of internationally competitive manufacturers exporting vigorously to the rest of the world. . ,

The arithmetic makes this policy ludicrous for "significant" means in the order of S20 billion in extra exports…

The European Comrnunity is heavily protected in a way that severely punishes Austrtalia and the obvious has been proved, that our virtue influences the Europeans not one jot to reduce their own levels of protection. They simplydo not give a damn.

And if free trade is such a virtue why is It that the most successful

contemporary economy, the Japanese, is crlss-crossed with quotas and tarlffs restricting the entry of foreign goods? Why Is It that Japan’s brilliant export Industries grew up under a protective canopy including generous subsidy?

However, Australia has a manufacturing sector of significant size only because it was allowed to grow up behind protective walls. Without protectlon there would have been no BHP.

The experience of the 1980s suggests that if Australia reduces tariffs it will end up not with a more efficient manufacturing sector but with no manufacturing at all.

Notes from three articles in the Australian 6th march, c 1998, by J. Carroll.

"The IMF has urged Australia to push on with more economic reforms, including abolition of all tariff protection of industry, reducing the award system to a simple safety net, slashing the top tax rate and "substantially" increasing work tests on the unemployed."

It also proposes that "…the government end the indexation of pensions and welfare benefits to average weekly earnings and let pensions fall relative to workers’ incomes….while substantially increasing participation requirements for welfare recipients."

The mission "…urged that tax cuts focus on reducing the top 47% marginal tax rate, and raising the $60,000 threshold at which it cuts in…"

IMF Report, The Age, 23rd March, 2001.




Government subsidies to Australian business, 1994-5, $12.5 billion. In addition tax exemptions totalled $7.5 billion.

D. Bryan and M. Refferty, The Global Economy in Australia, Allen and Unwin, 1999.

Assistance to banks:

These 'gifts' are often arranged very secretively and very swiftly. In the first major crisis of the post-Cold War world of global markets, the IMFBIS bail-out of the super-rich during the Mexican crisis of January 1995 took place in under 24 hours: no more than a handful of people, all operating outside any real parliamentary control, used Western taxpayers' money to organise the largest credit and aid programme since 1951. In the IMF bail-out during the Asian crisis of 1997-8, billions of taxpayers' dollars were spent on shoring up collapsing financial structures, and at the same time bailing out risk-taking speculative investors.
Typically in these bailouts, equity investors and long-term lenders suffer losses, but short-term international lenders - the 'risk-taking speculators'- are largely saved.

S. Haseler, The Super Rich, St. Martins, New York, 2000. P. 160.




The large drug companies are fighting to stop the Third World governments from producing very cheap versions of drugs the corporations have patented, and will only sell at high prices, which means that most Third World people .can’t afford them. As a result millions of people die each year because they can’t get crucial treatment, especially for aids. Sometimes the cheaper "generic" version of the drug is 1/20 the price charged by the drug companies.

Note that the lower price is sufficient to cover the cost of production plus a small profit. The drug corporations refuse to sell at less than the very high prices that maximise their profits, and therefore confine sales to the rich.

Is this justified b y the high costs of developing a new drug? Firstly the drug companies are among the most profitable corporations in the world; they could easily afford to set much lower prices for poorer customers. More importantly, in a number of important cases the new drugs were not developed by the drug companies but were developed in government laboratories and given or sold to the drug companies.

It would be difficult to find a more blatant instance of corporate greed having massively catastrophic consequences for millions of people.

Drug companies spend 15-20% of turnover on marketing, which is more than they spend on the development of new drugs. 146.

"Pharmaceutical TNCs have hindered attempts by developing country governments to provide people with safe, effective, low cost generic drugs." 153.

In 1982 Bangladesh began a generic drugs program. The TNCs tried to prevent this. The program saved $600million and improved quality. The US supproted the transnational corporations.

In Sri Lanka the US ambassador threatened cessation of food aid if they persisted with the plan to bet Pfizer drug co to use local inputs in production of drugs for sale there. 155.

J. Madeley, Big Business, Poor People, Zed Books, 1999.

"…the drug scene is nothing short of scandalous." S. George, quoted, p xiv.

J. Madeley, Big Business, Poor People, Zed Books, 1999.

Impeding AIDS prevention

AIDS is set to kill one in four people in Black Africa, unless anti-AIDS drugs can be made more widely available. However global pharmaceutical corporations charge such exorbitant fees for their products that they are prohibitively expensive in most of Africa. One way round this is for countries such as Brazil India and Argentina to produce the same drugs much more cheaply and export them to poor countries. US, British and Swiss pharmaceutical giants are furious at this, and thanks to the WTO's Trade-Related Intellectual Property Rights Agreement - designed to provide fierce protection for manufacturers' patented products - are in an excellent position to stop it.

In an attempt to reduce its infant mortality rate, Guatemala passed a law and issued regulations in 1983 encouraging new mothers to breast feed their infants and fully understand the health threats to their babies of using infant formula as a substitute for breast milk. To be accessible to illiterate people, Guatemala's regulations also included prohibitions against visual depictions of infants that 'idealise the use of bottle feeding'.

One infant formula producer, Gerber Food, bridled at the Guatemalan law and regulation because its trademark logo includes the picture of a rosy infant, the 'Gerber Baby' which it refused and still refuses to change for the Guatemalan market.

Gerber threatened to bring about WTO action to overturn the law. Bv 1995, Gerber's threats, taken seriously by the Guatemalan government at home and by its Washington embassy, succeeded. The law was changed so that imported baby food products would be exempt from its infant food labelling policy.

China, like Russia, has seen conditions for the majority of its citizens worsen as both countries have opened up to the global market. Should China join the WTO, the situation will worsen both internally and for other developing countries competing for the same export markets. Wages and conditions will remain very low and probably worsen. An estimated 100 million people have already left the land in search of work in towns and cities, thought to be the biggest migration in human history. WTO membership will result in cheap food imports, thus accelerating rural decline and the move to urban centres. In addition it is expected a further 150 million jobs will be lost as 'inefficient' state enterprises are made ready for international competition. Whatever the actual final numbers, this trend will ensure a permanent cheap labour force whose products will undercut workers in other developing countries as well as in the North.

The Ecologist Report, The Ecologist, Sept., 2000, p. 50.

Aids drugs in rich countries cost $15,000=$30,000 pa for one person. In India they can be supplied via the government’s system for $700. Half the AIDS drugs were developed in public laboratories.

ABC Radio, 5th march, 2001.

One-third of the world's population lack access to essential drugs. In the most impoverished parts of Africa and of Asia, more than half the population do not have access to essential 'drugs.

Pharmaceutical investments focus R&D on products that may be attractive from a commercial point of view but which add little to therapeutic innovation. In the period 1981- 1998, an assessment of 1,779 new drugs in France showed that only seven could be considered a real therapeutic breakthrough. In total, 1,043 were drugs that fell into the category 'nothing new' and were mostly 'me too' products. A 'me-too' product is an imitation - a slightly modified molecule - of a successful product of a competitor brought out to secure a share of a particular segment of the market. It hardly ever provides significant new therapeutic possibilities

E.T. Hoeh, "Globalisation and equitable access to essential drugs", Third World Resurgence, 120-121, p. 13. (2000)

Organisations like Doctors Without Borders believe that efficient procurement of generic drugs could drop the cost of HIV/AIDS medicines an additional 90% from the estimated drug-industry 'discounts'. That would put the cost of combination HIV/AIDS drug therapies at approximately $200.

R. Weissman, " Killing Africa with kindness", Third World Resurgence, 120/121, p. 25.

…the World Trade Organisation's Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is denying patients in the developing world access to life-saving essential medicines.

By virtue of TRIPS protection, no generic equivalent can come into the market until expiry of the 20 years, denying patients cheaper alternatives.

The Thai government passed a law banning parallel imports in 1992, under the threat from the US to limit textile imports

In Geneva, the developing countries in the Group of 77 proposed a new text, which proposed that essential and life-saving medicines be excluded from patentability in order to advance access to such medicines at affordable prices. This text further recognised that intellectual property rights under the TRIPS Agreement should not take precedence over the human right to health care, and he ethical responsibility to provide life-saving medicines at affordable prices.

Again, the developed countries the US, the EU, Canada, Japan and Australia - objected to this proposal.

'Medicines cannot be treated as mere commodities, access to medicines is a question of life or death,' asserted Ellen 't Hoen. During her presentation, she cited several examples of how patenting of drugs has resulted in consumers having to pay exorbitant prices for branded essential medicines, many times more than the cost of generic alternatives.

'Protecting public health should have primacy over commercial interests,' she added.

It was clear that the developed country governments did not share the same view.

C. Oh, "TRIPS and pharmaceuticals", Third World Resurgence, 120/121, p. 10.

A new report by the consumer health organisation Families USA refutes the pharmaceutical industry's claim that high and increasing drug prices are needed to sustain research and development. The report, 0.~ the Charts: Pay, Profits and Spending by Drug Companies, documents that drug companies are spending more than twice as much on marketing, advertising, and administration than they do on research and development; that drug company profits, which are higher than all other industries', exceed research and development expenditures; and that drug companies provide lavish compensation packages for their top executives.

The report comes on the heels of a recent Families USA analysis that found prices rose by more than twice the rate of inflation last year for the 50 most-prescribed drugs to seniors. Among the nine pharmaceutical companies examined in the report -but one (Eli Lilly) spent more than twice as much on marketing, advertising and administration than they did , on research and development

Editorial, Third World Resurgence, 131/132, p. 45.

The credibility of the drug majors has plummeted even since the US government intervened on their side in 1997, compelling South Africa to scrap plans to put in place an AIDS therapeutic system based on cheap
generic medicines.
A. Kwa, "Dying for free trade", Third World Resurgence, 131/132, 2001, p. 47.

A l998 investigation by the Boston Globe concluded that 45 of the 50 top-selling drugs approved in the US between l992 and l997 had received
government funding at some stage of development. The drug industry is one of the mostprofitable industries in the world.

Planet Dialectics: Explorations in Environment and Development. Wolfgang Sachs (Senior Research Fellow, Wuppertal Institute, Germany). London & NY: Zed Books, Nov 1999



"Wealth that goes to large companies does not 'trickle down' to to poor via employment opportunities: though the top 100 TNCs control around 14 per cent of all the world's wealth, they employ less than half of one per cent of the world's workforce." (Christian Aid, 'Fair Shares? Transnational companies; The WTO and the world's poorest communities.)

The Ecologist Report, Globalising Poverty, Sept., 2000, p. 5.

The world's 200 largest corporations account for 28% of global activity, while employing less than one quarter of one per cent of the global workforce.

S. Turnbull, in ERA Newsletter, Nov-Dec, 2000.




The promised land of export-led, private sector growth that would raise the living standards of the poor often receded further in the future with each new Bank loan: Mexico had been a model pupil through the '80s and early '9Os, and the living standard of more than half the population was lower in 1996 than it had been in 1980.

B. Rich, "Still waiting; Globalising poverty", The Ecologist Report, Sept., 2000, pp 10, 11, 16.

The Bank's other standard response, apart from the 'fiscal space' rationale, was that its projects promoted growth and created employment - an assertion that could justify almost any project. But even on these grounds the record is suspect. In 1997 MIGA claimed that the 70 guarantees it approved facilitated some $4.7 billion in foreign direct investment, creating 4,000 jobs in host countries. This amounts to $1.175 million dollars in investment per job. If the goal is job creation for the poorest of the poor, this is a bankrupt strategy.

B. Rich, "Still waiting; Globalising poverty", The Ecologist Report, Sept., 2000, pp 10, 11, 16.

45 per cent of World Bank lending goes directly to international companies through so-called international competitive Bidding, most of whom are based in G7 countries. The us and Germany each get six per cent of contracts and the UK three. US Treasury Department officials even calculate that for every $1 the United States contributes to international development banks, us exporters win more than $2 in bank-financed contracts.

B. Rich, "Still waiting; Globalising poverty", The Ecologist Report, Sept., 2000, pp 10, 11, 16.

Failing to deliver the results.

The World Bank's raison d'etre, in its own words, is environmentally sustainable poverty alleviation; it is really the only reason why taxpayers in the industrialised world, already faced with a shrinking domestic social safety net, should support such an institution.

Yet, as the Bank works through its sixth decade of trying to promote something called 'development', the poor in most of its borrowing countries are in worse shape than they were a decade and a half before. According to the United Nations Development Program (UNDP), since 1980, "economic decline or stagnation has affected 100 countries reducing the incomes of 1.6 billion people". For 70 of these countries, average incomes are less in the mid 1990s than in 1980 for 43, less than in 1970. In the early 1990s incomes fell by 20 per cent or more in 21 countries, mainly in the former Soviet Empire. The poorest fifth of the world's population has its share of global income fall from 2.3 per cent to 1.4 percent over the past 30 years.

Even according to the Bank's Operations Evaluation Department's latest Annual Review of Development Effectiveness 1999, "poverty trends have worsened. The number of poor people living on less than US $1 a day rose from 1,197 million in 1987 to 1,214 million in 1997. Excluding China, there are 100 million more poor people in developing countries than a decade ago". Furthermore, since 1990 life I expectancy has declined in 33 countries. …the Bank's own internal audits reveal an astonishing 51 per cent failure rate to achieve sustainable results in fiscal years 1998-99, a performance that has not changed appreciably in the last decade. This failure rate is even more acute in the poorest countries and in the developmentally most critical sectors.

B. Rich, "Still waiting; Globalising poverty", The Ecologist Report, Sept., 2000, pp 10, 11, 16.

An in-depth study into the world's 49 least developed countries rejects claims that globalisation is good for the poor, arguing that the international trade and economic system is part of the problem, not the solution.

"The current form of globalisation is tightening rather than loosening the international poverty trap," the study warns.

As markets become more entwined, the UN says the world economy is becoming increasingly polarised and the least developed countries are being left behind.

Very important; the theory is wrong. "Contrary to conventional wisdom, persistent poverty in poor countries is not due to insufficient trade liberalisation," the study says. In fact in the poorest countries, trade accounts for just over 40% of GDP - higher than the average for rich countries.100m more must survive on $1 a day
IMF and World Bank told to stop peddling discredited policies.

Charlotte Denny and Larry Elliott. Wednesday June 19, 2002, The Guardian



Not long ago capitalism needed repressive states in the Third World; not now.

"In the new climate, the brutal dictatorships that characterized the free world regimes of the periphery, with their naked repression, mass murders, torture and extortionist attitudes towards business activity within their territories , are no longer required. They are costly, inefficient from a business point of view, and tend to crystallise mass opposition...Better to have democratic governments, managed by local elites who are committed to transnational capital's globalist vision . In this way, well-meaning, democratically elected governments enforce IMF austerity, arguing that there is no alternative to market-oriented globalism." (p. 3.)

W. Tabb, "Progressive globalism", Monthly Review, 50, 9 , 1999.

"The economically overdeveloped countries… continue to exploit the other countries of the world, but they now do so through transnational corporations and global financial and regulatory institutions." 21

K. Jones, Beyond Optimism, Jon Carpenter, 1993.