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Handelsblatt On Globalization And Its Consequences Of Financial Markets


Handelsblatt, a popular German edition, has recently published an article by Wolfram Weimer called Das Globalisierungswunder (Wonder Globalization).




This article contains an unusual thought on globalization. The author kind of has disputes with his opponents (he collectively calls them European “left-wingers”). The author tries to prove that globalization has brought more good than damage to the entire world. Yet, he says, the benefits are quite visible.
We must admit that such a standpoint on the issue is rather rare in today’s mass media sine over the last two decades the very meaning of “globalization” has acquired a negative connotation.
Let’s have a closer look at the article.
Globalization Benefits: Weimer’s Reasoning
Globalization contributes to the widening of the middle class. According to Wolfram Weimer, it is thanks to globalization only that billions of people can see the quality of their lives improving. He says that the popular slogan that “the poor will become even poorer while the rich will get richer” has failed.
He sets Brazil as an example. He says that since 2002, over 35 million Brazilian citizens have crossed the poverty line to enter the middle class. At the same time, the Gini coefficient (measuring the concentration of welfare) keeps declining on an annual basis. At the same time, the lower class keeps outpacing the higher one in terms of income growth. He says, similar situations can be seen worldwide, from Indonesia to Chile, from Vietnam to Angola.  China, and India the best examples of such smoothening – dozens of millions of local citizens become richer. For example, India’s new middle class counts hundreds of millions of people. At the same time, the average income of Indian households has triple over the last decade.

We should also mention Russia, where the situation is similar as well. Over the last 20 years, the average salary has increased from $40 up to $1000.
Globalization fights poverty. Wolfram Weimer says that globalization leads to a rapid decline in the amount of poor and starving people worldwide. As of 1990, over a billion people worldwide had to survive by living on under $1 a day. This is when the UN set new goals for the millennium.  One of them was to cut the amount of such people at least by 50%. According to the latest UN report, the goal has was reached earlier this year, despite the fact that the absolute poverty line was raised up to $1,25 a day.
Globalization curtails the death rate. First of all, this concerns the death rate among children in third-world countries (especially Africa).
Globalization improves human health and literacy.
Therefore, the author says that all the pessimistic predictions have failed so far
Any Objections?
Obviously, there are some objections to his theses even though we can agree with most of them.
First of all, his statements imply that globalization equals capitalism. He says that it was the global market economy that helped the world to reach success. Globalization introduced monopolistic capitalism to the entire world. This leads to situations when powerful international corporations cooperate with governments and obtain truly unlimited powers to conquer new markets, simultaneously getting a huge competitive edge over weaker rivals.
For some reason, the author fails to mention that globalization has many more levels on top of economy – politics, culture etc. It is mostly these other levels that created the anti-globalism movement.
We cannot say that the quality of living has increased everywhere around the world. Just remember post-revolution Iraq, Libya, Syria and Egypt.
Globalization improved international communication. However, some national problems turned into global ones - extremism, drug trafficking, epidemics, international organized crime etc.
That is why we shouldn’t be all that positive about globalization and its results, especially as it resembles some kind of an experiment which is far from being over.
US Dollar As Global Currency
As you know, the US Dollar has been some kind of a global reserve currency for many decades. It definitely has a range of advantages over the Euro and the Japanese Yen, which are backed by the huge potential of the US economy.
From this point, the USA isn’t interested in a common currency, which would inevitably lead to new relations with the EU and Japan (they are considered as America’s reserves, which can help to back the US economic growth during hard times).
The chart below, courtesy of Masterforex-V Academy, reflects the current state of affairs in the market of EURUSD:


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