Tuesday, April 29, 2014


It’s been said that entrepreneurs have to think globally to survive locally.  This statement is more true today than ever before, as the competition (large, multinational corporations) is looking overseas to improve cost efficiencies by reducing overhead. Unfortunately for the local “mom and pop” establishments we have come to cherish, the economics make staying in business harder to manage.

One thing I love about Minnesota is the emphasis on “locally sourced” products, as this instills in us a tremendous sense of pride in the collective sweat equity of our state’s workforce.  My wife and I believe that patronizing local businesses is a great way to show our appreciation, and we are both attuned to the benefits of local entrepreneurship and how such establishments can make or break the character of a particular neighborhood.

This has inspired me to take a more in-depth look at what “globalization” means, how it impacts other countries, and whether it is the type of villain that should be taken on by the agents of S.H.I.E.L.D. (which is one of my favorite shows now that this season of Scandal has concluded). The fanciest definition I was able to find (on Google®) is “increasing integration of economies around the world, particularly through trade and financial flows,” but it is easier to comprehend globalization as the movement of people (labor) and knowledge (technology) across international borders. 

In other words, globalization stimulates free trade that motivates American corporations to move operations overseas to developing countries so that they can circumvent union activity and take advantage of cheaper labor opportunities. Quite often these countries are located in third world developing countries like Asia, Africa, and Latin America. These countries have also historically suffered from high unemployment, political instability, corruption, and little—if any—government interference or regulation.

Because of this, the word “globalization” has become an ambiguous and emotionally charged term—a mixed bag of acceptance and rejection. Some see it as leading to positive free trade that leads to healthy competition, higher productivity, and economic prosperity for both the developed and developing country. Others see it as enabling a negative trade system that exploits developing nations. Whichever way you see it, it is widespread and it is here to stay.

 American corporations easily find that they can contract out their raw materials to overseas factories in countries like India, Indonesia, Pakistan, Mexico, China, and Brazil because unemployment is high and many of the people are willing to compete with each other to work for less. Economists and politicians have referred to this as “downward leveling” or a “race to the bottom.”  Developing countries pit themselves against each other to see which can offer multinational corporations the cheapest labor.

Accordingly, some see globalization and the rise of multinational corporations overseas as creating substantially increased demand for child labor in developing countries.  While companies say that they do not condone the use of child labor, the reality is that these corporations “sub-contract” out their work to smaller companies that do use child labor as a way of competing with other companies to lower labor costs substantially.  

Look, I get it: globalization ushered in free trade and open markets, which in turn encouraged multinational corporations to look for the cheapest labor markets. Who isn’t guilty of trying to save a buck here and there? But let me step onto my portable pulpit here for a moment.  Shouldn’t we be tying the protection of children to free trade and the prosperity of developing countries?  The progress, success, and wealth of a nation are dependent upon the education of its children. Multinational corporations have a social responsibility to live up to high standards that value children first over profits.

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