Globalization and neo-liberalism

Europe is finding it increasingly difficult to export due its high euro currency, with the consequence of more jobless and a dramatic increase of poor people there. The continent's manufacturing industries, meanwhile, move to China, while its service industries move to India where salaries are much lower.

The economy of the United States is still growing but it is not creating jobs as U.S. factories and services also move to Asia. And in America there are abysmal deficits -- budget and commercial balances have reached unsustainable levels of US$500 billion a year.

No problem, the U.S. only has to print more money and most countries will pile up their dollar reserves -- and these reserves in China, Japan, Taiwan, Korea and Indonesia are fast decreasing in value.

For political reasons, China has pegged the Yuan to the greenback as its first priority in attracting foreign investments, creating jobs and flooding the world with cheap products.

The high-cost economy of Indonesia, meanwhile, registers more outgoing investments than incoming -- because of a lack of productivity, the harassment of foreign investors, widespread corruption, and the lack of level playing fields in the judiciary, regulatory and market sectors.

An ASEAN China-Free Trade Agreement will be extremely unfavorable to ASEAN countries and particularly to Indonesia, which cannot compete with the high productivity of China in industrial products in nearly all fields except for a few raw materials.

In a matter of time, imports from rich Western countries, in particular Europe, will decrease as consumers lose their purchasing power because of increasing unemployment.

In Germany, a new law beginning next year pays only a dollar an hour to the jobless or nothing at all if they refuse to work on public works schemes.

France's unemployment benefit is about as harsh. In the U.S. the income gap widens, as more people become poor as a few others get richer.

Who will end up buying the products manufactured in the world?

America has forgotten the wise principle of Henry Ford who said: "It is not only necessary to produce goods but also consumers if you want a sustainable economy and society."

An increasing number of Europeans will be excluded not only from manufacturing activities but also from consuming in the near future.

In already impoverished Asia, where many people work for less than euro 6 cents an hour, it is highly unlikely a wealthy consumer market will emerge to support the world's products, and thus the global economy.

These neo-liberal policies will only produce short-term profits for the very rich at the expense of the world's poor.

BERNARD DORLEANS
Bekasi, West Java