In the field of economics, Adam Smith showed back in the late 1700’s that each economy should concentrate on producing the products for which it had a comparative advantage, and then trade those goods with other countries. In this way, everyone benefits. If you want the detailed analysis, consult any introductory economics textbook.
However, in the world today this doesn’t quite work out. Here is how a consultant for Taiwan’s Council of Agriculture explained it to me. ITEM #1: Originally in a remote area of Chiayi County, papaya could sell for NT$ 30 a kilo. Today, the fields are filled with papaya most of which is not being harvested. The price has dropped to NT$ 5 per kilo, but there are still no buyers.
In the markets, there is abundant papaya. A lot of it is imported from Thailand at a very inexpensive price. Hence, the Taiwanese papaya growers have been priced out of the market. That much appears clear. However, it is still not that simple.
Even if we say that the Thailand papaya growers have a comparative advantage in growing papaya (which is at the most basic level because their costs are lower), still we must ask: When the Thais sell all this papaya to Taiwan who benefits? According to the economic theory, the Thai farmers should benefit. In fact, the Thai farmers have received little benefit. They are paid very little for their papaya. According to some research, they are actually paid less than the price they received before WTO. (This may be somewhat offset by the fact that they now sell more papaya into the international markets however.)
The ones getting rich are the middlemen.
ITEM #2: We can do the same analysis in the opposite direction to look at those products for which Taiwan has a comparative advantage in production. The international trader (i.e. middleman) may negotiate a very low price with these Taiwanese suppliers, with the promise to purchase a very large quantity of goods. When the middleman then sells those goods in the market of an overseas country, he receives a very good price and of course pockets the difference. The Taiwanese producer does not gain the full benefit to which he should be entitled from this transaction.
ITEM #3: This entire matter was illustrated very graphically by an article on page 6 of the Sunday, Nov. 17, 2002, CHINA POST entitled “Pork Barrel Educations”. The reportage is about Lindenwood University in Missouri, where the President Dennis Spellmann has implemented a barter system to allow the students to pay for tuition. In one telling example, a farm family sent 50 hogs to the slaughterhouse (over a period of time) and the meat was delivered to the university. Considering the wholesale cost which the university would have had to pay to purchase this similar quantity of meat, the accounting department made an allowance of US 22,000 toward the daughter's tuition payments for junior and senior years. By comparison, the same quantity of hogs, if sold at auction, would have brought less than US 4,500.
Hence, I believe that the anti-globalization movement is actually a reaction to the exhoribant profits which these middlemen are making. It adds up.