Power Play In The Global Economy

The new world economy and talk of free trade has been welcomed in recent years as a sign of progress and development. But liberalized commerce does not resonate well with a significant portion of the world's population. Global agribusiness crushed the livelihood of Manuel de Jesus Gomez, a small farmer from Puebla State in Mexico. "Before, we could make a living, but now sometimes what we sell our corn for doesn't even cover our costs," Gomez told Tina Rosenberg of The New York Times Magazine. Gomez's defeat at the hands of subsidized American corn reflects the dilemma of the world's poor in several different ways. First, globalization never gives small farmers like Gomez a chance to compete on fair grounds. American corn, for example, is subsidized to sell overseas at 20 percent less than the cost of production. Second, despite the fraudulently low prices for corn, access to food has become no less difficult. Rosenberg argues in her article "The Free-Trade Fix" that because Mexican authorities released price controls on tortillas and flour, those prices have tripled in real terms even though the price of corn has dropped. Third, the masses of farm laborers forced off their land are left with little choice of employment. Many young Mexican men migrate to the United States to risk harassment in exchange for survival - but for those like Gomez, now 72 years of age, the future is marked only by uncertainty of the events to come. Globalization wears a faÐ*ade of free trade, but history has shown otherwise. It is the tool of the wealthy and powerful to press for their own advantage - and their economic progress comes at the expense of those who can least afford it.

Gomez's predicament does not entail all of the problems inherent in a globalized free economy - the forms of difficulty vary by country and situation - but all of these troubles are symptomatic of an unhealthy distribution of power.

The Latin American "Import-Substitution Industrialization" approach makes a good case-study for examining the hierarchy of power in the globalized economy. In the first half of the 20th century, the leaders of the major Latin American countries realized that they were facing declining terms of trade with their commodity exports and felt they needed to become independent of imports of high-value goods and produce their own by closing their economies. Rosenberg argues that the strategy produced initial success and growth, but ultimately failed because of inefficiencies, uncompetitiveness, heavy borrowing, and high deficits. The situation contrasted with the path of the East Asian "tiger" economies which generally demanded technology transfer, a local production content of imports into their countries, and generally a greater