Week 7 Analysis: Economics

This week's readings in Global Transformations: Politics, Economics and Culture (1999) on economics and globalism (chs. 3 and 4) were especially interesting. Like in our readings on politics and violence (chs. 1 and 2, respectively), the topics relate to the global HIV/AIDS crisis, but not in a direct manner. One can say, however, given the intensity and extensity of globalization in the areas of trade and finance and the relation between those topics and health care, that this week's chapters do address HIV/AIDS. Not only are we dealing with the issues of poverty that exacerbate HIV/AIDS' and the concurrent affect of HIV/AIDS on poverty (see: "Putting it All Together" [PDF]), but these chapters give us an insight into the forces that create our economic milieu, for good or evil -- though it should be said that Held, et al generally refrain from making value judgments on the phenomena they observe.

Being raised in a world where trade, specifically international trade, is a dominant force and a given, I found it very interesting that trade has not always been a significant factor in most nations' economies. It has only been since the end of the Second World War that international trade has become so prevalent (Held, et al, 168-170). Through trade, national economies are becoming more and more enmeshed, especially as a new division of labor emerges. If countries that engage in trade more freely show economic growth and stability -- thanks in large part to the overall removal of tariffs and other protectionist measures -- as well as technological development, it seems imperative that we support developing nations so that they can become greater trading partners in the world. A large problem with HIV/AIDS in developing nations is that they do not have the infrastructure nor the technology needed to fight the disease. While virtually every nation does engage in international trade, Held et al show that there is also an emerging trade stratification. Richer nations tend to export manufactures while poorer nations export primary commodities (ibid., 173). There has been a shift as poorer nations have entered into manufacture exports with their cheaper labor costs, but that simply translated into richer nations continuing to export products requiring greater skills to manufacture (ibid., 186).

The authors of Global Transformations argue that trade has increased the wages of workers and GDP of nations overall and that economic growth also seems to lead to welfare growth.

[S]ince trade in principle produces a net welfare gain for a country, the gainers could compensate the losers adn still be better off. In this light it is not surprising that more open economies generally have more extensive welfare states... Neverthelesss, the growth of trace and changes in the structure of trade have placed increasing strains on the welfare roles of SIACS [states in advanced capitalist societies]. Although there is no systematic evidence that welfare provision harms trade performance...employers, in the tradabel industries particularly, resist increases in their social security contributions, pressing for reductions on grounds of global competetiveness. But erosion of the employment prospects of low-skilled worders as a result of trade...places a significantly higher burden on the welfare system. (Ibid., 183-184)

If our goal in helping developing countries is development rather than charity, then it seems imperitive that those of us in developed countries encourage just, equitible, and sustainable trade with other nations. If increased international trade does assist in the development of welfare within a nation's borders, then it seems that trade is a means of helping poorer nations achieving self-sufficiency, especially in the area of health care. (I know that the concept self-sufficiency is something of a phantom -- especially since international trade creates interdependent relationships -- but I use the term for its ease.) It is the beneficial aspects of just trade that leads groups like DATA to emphasize the role of trade in combatting HIV/AIDS.

It is important, however, to not see international trade and open markets easy saviors to world problems. Held et al remind us that banks are still an important structure within capitalist societies and "banks and other financial institutions still rely on national and international regulatory authorities for their effective operation" (ibid., 214). The authors also give us sobering reminders about the affects of emerging global markets on the existing welfare states.

Global financial markets are conceived as central to inducing a convergence of political and social agendas among governments of varied ideological persuasions to 'market friendly' policies: a general commitment to price stability; low public deficits and indeed expenditure, especially on social goods; low direct taxation; privatization and labour market deregulatoin.

These developments are argued to be particularly unfavourable to organized labour, public sector employees, welfare state beneficiaries, and other traditional interest groups of the left. In this context financial globalization shifts the balance of economic advantage further towards capital and away from labour. But global financial markets do not, as many hyperglobalists imply, simply spell the end of the welfare state... [E]xpansionary economic policies and strong welfare programmes are not precluded by financial globalization, but rather markets impose on governments higher costs of international borrowing or falling exchange rates. (Ibid., 232)

It is an interesting point that welfare structures do not do away with the gains from open markets and open markets do not spell the end of the benefits received via the welfare state. This is a helpful point as we look at how publicly traded pharmaceutical companies affect the fight of HIV/AIDS. Some want to villify them as merely being slaves to the market, whereas others defend their capitalistic structures and high profits as necessary for research and development. Perhaps there is some middle ground. But then again, I'm not an economist, but a theologian/minister in training.

And for good measure, here is a new link for the Pacto de Esperanza, an HIV/AIDS awareness campaign targeting Hispanic churches in the US. Note the links on the sidebar to the left, which give more discussion on HIV and Latinos.