Before you throw Naomi Klein out the window...
by Pranav Gupta, London School of Economics, February 2003 

Before you throw Naomi Klein and her international bestseller, "No Logo", out the window, you must read this economist's defense of her and her book.

Naomi Klein is a thirty-something journalist from Toronto. She is a global "spokesperson" for the anti-globalization movement. This is the "movement" responsible for protests at WTO and World Economic Forum meetings in Seattle and Davos, delays at IMF meetings in Argentina, pies in the faces of Bill Gates and Milton Friedman, and, recently, anti-war protests around the world.

What is the Anti-Globalization Movement?

It is a heterogeneous group of young and old people worldwide who are discontent with globalization, corporatization, and war, among other things.

Why do so many neo-classical economists, businessmen, and professionals shudder at the mention of this "movement" or its stance?

Perhaps it's because so many anti-globalization protesters take an extreme view: stop international trade, revert to communism, anarchy rules, etc. Of course, these views are neither feasible nor desirable.

But, there is a little bit of truth in everything. Before we throw Naomi Klein, her followers, and her book out the window, let's try to separate the chaff from the grain and identify the truth in their discontents.

As an economist and businessperson, I find it very difficult to reconcile Naomi's anti-corporate "movement" with all of the good things that businesses do for people and society. But, here are three specific negative by-products of corporations that Naomi describes:

NO SPACE

With corporations fighting each other for market share, advertisements have seeped into every inch of our modern landscape. Nowadays, everything is a billboard--taxis, clothing, buildings, celebrities, and so on. Naomi quotes the marketing genius David Ogilvy: In his "Confessions of an Advertising Man," Ogilvy writes that he silently wishes he could drive into the country side and chop down every billboard destroying America's beautiful landscape.

Similarly, Naomi describes the marketing and consumerism that has made it's way into American and Canadian schools. Kids can now eat a Taco Bell burrito or a Burger King whopper in the comfort of their school cafeteria. On every book cover handed out in the classroom, there is an ad for Calvin Klein perfume or cologne. Students can watch closed circuit television in school with ads from toy manufactures and back-pack companies interrupting their educational programming every few minutes.

We have opened the floodgates to advertisements and corporate programming. Of course, advertising is important, but  anything in excess is bad. We should rethink the consumerism forced upon our children and upon our landscape.

NO CHOICE

By their nature, corporations, stores, and ads have the power to influence choice. By selectively placing items in certain stores but not in others or by advertising to certain groups of the people and not others, the modern-day corporation has the ability to "censor" consumer behavior.

A concrete example: Lining the streets of West Philadelphia and the South Bronx of New York, one can find ads for malt liquor (40's as they're called) and New Port cigarettes. These same ads rarely reach the suburban streets of Bergen County, New Jersey or Conshohocken, Pennsylvania. In "No Logo" there is a great photo of the Marlboro man riding his horse in a billboard overlooking a recently-bombed building in Kosovo.

The point is that certain ads are targeted towards more vulnerable people. Poor people should not be bombarded with ads for Old English malt liquor and children should not be bombarded with ads from Calvin Klein while they're trying to study English.

NO JOBS

This is the most thought-provoking part of the book. Two criticisms of corporations are offered:

First, corporations are moving more and more towards hiring temporary-contract labor as opposed to full-time workers with health benefits.

Our gut reaction might be: but hiring part time contract labor will allow corporations to employ more people. But, in the 1990s UPS (the United Postal Service) was employing thousands of workers for 39 hours a week--just below the 40 hours per week which requires them to pay health benefits. Hiring a delivery man for 1 hour short of his medical benefits does not create an extra job for his unemployed buddies.

Of course, not all part-time contracts are bad. But, a part-time contract which is de facto a full-time contract but without the burden of paying health benefits is just not fair. What is particularly surprising is that UPS reported a profit of $1 billion dollars during the years in which it refused to pay health benefits for thousands of part-time truck drivers.

Again, corporations are not "bad" per se, but they can turn bad if the right checks and balances are not in place.

The second criticism: multi-national corporations have so much bargaining power that they can exploit a developing country's cheap labor without delivering much "value-added" back to the people or the developing country. Note, this is the first explicit criticism of globalization/international trade. The discussion above is limited to corporations in general.

An example: In the Philippines, one of the many countries which has set up Export Processing Zones (EPZs), multinational clothing companies contract the manufacturing of their clothing to factories set up within the EPZs.

Just south of Manila, the capital city, an EPZ offers factories a tax-free tariff-free stay for the first five years of operation, and it offers the promise of no labor unions or labor uprisings within the EPZ.

There are three channels through which EPZs are supposed to benefit developing countries: 1. They are to create a larger tax base for developing countries, attracting international manufactures. 2. They are to facilitate technology transfer from multinational companies to local workers and companies, and 3. They are to create jobs and deliver higher wages to the local population.

In actuality, few of these benefits are realized in the Philippines. 1. The larger tax based is not easily achieved, because the factories don't have to pay taxes during the first five years, and after the fifth year, many of the factories re-incorporate under a new name to benefit again from the five-year tax break. 2. Technology and expertise are rarely transferred to local players, because the textile industry is not a capital- or expertise-intensive business. 3. While jobs are created, a living wage is rarely paid and employees are overworked in horrid conditions; this is due in large part to the inability of workers to unionize within EPZs.

Again, globalization is not "bad" per se, but it can turn bad if the right checks and balances are not in place.

Unfortunately, placing checks and balances on multi-national companies (MNCs) is not very easy. It is a question of  supply and demand. If the Filipino government gets tough on the clothing company Van Heusen, for example, the company will simply contract its work to a factory in another EPZ in one of the 50 other poor countries offering tax benefits. The supply of cheap labor and poor countries far exceeds the demand for such labor.

Nonetheless, “globalization” has worked for some countries: Mauritius, Chile, Botswana, Korea, etc. These countries developed their own investment strategies and did not base their economies completely on MNCs or international trade.

The conclusion: There is a little bit of truth in everything. There is some truth in the banners, websites, slogans, and books of the anti-globalization movement. Corporations, if left unchecked, can get out of line. We shouldn't blindly accept the gospel of capitalism and international trade. Rather, our opinions should be informed by truth from both sides of the fence. 

p.s. For those of us who criticize Naomi Klein for not providing a solution--for just ranting and raving--we must remember that she is just a journalist. Her job is to report what she sees. She has done a good job of that. It is our job to use the awareness she and her followers have created to come up with a solution.

Sends your comments to: p.gupta1@lse.ac.uk
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Related Links 

How Part-timers fare in the US Economy
Why Naomi Klein needs to grow up Nov 7th 2002. The Economist.

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