Friday, September 18, 2009

Winners and Losers

The readings this week cover the technological developments in communications and the role of ICTs in globalization. I think that chapter 3 in the Hanson book provides good background information for understanding the evolution of communications technology. However, I will be focusing my post on the other readings concerned with globalization and information technology.

Hanson states that ICTs have both a direct and indirect effect on the distributional effects of globalization. Indirectly, the infrastructure of ICTs facilitate the economic changes associated with globalization. Access to ICTs directly affects "the interaction capacity, employment, and income of states and individuals" (Hanson 159). These effects define the debate as to whether advancements in ICTs have expanded economic opportunity or increased inequality and marginalization.

At the national, supranational and sub-national levels, one can see the disparity in access and use of modern ICTs. Many of the places that lack access to ICTs also lack more basic needs, such as clean water, shelter and food. It is clear that a distinction between winners and losers results from the liberalization of economic policies. Led by the US and other Western countries, this process of liberalization took place globally throughout the 80s and 90s.

When discussing the losers of economic liberalization, most focus on developing countries, but the US has also not wholly come out a winner from this process. I find it ironic that the US push for global economic liberalization, as well as US and Western advancements in ICTs have resulted in the loss of thousands of jobs due to offshore outsourcing. Like the old adage, "You've made your bed, and now you have to lay in it," Americans are now faced with large unemployment problems, exacerbated by the current financial crisis.

The issue of outsourcing was a very hot topic in the early 2000s, and throughout this debate, I continually thought to myself, "the US is a country based on innovation and entrepreneurs and always being on the cutting edge. If we are losing our competitive advantage in one area of business, we need to come up with some other industry or industries in which we can be competitive." Of course I know that the process of coming up with a new industry is much more complicated than just saying to do so. However, I find it very frustrating to see the US advocate some policy that it sees as a benefit for (most importantly) itself but also the majority of other nation-states and then when there are negative consequences, the political tide turns and the government and people try to reverse their earlier support or at least make some sort of exception, so that the US can opt out. Instead of appearing hypocritical, perhaps Americans should put more effort into being on the cutting edge of whatever field piques their interest.

In an international system based on capitalist, free market ideals, there are always going to be winners and losers. Within this world system, the difficulty arises in trying to decrease the number of losers and in trying to mitigate the negative consequences for those who do not benefit.


  1. Do you think that the US economy would be better if American companies had not outsourced to developing nations? Or if, Wal-Mart for example, wasn't able to get the cheapest products from many other nations who supply them with cheap goods were not able to do so, would the US be better off in this case as well? How about the other nations that depend solely on Wal-Mart's big business? These are interesting questions that I was wondering about when reading Hanson's chapters. There is definitely a digital divide and somewhat of an unfair distribution of wealth. The winners seem to be the big honchos who sit with the cigars and make decisions about where to go for cheap labor, cheap goods, etc. These people and big companies gain the most. But as I posted on my post today, the developing nations also profit, albeit only slightly, from the West's business. You are right that there will always be winners and losers, but there's gotta be better ways to have more winners and to help the losers out a little bit. Maybe, I'm too idealistic.

  2. I wrote about outsourcing in my post as well. I pretty much agreed with Hanson's argument that outsourcing is a necessary and inevitable thing in today's global economy, even though I'd prefer that more jobs stay here in the US when possible. Driving costs down is a valid concern in today's weak economy, so outsourcing can definitely be beneficial. It just depends how companies do it--and I think that leads to the digital divide in countries like India. Yes, there have been a lot of jobs created in India through outsourcing, but millions of others in that country are still extremely poor and have never seen a computer. I think you both raise some great questions about the controversy, the answers to which are difficult and which we may not know for years to come.

  3. "Many of the places that lack access to ICTs also lack more basic needs, such as clean water, shelter and food. It is clear that a distinction between winners and losers..."

    The above are obviously your words that moved me to comment on your post. There are definitely "winners and losers" with globalization. As I stated in my post, the digital divide is an issue that must be addressed and is as important as the lack of food, shelter, and clothing in developing countries. Outsourcing has brought some negatives to our economy as well, but has created jobs for others in those same developing countries. Once again, globalization is very relevant, and our generation does not know a world without it. Many of our daily products (that many of us obtained from Wal-Mart, etc.) are a product of global trade. When we study abroad and connect with families overseas, it is a result of the social and technological advances of globalization. Therefore, once again we have come full circle and must now work on ways to incorporate the good with the bad and help the good significantly outweigh the bad. In a joking, yet serious manner, it is very similar to global warming issue. One "nation," as relevant as the word is or is not, cannot reach the answer alone. As globalization includes the entire globe, the answer(s) must be derived from collaborative efforts.