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Is this globalisation?

In the face of evidence of resistance to the `benefits' of globalisation across the globe, G. SUNDARAM examines whether we have to give up on it.

Growing disenchantment with globalisation cannot be dismissed.

Globalisation promoted competition, quality to the consumer, to a certain extent, and work culture. But it has to be tempered a great deal to prevent fraud and exploitation.

NAOMI KLEIN'S seminal work No Logo, on anti-globalisation published in early 2000 did not receive the attention it deserved, although it was highlighted in the media, in an article that appeared in The Hindu.

But events since then like the corporate frauds by multi-national corporations, particularly in the United States, and fallen CEOs, who were once idols, and their fraudulent practices have proved that Klein is right. Subsequent demonstrations in front of the World Trade Organisation (WTO), the International Monetary Fund (IMF), the European Union (EU) and the G-7 meetings, although creating an impression of puerility because of the attire and antics of the demonstrators, have given a momentum to the anti-globalisation movement. In a leader in The Hindu on August 21, 2001, it was perhaps aptly stated: "the frequency and the scale of protests suggest that there is a strong global undercurrent of unhappiness about globalisation which cannot be dismissed as the doing of cranks and marginal groups."

There is a difference of about 500 to 700 times between the wages of a shopfloor worker and a CEO in the U.S.. Fortunately, it does not exceed 80 times in India although the difference is large by Indian standards as Infosy's Narayana Murthy himself admits and pleads for a voluntary reduction.

Transnational corporations, which control more than 33 per cent of the world's productive assets account for only 5 per cent of the world's direct employment! And although the total assets of the world's 100 largest corporations increased by 288 per cent between 1990 and 1997, the number of people these corporations employed grew by less than 9 per cent during the same period of tremendous growth. One can well imagine the position now in a period of slow-down or recession.

The "brand" or "logo" culture has been consistently promoted, targeting the youth. It is not surprising, therefore, that these MNCs pay a crore of rupees to a Sachin Tendulkar or an Aishwarya Rai! In many cases, the advertising expenditure of an MNC is several times the GDP of a developing country. But even though the pink paper now argues for brand publicity and the opening up of even the retail sector, it stops short of telling us to sell the country to market forces — which mean the MNCs.

Under the WTO dispensation, even apples and vegetables have free entry. The Americans themselves do not implement wholeheartedly the WTO dispensations which go against their domestic interests, but we seem to have sacrificed our interests easily.

Shareholders suffer at the macro-level. Consumers suffer at the micro-level, as reported in detail by The Economist of London in 2002, when looking at Japan:

"Dinosaurs from Jurassic Park offer visitors at Universal Studios, Japan, some out-of-the-ordinary thrills. But the theme park, which opened in March 2001, has been giving customers scares of a more unpleasant kind too. Last month, it confessed that it had served beef, caviar and salami that was as much as nine months past its sell-by date, after falsifying labels. It also admitted that a drinking water fountain had been pumping out untreated industrial water for nine months. Once discovered, this was quickly fixed, but Universal Studios, part of the Vivendi Universal, a troubled media group, failed to alert local health authorities. On July 29, after finding excessive levels of bacteria in the water, health officials banned the use of all drinking fountains in the park.

In America, companies such as Enron and WorldCom deceived their shareholders by fiddling with their accounts. In Japan, the problem is two-fold. Corporate misbehaviour, from dodgy accounting to food fraud, is hurting not just shareholders but customers too. Universal Studios is only one of many erring companies that people prefer to shun.

Sales at `Mister Don't' shops, run by Duskin, a cleaning company, fell by some 15 per cent when it emerged in May that the doughnut chain had sold more than 13m meat dumplings — some knowingly — that contained a banned additive. Marubeni Chiksan, an arm of Marubeni, a big trading-house, was caught passing off 700 tonnes of Brazilian chicken as higher-priced domestic poultry. And it emerged that Kyowa Perfumery, an additives maker, had for 30 years been shipping banned flavourings to unsuspecting companies such as Kentucky Fried Chicken and Meiji Seika, one of Japan's biggest confectionery manufacturers; their products have had to be hastily recalled.

As consumers have fled, so too have investors. The shares of `Snow Brand', the country's biggest dairy producer, have fallen by 70 per cent since it poisoned some 15,000 people by recycling old milk and failing to clean factory pipes. Earlier this year (2002) it emerged that to get state subsidies, the firm's food subsidiary had passed off 30 tonnes of imported beef as local meat. `Snow Brand' is now fighting for survival.

Misconduct is easier to cover up in Japan than in Europe or America. Lifetime employment requires employees to display unswerving loyalty. Rigid hierarchies stifle internal communication. Workers find it hard to blow the whistle on wrong-doing — witness Mitsubishi Motors and Bridgestone, which managed for years to cover up defects in cars and tyres, respectively.

Unlike America, which has rushed to pass new legislation to curb corruption and reform auditing, Japan has done little to prevent a repeat of past accounting fiddles. For example, it has yet to create an independent body to oversee auditors, who are rarely pulled up for lax audits.

Shareholders may weep, but consumers at least have won a small victory; their fury at the spate of food scandals prompted politicians to pass a bill in June, unusually quickly, introducing prison terms and stiff fines for companies that falsely label food."

As far as India is concerned, the situation is not different. A Japanese split air-conditioner firm does not even reply to complaints. It leaves everything to the Indian partner who is not affected by globalisation and his attitude is the same as it was. One can contact the Prime Minister but not the CEOs of companies in India. The company demands about Rs. 4,800 per year after the first year of sale as part of a maintenance contract. Since there is some consumer resistance to spend Rs. 400 per month (a poor family lives on this amount in India) just for maintenance, this was included in the price and the guarantee was increased to two years. Similarly, a Dutch CTV firm wants Rs. 1,500 per year — about Rs. 150 per month — just for maintenance. If one does not accept these contracts, one is charged exorbitantly by these MNC s even for small repairs. This Dutch company and a few other MNCs got out of their domestic legal obligations by increasing their company holdings to 100 per cent. Automobile multi-nationals have been freed from export obligations under a supposed WTO obligation!

A Hyderabad based Infoway with foreign partners wanted to increase the rates in its cybercafes because other "cafes" around closed down with the dotcom bust. But it did it without the consumer knowing it by changing software. Complaints to the company did not elicit a response.

Indians are used to keeping consumer items like cars, cameras, watches and refrigerators for years. But MNCs want the adoption of a throw-away culture. The trick is not to undertake any repair after three years on the plea of a lack of spare parts. These MNCs and their Indian employees have the same old "take-it" or "leave-it" attitude toward the customer.

An "Assault of the Roads" is going on in Chennai by telecom multi-nationals with their big Indian partners; roads in this city already suffer constant digging by the electricity and water authorities. Government owned Bharat Sanchar Nigam Limited (BSNL) and its earlier departmental avatar has also displayed absolute disregard for consumers for 50 years. They have now become techno-savvy, but what is the need to have them — BSNL, Bharathi Tele, Reliance and Tata — in the same area and in the same building? One company excavates the same day after the other has laid the road again.

Foreign banks are a class apart, though their attitudes shine, in contrast with those of the nationalised banks. Employees in foreign banks are not very different except in their manner of deportment and remuneration. Their knowledge is generally poor. Thy have made poor Indians debtors by freely offering credit and loans.

We do not know whether the Reserve Bank of India (RBI) pays attention to multi-national banks. The RBI seems to be interested only in reducing interest rates. Middle-class and small depositors have no other safe investment proposition including Government-sponsored financial institutions.

* * *

All this does not mean we have to give up globalisation and go back to the days of no competition. Globalisation has certainly infused competition, ensured quality and a work culture in India (except in the government); even if they are slave labour, as Naomi Klein puts it, employees put in long hours, which was certainly not an Indian trait. However, this does not mean that the blue-collar (not the white-collar who is well paid by the Indian standards) should be paid "poverty wages" without any scope for collective-bargaining. The chambers of commerce have been pleading for a long time to free them from labour legislations and have succeeded in the special economic zones. Further reduction of labour laws for the rest of the country is not desirable. This would only make the poverty line move up.

At the same time, political will should encourage people to move towards modernisation, as in China, if we have to reap the benefits of globalisation. Here is an example. Where are the roads, to accommodate the large cars being produced in India? Fish-carts and two-wheelers, still a part of Indian rods, cannot co-exist in this situation. Two-wheelers have become a hazard not only to the pedestrians and motorists but also to their operators. Is there a traffic plan for our cities? Beijing and Shanghai, China, have banned the movement of 80,00,000 motor-cycles and scooters immediately from the down-town areas so that they are free of these vehicles by 2004. These cities have already transformed themselves a great deal by widening roads with state of the art fly-overs (unlike the ill-executed ones we have) and the introduction of magnetic levitation trains. Do we have the political will, and also the discipline, to emulate this in the context of globalisation or do we want to remain partners in a sham globalisation with neo-colonial nuances and exploitation and big fraud coupled with widespread corruption? It is already widely suspected that there is big corruption in the investment by MNCs in developing countries including India.

In France, the leaders feel that the force of globalisation is a fact of modern life, but it needs to be kept in check. President Chirac recently told the G-8 summit: "Our democracies cannot clearly be mere spectators of globalisation. They must tame it, accompany it, humanise it, civilise it". As reported by The Economist, this was music to the ears of trade unions, anti-industry lobby groups and NGOs. We should also adopt the same approach.

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