Poor Man's Hero

Controversial writer Johan Norberg champions globalization as the best hope for the developing world.

Nick Gillespie from the December 2003 issue

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Norberg: Look at Vietnam, which I visited recently. It had the benefit that when the Communists took power there, they actually implemented their ideas. They collectivized agriculture and they destroyed private property, which meant that in the mid-1980s people were starving there. The Communists' own ideas managed to do what the American bombs never did: destroy communism. In the wake of such failure, the government began to look for other examples, and they saw that Taiwan had succeeded by globalizing. The Communists in China were liberalizing trade and ownership laws and were seeing fast progress. The contrast is especially clear on the Korean peninsula. It's the same population, with the same culture, just having two very different political and economic systems. In 50 years, one of them went from hunger and poverty to Southern European living standards. The other one is still starving.

Looking at all this, the Vietnamese chose to go global. They began to price land and they began to open up for investments and for trade, which led to quick results. Agricultural production took off and has made them one of the world's biggest exporters of rice. But they also took in investments for manufacturing production. They've received tons of foreign investments and factories that gave people new opportunities and new resources that have increased their standard of living.

Reason: Critics would say that what Vietnam really imported were sweatshops.

Norberg: Sweatshops are a natural stage of development. We had sweatshops in Sweden in the late 19th century. We complained about Japanese sweatshops 40 years ago. You had them here. In fact, you still do in some places. One mistake that Western critics of globalization make is that they compare their current working standards to those in the developing world: "Look, I'm sitting in a nice, air-conditioned office. Why should people in Vietnam really have to work in those terrible factories?" But you've got to compare things with the alternatives that people actually have in their own countries. The reason why their workplace standards and wages are generally lower is the lack of productivity, the lack of infrastructure, the lack of machinery, and so on. If workers were paid U.S. wages in Vietnam, employers wouldn't be able to hire them. The alternative for most workers would be to go back to agriculture, where they could work longer hours and get irregular and much lower wages.

Sweatshops are the way poor countries tap into their competitive advantage, which is cheap labor. Multinational corporations bring in more modern technology, including things like training and management systems, that actually increase productivity. When workers are more productive, they tend to earn more. That's why in a typical developing nation, if you're able to work for an American multinational, you make eight times the average wage. That's why people are lining up to get these jobs. When I was in Vietnam, I interviewed workers about their dreams and aspirations. The most common wish was that Nike, one of the major targets of the anti-globalization movement, would expand so that a worker's relatives could get a job with the company.

When unions, when protectionists, when uncompetitive corporations in the U.S. say that we shouldn't buy from countries like Vietnam because of its labor standards, they've got it all wrong. They're saying: "Look, you are too poor to trade with us. And that means that we won't trade with you. We won't buy your goods until you're as rich as we are." That's totally backwards. These countries won't get rich without being able to export goods.

Reason: How much does the legacy of colonialism contribute to conditions in the developing world?

Norberg: It's part of the problem, though not in the sense that people usually claim. A lot of critics of globalization say that developed nations exploited and destroyed former colonies' natural resources and that's why former colonies are poor. That might be a problem in some cases, but what we see today is that, many times, the more natural resources a country has, the worse off things are for the general population. If there is a single valuable resource, then there are fierce power struggles to keep control of it within a small elite. Places without natural resources, such as Taiwan, Hong Kong, and Singapore, have developed relatively broad-based economies, where countries rich in oil or minerals often have not. The broader an economy is, the more wealth and income are spread around. The best thing that could happen to the Arab world would be for them to run out of oil. Then they'd have to open up to trade, and a small number of people wouldn't be in control all of the wealth, as is the case in Saudi Arabia.

This sort of economic and political centralization is the really problematic legacy of colonialism. It created new, very strong power centers in a lot of places where they hadn't really existed before. You can see this in Africa. As the scholar George Ayittey has shown, in many African countries there once existed regional markets and local democracies where the chief was accountable to his people and had to follow their decisions. But when the colonizers appeared, they created power structures that weren't accountable in the same way. They extracted resources and, with the help of small groups of locals, became autocratic occupiers of the land. When they left, the local elites just took over the power structures and became the new occupation forces. They simply took over the machinery of power left by the colonizers.

That creates a sense that the only way to improve things is to seize centralized power, to control a country's political machinery. Many Western countries exacerbated this problem by distributing billions of dollars into these very centralized governments in extremely miserable and poor countries. The rulers would use some of this to buy off the people, but they mostly kept it for themselves and their associates. Everybody living there could see that if they wanted a good life for themselves and for their family, they had to seize political power -- as opposed to, say, going into business or trade.

Reason: Yet as you note, trade and economic liberalization are proceeding apace. Why now?

Norberg: For a number of reasons. The most important reason has to do with the end of the Cold War. During the Cold War, these power centers were supported by outside forces, mostly by the Soviet Union or the U.S. They poured money into these places to maintain influence, giving huge amounts to dictators with very little expectation that it would be used to improve things. Without that sort of money coming in, tyrants now have a harder time of it.

Kenya, where I've also been recently, is a perfect example of this. Daniel arap Moi, the longtime dictator, never would have lasted as long if he didn't get so much foreign aid from the U.S. and European countries. But in the early '90s, those countries started to say, "We won't continue to support you unless you do these things to improve your country." I'm not sure that foreign aid is a good way to create liberal policies, but what happened was that he was no longer given the support that he needed to stay in power. Suddenly you saw new power centers arise, new forces that began to challenge arap Moi. He had to implement elections and, though he always threatened the opposition forces, eventually they overtook him. Late last year, they won a presidential election, against his handpicked successor.

Now we have a new situation in Kenya. The government is actually supporting reforms, including economic liberalization.

Reason: If the benefits of globalization are so obvious, why is there so much opposition to it, especially in the West? Vietnamese workers may be clamoring for more Nike factories, but protesters in Europe and North America are tossing bricks through the windows of McDonald's and Starbucks.