Protectionism on the increase<\/p>\n
By Guest van der Veen<\/p>\n
BANDUNG (JP): The same herd mentality that caused the rupiah
\nto plummet last year makes main stream economists regularly speak
\nhalf-truths. These half-truths are very dangerous because they
\ndistort reality.<\/p>\n
Main stream economists maintain that globalization is all
\nabout the opening of markets. They believe that the keyword is
\nfreedom. They want governments to abolish trade regulations so
\nthat companies can complete in the same \"global playing field\".
\nLess bureaucracy and more competition leads in their view to
\ngreater efficiency. More efficiency enlarges and improves the
\neconomic output of factories. More output means more jobs and
\nmore wealth creation.<\/p>\n
Who wouldn't want that?<\/p>\n
Unfortunately, this rosy picture is false. The reality is that
\nin the global \"playing field\" a very fierce battle is being
\nfought. Cut-throat competition is the norm and it is endangering
\nthe survival of many small and big companies. No wonder that Gen.
\nSchwarzkopf (Desert Storm) is a celebrated lecturer in the
\ninternational business community. It's war out there! No wonder
\nthat many companies are trying to protect themselves.<\/p>\n
In order to survive companies speed up their production and
\ncut prices. More and cheaper output means more income and thus
\ngreater strength. This oldfashioned way isn't working any longer.
\nInternational consumer demand is too low and all the competitors
\ndo the same thing. It's like a bucket full of lobsters who try to
\nclimb out. When one of them reaches a certain altitude, the
\nothers pull him down. No lobster can get out because they all use
\nthe same technique.<\/p>\n
But businessmen are much smarter than lobsters. So they have
\ncome up with a new strategy: strategic alliances. Many companies
\n-- especially multinationals -- are at the moment busy forming
\nbusiness partnerships with their former enemies. It is a
\nphenomenon that can be observed every day. The Dutch airline
\ncompany KLM announced this year that it wants to further
\nstrengthen its already close cooperation with American based
\nNorth West Airlines. The two competitors apparently need each
\nother badly. Announcements like this abound in the international
\ncommercial press.<\/p>\n
The advantage of this kind of cooperation is obvious: two
\ncompanies are stronger than one. They have more capital to invest
\nand thus posses more endurance. Another big advantage is that
\ncooperation gives them the ability to regulate competition. Many
\nmultinationals seek an escape from the global commercial war that
\nis now being fought. Many multinationals try to make global
\nstruggle somewhat less intense. Cooperating companies divide
\nmarket shares between themselves and thus engage in what could be
\ncalled \"global protectionism\".<\/p>\n
Does this major restructuring process make the world a better
\nplace? I don't think so. It could well be the preamble for the
\nnext round of corporate struggle. This time groups of allied
\nmultinationals will do battle and the ensuring conflicts will be
\nnasty because so much money is involved. Another possibility is
\nthat the \"global appeasement process\" will continue. In that case
\nunrivaled centers of power will be created as multinationals
\nbecome more and more interdependent. It is worth to remember that
\nmultinationals are not humanitarian institutions. Their prime
\ngoal is to make money. Its is worth to remember that the annual
\nbudget of many multinationals exceeds that of most developing
\ncountries. They can easily blackmail a government.<\/p>\n
In fact, they have already done so frequently. When labor
\nprotests erupted in Malaysia and Indonesia, multinationals sent a
\nclear signal to the respective governments: we don't want
\ntrouble. It's easy for us to move factories to other developing
\ncountries. Do something about it! The government quickly put many
\nprominent labor leaders in jail and thus reassured the companies.
\nWhen unrest surfaced again, it was suppressed.<\/p>\n
The mantra of main stream economists -- open markets, less
\ngovernment interference, more competition -- ignores this dark
\nside of globalization. It is not in touch with what is happening
\non the international stage. World protectionism of multinationals
\nis on the rise, and it will further decrease the power of
\nnational governments. There is a big chance that the global
\nmarket will become much less competitive. Multinationals will
\nfare well. Smaller and medium sized companies however face
\ndifficult times. In the global market the keywords are
\n\"concentration of power\" and not \"more freedom for the individual
\nenterprise\".<\/p>",
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