What are the real costs of globalization?

Trade offs and solutions highlighted in the latest lecture in the Social Justice Speaker Series

May 19, 2015

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"Trading Up: How to Make Globalization Work for People," a lecture by UC Hastings College of the Law professor Joel Paul, was the latest talk in Social Justice Speaker Series, a series of special events that feature UC Hastings professors presenting at UC Santa Cruz on important topics related to social justice. Photo by Steve Kurtz, 2015.
From left to right: UC Santa Cruz Chancellor George Blumenthal and his wife and UC Hastings Professor, Kelly Weisberg with Joel Paul (right) at University House. Photo by Steve Kurtz, 2015.

"Trading Up: How to Make Globalization Work for People," a lecture by UC Hastings College of the Law professor Joel Paul, was the latest talk in the Social Justice Speaker Series, a series of special events that feature UC Hastings professors presenting at UC Santa Cruz on important topics related to social justice and the 3+3 Program, a combined program between UCSC and UC Hastings.

Paul’s talk on understanding how trade and market forces impact globalization came just hours after the US Senate agreed to move forward with debate on the Trade Promotion Authority, a bill that will allow the president to propose free trade agreements with the EU and Pacific Rim countries to Congress for expedited consideration.

In his remarks, Paul challenged the idea that we are becoming more economically interdependent. He argued that in fact the United States was more dependent on trade in 1800 than it is today and that over time the extent of our economic interdependence has ebbed and flowed depending on world markets and specific trade policies.

“Globalization is not a natural, inexorable force like gravity. We can decide for ourselves how much we wish to become economically integrated with the rest of the world. These are policy choices,” Paul asserted. The decision to open up an economy to trade necessarily involves trade-offs. But as Paul argued, “countries are free to choose how globalized they want to be and at what cost.”

“We are becoming more economically interdependent,” Paul added in light of the proposed legislation. The new fast-track policies are indicative of these mutually bound relationships, a defining characteristic of an increasingly globalized market.

But as Paul commented, “it is up to the countries themselves to determine how they become more or less economically dependent.” In other words, countries choose how globalized they want to be and at what cost.  

Exporting social problems

When manufacturing jobs are exported, social problems and environmental damage become exports as well.

Paul explained that, “Social dumping occurs when a country exports goods without requiring producers to internalize the social costs of production.” Producers tend to relocate to countries with lower regulatory standards because it is cheaper to produce there. “When we import goods that are manufactured with lower standards, we are importing poverty, unemployment, low wages, and environmental degradation,” Paul argued.

Social dumping can be problematic. From the perspective of market economics, costs are only artificially lower. Businesses are at an unfair advantage to  competitors that have higher employment standards. If dumping continues over time, it could drive competitors out of business.

Paul gave examples of some of these social and environmental costs. He pointed to the April 2013 tragedy in Dhaka, Bangladesh when a factory collapsed leaving 1,129 garment factory workers dead and additional 2,515 injured. Unsafe working conditions are a trade off for cheap goods to be available in stores like WalMart, Joe Fresh and Benetton - some of the North American retailers with relationships to the Dhaka factory.

Another example Paul offered is the colossal environmental pollution in China.  As a result of intense manufacturing of steel for US and European businesses, Beijing now faces the worst environmental hazards in history. The toxic air, which comes with a long list of health problems for local populations and natural environment, is another consequence of low cost manufacturing.

Incidents like Dhaka and Beijing are never factored into the true price of the goods. Currently, there is little incentive for businesses and the countries they operate in to solve social dumping. Economic growth would be put at risk. As Paul’s lecture indicated, the social and environmental costs far exceed the short term economic gain that social dumping yields.

“The social costs of exploited workers and environmental damage needs to be taken into account,” Paul commented. The US could resist social dumping by imposing an antidumping duty on imports produced by workers who are not paid fair wages or on good that are produced unsustainably.

Paul worked closely with Senator Jeff Merkley (D-Oregon) to craft a new bill the Level the Playing Field in Trade Agreements Act (S. 735), which would include social costs in the calculation of anti-dumping duties. Paul proposed that this bill should be attached to the pending free trade agreements. He concluded that an anti-social dumping duty would incentivize other countries to raise their regulatory standards.

About the Social Justice Speaker Series and the alliance between UC Hastings College of the Law and UC Santa Cruz

Previous speakers in the Social Justice Speaker Series included Morris Ranter, who is best known for prosecuting Holocaust-era private law claims against Swiss, German, Austrian and French entities that profited from Nazi atrocities and Elizabeth Hillman, who played a pivotal role in ending the military’s “Don’t Ask, Don’t Tell” policy.

The Social Justice Speaker Series was born out of the UC Santa Cruz and UC Hastings College of the Law alliance of the 3 +3 program, an accelerated path to a Bachelor's degree and Juris Doctor (J.D.) degree. This innovative partnership - the first and only such program in the UC system - enables UCSC students to earn a bachelor's and law degree in six years instead of the usual seven, saving both time and money.

About Joel Paul

Paul is the author of several books on globalization and international law. He has lectured and published on trade policy on four continents, drafted proposed federal trade legislation to promote labor and environmental standards, advised President Clinton’s campaign on trade issues, and testified before Congress.

As the Associate Academic Dean for Global Programs, Professor Paul was responsible for the law schools foreign visiting scholars program. He has advised the Clinton presidential campaign on trade policy, challenged the military's exclusion of gay service members in the Supreme Court, testified before Congress, and lectured or published in Europe, Asia, and Latin America.

The event was co-sponsored by the UCSC Departments of Economics, Politics (including Legal Studies), Sociology, and Environmental Studies, Center for Labor Studies, Division of Social Sciences, and the Santa Cruz County Bar Association.

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