[lbo-talk] "Cultural" Imperialism and $784 Billion Net Transfer from the South to the North

[Sean Andrews]

On 3/26/07, Yoshie Furuhashi <critical.montages at gmail.com> wrote:
> What is the relation between culture and imperialism?  According to
> Omar Lizardo, theory of cultural imperialism argues that the more
> economically disadvantaged people are in the world economy, the more
> Westernized popular culture they consume.  Naturally, he finds no
> evidence for that.*
>
> But what if that's not the point of the cultural aspect of
> imperialism?  What if the point is to socialize the top 20% or so of
> nations in the South as well as the top 40% or so of nations in the
> North -- the power elite, the ruling class, and those who serve them
> in administrative, ideological, and other capacities -- into the
> tastes, habits, beliefs, etc. that lead them to think that the best
> thing they can do for their nations is to integrate them into the
> multinational empire led by Washington, even if social costs of doing
> so are high**?  In other words, what if the point is globalization of
> the cultural aspects of the class formation described by Kees van der
> Pijl in The Making of an Atlantic Ruling Class (London: Verso, 1984,
> <http://www.theglobalsite.ac.uk/atlanticrulingclass/>)?
>
> * Here are relevant passages where he makes his case against theory of
> cultural imperialism most clearly.
>
> "All of these empirical predictions are in severe disagreement to what
> we would expect given the cultural imperialism, and some versions of
> the 'national strategies' (Crane 2002) approach, which imply a
> positive association between the consumption of Westernized and
> 'Americanized' global popular culture and a disadvantaged position in
> the world economy or the interstate system (because weaker states are
> assumed to be more easily bullied and manipulated by global
> transnational media industries or are less likely to have the
> [political, material, social] resources to implement policies of
> 'resistance' against global cultural flows)" (Omar Lizardo,
> "Globalization and Culture: A Sociological Perspective," 10 Feb 2007,
> p. 13).
>
> "However, the media imperialism hypothesis has a hard time accounting
> for why -- as shown in Figure 2 -- the majority of low income societie
> (60%) are below the zero point in the y‐axis (that is, they consume
> more domestic popular music than international popular music). 3
> According to the cultural imperialism thesis (Schiller 1991), these
> societies should instead be in thrall of and thus overrun by the
> global American popular culture industry" (p. 16).
>
> "If the cultural imperialism account is correct, we should expect to
> observe a negative association between levels of economic development
> and the degree of foreign penetration by the U.S. film Industry" (p.
> 22).
>
> "According the cultural imperialism model, the least economically
> advantaged societies should be the ones most dependent on cultural
> imports such as foreign films, and therefore the direct effect of
> socioeconomic development on foreign film imports should be negative"
> (p. 25).
>
> ** <http://www.nytimes.com/2007/03/25/magazine/25wwlnidealab.t.html>
> March 25, 2007
> Idea Lab
> Reverse Foreign Aid
> By TINA ROSENBERG
>
> For the last 10 years, people in China have been sending me money. I
> also get money from countries in Latin America and sub-Saharan Africa
> ― really, from every poor country. I'm not the only one who's so
> lucky. Everyone in a wealthy nation has become the beneficiary of the
> generous subsidies that poorer countries bestow upon rich ones. Here
> in the United States, this welfare program in reverse allows our
> government to spend wildly without runaway inflation, keeps many
> American businesses afloat and even provides medical care in parts of
> the country where doctors are scarce.
>
> Economic theory holds that money should flow downhill. The North, as
> rich countries are informally known, should want to sink its capital
> into the South ― the developing world, which some statisticians define
> as all countries but the 29 wealthiest. According to this model, money
> both does well and does good: investors get a higher return than they
> could get in their own mature economies, and poor countries get the
> capital they need to get richer. Increasing the transfer of capital
> from rich nations to poorer ones is often listed as one justification
> for economic globalization.
>
> Historically, the global balance sheet has favored poor countries. But
> with the advent of globalized markets, capital began to move in the
> other direction, and the South now exports capital to the North, at a
> skyrocketing rate. According to the United Nations, in 2006 the net
> transfer of capital from poorer countries to rich ones was $784
> billion, up from $229 billion in 2002. (In 1997, the balance was
> even.) Even the poorest countries, like those in sub-Saharan Africa,
> are now money exporters.
>
> How did this great reversal take place? Why did globalization begin to
> redistribute wealth upward? The answer, in large part, has to do with
> global finance. All countries hold hard-currency reserves to cover
> their foreign debts or to use in case of a natural or a financial
> disaster. For the past 50 years, rich countries have steadily held
> reserves equivalent to about three months' worth of their total
> imports. As money circulates more and more quickly in a globalized
> economy, however, many countries have felt the need to add to their
> reserves, mainly to head off investor panic, which can strike even
> well-managed economies. Since 1990, the world's nonrich nations have
> increased their reserves, on average, from around three months' worth
> of imports to more than eight months' worth ― or the equivalent of
> about 30 percent of their G.D.P. China and other countries maintain
> those reserves mainly in the form of supersecure U.S. Treasury bills;
> whenever they buy T-bills, they are in effect lending the United
> States money. This allows the U.S. to keep interest rates low and
> Washington to run up huge deficits with no apparent penalty.
>
> But the cost to poorer countries is very high. The benefit of T-bills,
> of course, is that they are virtually risk-free and thus help assure
> investors and achieve stability. But the problem is that T-bills earn
> low returns. All the money spent on T-bills ― a very substantial sum ―
> could be earning far better returns invested elsewhere, or could be
> used to pay teachers and build highways at home, activities that bring
> returns of a different type. Dani Rodrik, an economist at Harvard's
> Kennedy School of Government, estimates conservatively that
> maintaining reserves in excess of the three-month standard costs poor
> countries 1 percent of their economies annually ― some $110 billion
> every year. Joseph Stiglitz, the Columbia University economist, says
> he thinks the real cost could be double that.
>
> In his recent book, "Making Globalization Work," Stiglitz proposes a
> solution. Adapting an old idea of John Maynard Keynes, he proposes a
> sort of insurance pool that would provide hard currency to countries
> going through times of crisis. Money actually changes hands only if a
> country needs the reserve, and the recipient must repay what it has
> used.
>
> No one planned the rapid swelling of reserves. Other South-to-North
> subsidies, by contrast, have been built into the rules of
> globalization by international agreements. Consider the World Trade
> Organization's requirements that all member countries respect patents
> and copyrights ― patents on medicines and industrial and other
> products; copyrights on, say, music and movies. As poorer countries
> enter the W.T.O., they must agree to pay royalties on such goods ― and
> a result is a net obligation of more than $40 billion annually that
> poorer countries owe to American and European corporations.
>
> There are good reasons for countries to respect intellectual property,
> but doing so is also an overwhelming burden on the poorest people in
> poorer countries. After all, the single largest beneficiary of the
> intellectual-property system is the pharmaceutical industry. But
> consumers in poorer nations do not get much in return, as they do not
> form a lucrative enough market to inspire research on cures for many
> of their illnesses. Moreover, the intellectual-property rules make it
> difficult for poorer countries to manufacture less-expensive generic
> drugs that poor people rely on. The largest cost to poor countries is
> not money but health, as many people simply will not be able to find
> or afford brand-name medicine.
>
> The hypercompetition for global investment has produced another
> important reverse subsidy: the tax holidays poor countries offer
> foreign investors. A company that announces it wants to make cars,
> televisions or pharmaceuticals in, say, east Asia, will then send its
> representatives to negotiate with government officials in China,
> Malaysia, the Philippines and elsewhere, holding an auction for the
> best deal. The savviest corporations get not only 10-year tax holidays
> but also discounts on land, cheap government loans, below-market rates
> for electricity and water and government help in paying their workers.
>
> Rich countries know better ― the European Union, for example,
> regulates the incentives members can offer to attract investment. That
> car plant will most likely be built in one of the competing countries
> anyway ― the incentives serve only to reduce the host country's
> benefits. Since deals between corporations and governments are usually
> secret, it is hard to know how much investment incentives cost poorer
> countries ― certainly tens of billions of dollars. Whatever the cost,
> it is growing, as country after country has passed laws enabling the
> offer of such incentives.
>
> Human nature, not smart lobbying, is responsible for another
> poor-to-rich subsidy: the brain drain. The migration of highly
> educated people from poor nations is increasing. A small brain drain
> can benefit the South, as emigrants send money home and may return
> with new skills and capital. But in places where educated people are
> few and emigrants don't go home again, the brain drain devastates. In
> many African countries, more than 40 percent of college-educated
> people emigrate to rich countries. Malawian nurses have moved to
> Britain and other English-speaking nations en masse, and now
> two-thirds of nursing posts in Malawi's public health system are
> vacant. Zambia has lost three-quarters of its new physicians in recent
> years. Even in South Africa, 21 percent of graduating doctors migrate.
>
> The financial consequences for the poorer nations can be severe. A
> doctor who moves from Johannesburg to North Dakota costs the South
> African government as much as $100,000, the price of training him
> there. As with patent enforcement, a larger cost may be in health. A
> lack of trained people ― a gap that widens daily ― is now the main
> barrier to fighting AIDS, malaria and other diseases in Africa.
>
> Sometimes reverse subsidies are disguised. Rich-country governments
> spent $283 billion in 2005 to support and subsidize their own
> agriculture, mainly agribusiness. Artificially cheap food exported to
> poor countries might seem like a gift ― but it is often a Trojan
> horse. Corn, rice or cotton exported by rich countries is so cheap
> that small farmers in poor countries cannot compete, so they stop
> farming. Three-quarters of the world's poor people are rural. The
> African peasant with an acre and a hoe is losing her livelihood, and
> the benefits go mainly to companies like Archer Daniels Midland and
> Cargill.
>
> Most costly to poor countries, they have been drafted into paying for
> rich nations' energy use. On a per capita basis, Americans emit more
> greenhouse gases into the atmosphere ― and thus create more global
> warming ― than anyone else. What we pay to drive a car or keep an
> industrial plant running is not the true cost of oil or coal. The real
> price would include the cost of the environmental damage that comes
> from burning these fuels. But even as we do not pay that price, other
> countries do. American energy use is being subsidized by tropical
> coastal nations, who appear to be global warming's first victims. Some
> scientists argue that Bangladesh already has more powerful monsoon
> downpours and Honduras fiercer cyclones because of global warming ―
> likely indicators of worse things ahead. The islands of the Maldives
> may someday be completely underwater. The costs these nations will pay
> do not appear on the global balance sheets. But they are the ultimate
> subsidy.
>
> Tina Rosenberg is a contributing writer for the magazine.
> --
> Yoshie
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