Global Themes

On Globalization & Venture Capital

The Dark Side of “Globalization”

Yesterday. I finally managed to have a look at Ben Casnocha’s blog. Ben has impressive credentials. Although very young (under 20!), he has already founded a company, been an entrepreneur & CEO and is currently working on a book. He writes engagingly on a variety of themes – one of his favourite is “Globalization”.

While browsing through his writings, I came across this. Ben quotes from a recent Financial Times article that lamented the loss of craftsmen and skilled artisans across Europe – symbolised in the profile of “Thierry Millet, a Paris-based umbrella repairman. Millet mends 8,000-10,000 umbrellas a year. His business is struggling because umbrellas are cheaper than ever (manufactured overseas) and people are choosing to throw them out and buy new ones instead of sending them in for repair.

Thierry Millet blames “globalization” for his dwindling business.

It reminded me of a recent TIME cover story, provocatively titled “Italy vs. China”.  It contrasted the plight of Italy’s struggling craftsmen and designers of premier goods (in a specific case mentioned in the article – high end furniture) with increasingly sophisticated Chinese manufacturers. The article mentioned how entire towns that specialised in forms of craft were coming under threat in a rapidly globalizing world economy.

The magazine’s readers had differing perspectives on this: “Some readers blamed Europe’s decline on its economic inefficiencies. Others criticized Asia’s unfair labor practices”.

But few would disagree that the social security and welfare systems that exist in the West today are under threat.

As TIME reader Diego Amicable put it in his letter to the magazine: “In order to compete, Italians will have to give up the buying power and social security they are used to. Italy has been living under the delusion that the manufacture of quality chairs is rocket science. It has failed to invest in research, education and high technology. Now the reality is hitting home, and Italy will go down. The question is how far down.”

The possibility that there may be stagnation or even a decline in living standards in the West rarely finds its way in discussions – it is an emotive issue…politically sensitive and difficult to rationalise to a generation that has not faced any hardships.

Globalization will be wrenching for more than a few.  

While some people still think only of “sweat shops” and cheap wages when they talk “globalization”, craftsmen like Thierry Millet are beginning to feel the pain.

Value judgements rarely influence outcomes though…and whether we like it or not, this change (and the accompanying shock) is almost inevitable.

Those of you who have read history would of course remember that a similar fate befell the artisans and weavers of India* when the industrial revolution made it possible to produce goods (in particular textiles) very, very cheaply and in enormous quantities. E.g. Nick Robins notes in this essay that “… Between 1814 and 1835, British cotton cloth exported to India rose 51 times, while imports from India fell to a quarter. During the same period, the population of Dacca (a major textile weaving centre) shrunk from 150,000 to 20,000. Even the Governor-General, William Bentinck, was forced to report that ‘the misery hardly finds parallel in the history of commerce. The bones of the cotton-weavers are bleaching the plains of India.’”

It would seem as if the wheel is coming back full circle…but is it really that simple?

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* For those of you with more than a passing interest in this subject, I would recommend this utterly fascinating historical research paper  

August 22nd, 2006 Posted by | Globalization | one comment

1 Comment »

  1. Excellent point Shantanu, we too often think about cheap labor and not higher end professions. Even skilled labor will need to acquire new skills and experiences to keep. A good thing, I think.

    Comment by Ben Casnocha | August 22, 2006

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