Rightwords... Prudent Conservatism

Recognizing the Inevitable


First of all, the choice all nations face today is whether to join the rush to globalization of economies or not. It is possible to wall off a nation and revert to self-support only, which will condemn its citizens to a life of hardship and penury. But as soon as sufficient people in the nation become convinced by way of the internet, TV, radio and travel that they are being held back through tyrannical laws and their government, they will protest.

Eventually, perhaps many years later, they will revolt and install a new government more attuned to their needs and desires. Obviously, there are regimes that are far harder to overthrow successfully because of the in-depth, iron control exercised by the leaders. These rulers are merely postponing the day of change, and at the same time, oppressing their people for many years beyond what otherwise might be the beginning of a better life for them all.

So, for rational leaders, there is really only the choice of when to join and how. For irrational leaders, their choice to suppress globalization changes will redound on them sooner or later. Other forcing functions may come to bear as well then, besides finances, such as the UN and world opinion.

Mentioned earlier were TV and the internet. They are a prime force for change. These conveyers of lifestyle images of the Western world are powerful means for comparing that style with the penurious lifestyles in much of Africa and the Middle East. Not only the lifestyles but also the literature is largely available on the web, and becoming more so. The question: “Why not us too?” jumps into the citizen’s minds easily.

So what is this globalization? It is the process of integrating a nation into the global economy step by step, and it must be done with great care, since the end result will be enormous changes in the operating rules both between that nation and others, and within the nation itself.

The most interesting fact about the globalization process is that it is not ruled by any single nation or group of nations, nor by the UN, but rather it is a consensus on high-level economic directions formed by the major governments ( such as via the G8, for example) and the top Financial Centers (FCs) of the world economy.

But once a nation decides to integrate, their main contacts to begin the process become one or more of the FCs. These FCs reside in major cities such as: London, New York, Chicago, Tokyo, Frankfort, Sydney, Singapore, Hong Kong, Bombay, Shanghai, Paris, Zurich, Sao Paulo, and Paris, to name a few of the twenty-five centers that operate today.

These financial centers privately control well over 80% of the investment funds in the world, such as stocks, bonds, and other instruments. The value of the holdings of the FCs tops an estimated 28 to 30 trillion dollars as of 2005. Thus, virtually all of the truly major capital for developments around the world comes from one or more of these sources.

Government largess, direct loans or outright gifts of serious money, appear to be reserved for emerging HNs, but seldom HNPs, and to those HNs that are politically and geographically important. By “serious money” is meant a support program of tens of billions of dollars per year, such as has been granted to Egypt by the US ( to bribe them not to attack Israel again, it seems. ).

In addition, FCs are very well coordinated between themselves. They send out investigators to examine a nation and its industries, its potentials, and its current rules and internal practices. They recommend the necessary changes and a schedule for their accomplishment. If the nation signs up but does not meet their conditions in a reasonable time, or if they cheat, they are downgraded by the entire FC clan, and cannot receive any further investment funds at favorable rates, if at all, except in dire emergencies.


If a nation wants to join the process, it must be willing to accept the rules for globalization as determined by the FCs, which means altering many important aspects of the internal and external operation of the nation: transparency of their books, standard accounting practices, no hidden funds, ensuring that the private sector of their economy is the driving force in the nation, maintaining a low rate of inflation, getting rid of corruption as much as possible, opening its industries to foreign ownership, privatizing state-owned industries and utilities, opening their banking to private ownership, and a host of other stated rules.

A critical rule is that the financial reporting from that nation must be extremely detailed and timely, and the reports are scanned daily, hourly, or more often, over the financial internet. Any anomaly that shows up is broadcast to all other FCs for follow up. The follow up is thorough and complete, with on-site inspections and many interviews. A principal rule being enforced today is that of fair treatment of workers, their working conditions, and their benefits in country.

It is a very hard road to tread, especially for dictators that suddenly find themselves relegated to almost a cheerleading role. Even current nations that consider themselves far along the path to globalization, such as the US itself, have many rules yet to be implemented, Tariffs, for example, are to be halted in truly globalized economies, but the US has many tariffs on the books today, as do most of the Western nations of the EU. So it is an ongoing process of installing free trade and scheduling tariff reductions between nations by negotiations in a steady, strong push.

Thus to make serious investment funds available to an HN nation, it must go to an FC, and then be willing to make all of the needed changes in accord with a plan and a national business model that is acceptable to the FC. This means that large financial firms in the key centers have substantial veto power on the plans and aspirations of the HN nations, and even greater power once a nation is signed up and has begun to receive loan installments. The nation’s progress to plan is monitored very carefully, and if there are problems, they will be investigated. The money spigot can be turned off in an instant if the nation is deemed to be failing in its commitments.

Globalization is on-going now. Its results may not be very highly visible to the average citizen, except at times when a nation moves against its rulers in the name of reform and social justice. Then that nation becomes newsworthy and the spotlight sometimes catches a little of the news from the financial side as well as the rioting, fall of the government, and elections.

( To be continued )
(References to follow)

# posted by Mannning @ 12:37 AM