Poor Man's Hero
Controversial writer Johan Norberg champions globalization as the best hope for the developing world.
If there is any moral certainty underpinning today's anti-globalization movement, it's that desperate actions—from sometimes violent street demonstrations to public crop burnings to dressing up as giant sea turtles—are needed to protect the traditions, forests, and human rights of the Third World against the rapacious greed of the First. The anti-globo left has little doubt that anyone who favors international free trade, open markets, and the cultural mongrelization they foster must be a greedy corporate bastard hellbent on plundering the world's poor and chopping down the last tree left on the planet. On the right, if George W. Bush is any indication, a different sort of blindness is at work: It's OK to pass nakedly protectionist legislation as long as you talk a good game about favoring free trade.
This is why Johan Norberg, a 30-year-old Swede with roots in the anarchist left, is so important. He is the author of In Defense of Global Capitalism, which makes a powerful moral and economic case for globalization. Norberg throws rhetorical Molotov cocktails both at left-wing critics who would condemn developing countries to poverty by insisting on First World workplace and environmental standards as a prerequisite for trade and at Western governments whose free market rhetoric is shamefully undercut by draconian tariffs on textiles and agriculture, the two areas in which the developing world can actually compete.
Norberg focuses on the human dimension of globalization, how increased and freer trade is the best way to help the wretched of the earth. A bestseller in Sweden when it appeared there in 2001, In Defense of Global Capitalism is a richly detailed and nuanced brief in favor of globalization. It was translated for British audiences by the influential London free market think tank the Institute of Economic Affairs. The Cato Institute has just released a new and updated American translation by Roger Tanner (with help from reason Associate Editor Julian Sanchez, who previously worked at Cato).
A fellow at the Stockholm think tank Timbro, Norberg is the author of several previous books, including State, Individual, and Market (2000), A History of Swedish Liberalism (1998), and The Resistance Man (1997), a study of the Swedish writer Vilhelm Moberg.
In Defense of Global Capitalism is a compelling book on what is arguably the major economic issue of our time. In Johan Norberg, globalization has found a persuasive and passionate spokesman who may well reshape the terms of debate. If he succeeds in doing so, it won't be his first such success. In the early 1990s, as part of a libertarian group called the Freedom Front, Norberg helped to organize speakeasies that illegally sold liquor to protest Sweden's restrictive licensing laws. After the group grew to 30,000 members—and after more than a dozen raids by the police—Swedish politicians realized they couldn't contain what was becoming a broad-based social movement. Instead, they liberalized their laws, allowing drinking establishments to maintain longer hours. "That's my biggest political success to date," jokes Norberg.
Editor-in-Chief Nick Gillespie interviewed Norberg in Washington, D.C., in early September.
Reason: Your book is titled In Defense of Global Capitalism. Can you summarize your case?
Johan Norberg: The core is that capitalism and globalization—by which I basically mean free and open markets and the liberal political, economic, and social institutions that support them—bring freedom of choice to people in countries that have never experienced this before. If we want to defend globalization—and we should—our focus must be on developing countries, not our own Western countries. Global capitalism means that people are no longer confined by the decisions of national elites. These could be the local monopolies, the local powers, politicians, and so on.
By making local powers compete or by bypassing them altogether, globalization gives people more freedom to decide over their own consumption, to buy things from abroad, to get the cultural influences they want, to travel, to meet friends, and to cross borders.
Reason: What's the evidence that global capitalism benefits people in poor countries?
Norberg: Take just about any statistic, any indicator of living standards in the world, and you can see the progress that has been made over the exact period that worries globalization critics. In the last 30 years we've seen chronic hunger and the extent of child labor being halved. In the last 40 years, we've seen life expectancy going up to 64 years in developing countries. We've seen literacy levels approaching the maximum in most countries in the world. According to World Bank statistics, 200 million people have left absolute poverty—defined as living on the equivalent of less than $1 a day—over the past 20 years. What's more, the most progress is found in the countries that increased trade and contacts with the outside world.
Globalization has also helped extend rights to women that had long been confined to men. These include being able to go into business, get an education, inherit money, and so on. One reason for this is simple economics. In a globalized, competitive economy, women are a potential resource. They are able to have new ideas, to produce, and to work. If you discriminate against women—or anyone else—you lose opportunities as a society or as an employer. Take the discussion that's going on now in Saudi Arabia about whether women should be allowed to drive, which they can't legally do now. While it's unlikely the situation there will change anytime soon, it's progress just to have the discussion. People are saying it's extremely costly to hire drivers, often from other countries, to drive women around. You can see how basic economics, basic capitalism, creates the incentive to give women more rights.
A second reason is that all the goods, ideas, and people that cross borders under globalization allow people to see more alternatives, to see other ways of living. When women and other oppressed groups in poor countries see how their counterparts in Western societies are treated, they begin to have ideas about how they want to be treated. Globalization is a great influence because people everywhere get all sorts of new ideas. They say, "Wow, things can be very different than I'm used to."
This isn't to say everything is rosy. Most things are getting better in the developing world, but there are new problems, including AIDS. Yet we can see the old scourges, the old diseases, being abolished. Life expectancy wouldn't be getting longer if things were getting worse in terms of health, hunger, and the environment. We have the few exceptions in sub-Saharan Africa, which also happens to consist of the very countries that are the least globalized. They have the least foreign investment and, generally speaking, the least political and economic liberty. More than anything, they need the sort of economic growth that will allow them to buy not simply relatively expensive AIDS drugs but penicillin and vaccines for more basic sorts of illnesses.
Reason: Can you give a specific example of a developing nation that has benefited from globalization?
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.
Norberg: The further you get from the West, the more positive people are toward globalization, toward more business and trade ties with the rest of the world. The most vocal opponents of globalization in poor countries are often funded by critics from wealthier countries. For instance, Vandana Shiva [director of the New Delhi-based Research Foundation for Science, Technology, and Ecology] is a very vocal opponent of economic liberalization and biotechnology, and she's funded by a lot of different Western groups. Actual farmers in the developing world mostly would like these new crops to actually get something done.
There are the old groups that have always been scared of foreign competition. Corporations that wouldn't be able to beat competition from other countries are one of them. In the U.S., that includes the textile industry, which has funded a lot of the anti-sweatshop propaganda. You see the same thing when it comes to unions that are trying to educate people against free trade, trying to block the NAFTA agreements, the World Trade Organization negotiations, and similar things. But there are newer pressure groups too. These include nongovernmental organizations that have been mostly interested in domestic issues, which could be anything from workplace safety to opposing privatization and outsourcing. In a globalized world, it makes sense for these groups to make their case in front of international bodies. Probably more than most, environmental groups understood that they have an interest in challenging the new globalization forces. They are used to being able to lobby their own governments to stop certain substances, to stop genetically modified crops and the like. They understand that they have to take their issues to the WTO and to be able to fight for them there.
All these groups may have different agendas—the unions are interested in domestic jobs and the greens in air quality—but they're willing to collaborate. They don't have the same views, and they don't have the same goals. But they do have the same enemy.
Reason: Let's talk about the environmental groups a bit. In your book, you convincingly demonstrate that economic development is a boon to the environment because richer countries tend to pollute less. You point to research suggesting that economic growth correlates positively with cleaner air and water once countries reach around $10,000 per capita GDP—the level of South Korea, Argentina, and Slovenia. You argue that best way to clean the environment is to get the developing world to move as quickly as possible from a pre-industrial to a post-industrial economy. Why would environmental groups not buy that argument?
Norberg: I think that there are two basic reasons that lead environmentalists to oppose globalization and the industrial development that goes along with it. The first is a real concern about the environment. Many environmentalists care about green forests, clean air, clean water, and so on. What they don't appreciate is that attitude is itself a result of industrial development. In our countries, people didn't care about these things 100 years ago. Preferences shift when you can feed your children and give them an education. That's when you begin to care about these sorts of things. Environmentalists in this camp merely project a contemporary sense of these issues onto developing countries that are at the place where the West was a century ago. It's an intellectually honest mistake, one that new information and data can change. So can talking with people in developing countries.
But there's another motivation at work among some environmentalists. I don't think this viewpoint represents the majority, but it often includes the intellectual leaders of environmental groups. These are people who are bothered not by environmental degradation per se. Rather, they reject the modern project altogether. They are skeptical of the lifestyles and societies that we have created. They think we are alienated from nature compared to the past and that it is wrong to see nature as a tool that human beings can use for their own convenience and benefit. It's a fundamentally aesthetic understanding of the world that is reminiscent of early 19th century German romanticism. It paints a very distorted view of the pre-industrial world as a utopia. In reality, that world was a place in which starvation was the rule and not the exception.
I was extremely skeptical towards modern industrial society for a long time, so I understand these sentiments. If you live in an urban, developed area and your main experience of rural areas is secondhand, they're quite understandable. You feel very sad about countries that are modernizing and building factories, and about people who will be buying espresso machines that make loud noises instead of, I don't know, sitting around listening to the birds singing.
My attitude changed as I began to read history and understood what kind of circumstances my ancestors lived in. The world they lived in was far from ideal. It was starvation, it was children dying in the first year of their lives. And of course, backbreaking labor, including child labor, was everywhere. I think the best way to rebut this romantic, aesthetic challenge to globalization, to our modern project, is by actually looking at the circumstances of pre-industrial society.
Reason: In your book, you really lay into Western governments, many of which talk out of both sides of their mouths when it comes to liberalizing trade. They want unfettered access to new markets, but they routinely employ protectionist tariffs against developing countries. You call this "the white man's shame" and point out that "Western duties on export commodities from the developing world are 30 percent above the global average."
Norberg: Since the end of the Second World War, we've liberalized trade in most areas. Ironically, the main places where we haven't done so are textiles and agriculture—the two very areas where poor countries can compete.
In the developed world, the textile and agricultural sectors are very strong special interest groups with a lot of political resources. They can make a lot of noise in the public debate. We know that if we open these markets to competition, we'll have to restructure those parts of our economies. People will have to change jobs and go into something else. That would be painful, of course, but it's outrageous, since those are precisely where poor countries would be able to do well.
Reason: This opens up a larger question about increasing globalization. If trade laws come down to special interest politics, how do you defeat those interests? How do we get to a point where the U.S. and the European Union finally gives up on protectionism for textiles and agriculture?
Norberg: I think the first thing that is necessary is moral outrage. We need to explain what's on the line, what the cost is to poor people in the least developed countries. People are dying because we in the West are unwilling to change and to actually live by the free market rhetoric we often spout. We also have to explain to the public that it's not merely developing countries that lose out by these policies. We do too.
Reason: How do we lose out?
Norberg: We deny ourselves access to better goods at cheaper prices from other countries. We lose out because we have to pay billions in tax-funded subsidies to these special interest groups so that they don't have to face competition. Agricultural subsidies cost something on the order of $1 billion a day in Western countries. We have to explain to people, "Look, if we have real free trade, we'll make another $1 billion every day, simply because we abolished our agricultural subsidies." One study I cite in the book estimates that the world would gain about $70 billion annually from a 40 percent tariff reduction on manufactures—and that 75 percent of that gain would go to developing nations.
Reason: The WTO is meeting in Cancun as we're talking. What do you think of the WTO, which is a major target both of anti-globalizers and many free market advocates?
Norberg: It's a good thing that it exists, but it's rightly
been called the free traders' deal with the devil. The best solution for all of us would be unilateral free trade: Just open our borders. We don't need protection from cheap goods; they're exactly what we want!
Unfortunately, we don't live in a perfect world, and in that case I think that the WTO is important for two reasons. One is that it's hard to combat the special interests that are against opening up market access for other countries. But if we do it in multilateral negotiations, we can face the special interests and say: "OK, we might lose jobs in those sectors that we open up to competition. But in exchange we get access to new markets over here." That helps convince people in the export business. It helps get, say, unions on our side for free trade, and that's a good thing. The other reason that the WTO is important is that helps create a rule of law in the international trade system. We lock in free trade reform so that politicians can't backtrack every time there's a failure or a downturn in their national or local economy.
Those are reasons the WTO is important, but it really is a deal with the devil, if only because it gives the impression constantly that when we open up markets, when we give ourselves the opportunity to buy a wider variety of goods at better prices, we are giving up something. I think that's one of the reasons why we have a backlash against free trade. The president of the U.S. and everybody else always act as if free trade is some sort of concession.
Reason: In the wake of the 9/11 attacks and the rationale offered for them by bin Laden, many observers in the West suggested that there was something intrinsic to the Arab world and Islam that makes them particularly uncomfortable with the creative destruction that accompanies what you've called "global capitalism." What do you think?
Norberg: There's something problematic when any religion is taken literally and when people try to impose it on others. It was true for Christianity and Europeans, who historically were happy to go the Holy Land and slaughter religious infidels there. Just 400 years ago in Europe, we had wars on religious grounds. The key was that Europe figured out ways of having different beliefs without slaughtering one another. It was secularization that saved the West, and the same thing has to happen with Islam. People don't have to give up religion, but they have to confine it to a private sphere and not try to impose it via force.
I think it will be both easier and harder for Islamic countries to go through the sort of secularization that Christian ones did. It's easier because in its basic teachings, Islam is much more pro-capitalist and pro-material wealth than Christianity ever was. Jesus was walking around telling people that rich people are evil and that they'll have a tough time getting to heaven. Muhammad, in contrast, was a trader. He was a capitalist himself, and he praises trade in many passages of the Koran. But it's also much more difficult because Muhammad was also a state builder. He saw religion and state as one and the same. The big challenge in the Arab Muslim countries is to bypass the injunction to theocracy and to confine Islam to private life.
Although I'm glad Saddam has been toppled—it's a good day whenever a tyrant is dethroned—I don't think that war and occupation are the way to do this. The best way is through globalization, through the introduction of new ideas, of Western influences, into these countries. You can see that happening even in Iran. You can see it happening in Jordan and Qatar and in many other countries that have more access to Western goods and media.
Because of globalization, it's easier for people to watch and read about Western societies, and more and more do. As we mentioned, Arab women see that Western women have the same rights and opportunities as men. That sort of contact is a great source of inspiration. The same thing happens when they see that we can express our own beliefs in a general way, in culture and in music. That's the big hope, I think, for the region. But we have to be very patient because it's going to take a long time. It took a long time for Japan to turn into a peaceful, productive country; it took nearly 50 years for South Korea to become something like a liberal democracy.
But I see the rise of fundamentalist forces in the Middle East not as a sign of the strength of their ideas. It's more a sign that they are terrified of the globalization that is already occurring. The fundamentalists can see that there's a new middle class growing in these countries and that these people are interested more in living the good life, in choosing their own lives, and not in following the literal teachings of the Koran. Critics of globalization worry about the Disneyfication or McDonaldization of culture, of standardization replacing "authentic" traditions. But it's more correct to say that no single culture is becoming dominant. Instead, it's pluralism, the freedom to choose among many different paths and destinations, that is gaining ground due to globalization and greater exchange.