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A Globalization backlash
The size and power of multinationals, combined with the growth of free trade agreements, which we will discuss later in this chapter, has sparked a backlash over globalization. In a Fortune magazine poll, 68 percent of Americans say that other countries benefit the most from free trade, and a 2010 survey by The Wall Street Journal and NBC News
found that 53 percent of Americans surveyed said that free trade has actually hurt the United States. That figure is up from 46 percent in 2007 and 32 percent in 1999. The sentiment is reflected in other countries such as Germany, France, and even India. “For some reason, everyone thinks they are the loser,” said former U.S. trade representative Mickey Kantor.
In the United States, the primary concern has been the loss of jobs as companies ex- panded their offshoring activities by exporting more and more work overseas. The transfer of jobs such as making shoes, clothing, and toys began decades ago, and in recent years, ser- vice and knowledge work have also been outsourced to developing countries. Many Ameri- can shoppers say they’d be willing to pay higher prices for U.S.-made products to keep jobs from going overseas.
Business leaders, meanwhile, insist that economic benefits of globalization flow back to the U.S. economy in the form of lower prices, expanded markets, and increased profits that can fund innovation. However, another growing trouble spot for managers ishow overseas contractors and suppliers treat their employees. Globalization increases the complexity because managers often have a hard time knowing what firms they are actually doing business with. For example, Amazon has distribution centers in Germany, and because of high costs in that country, it often works with third parties to hire and manage thousands of temporary immigrant workers from Poland, Spain, Romania, and other European countries, allowing Amazon to adjust to seasonal needs. The company became embroiled in an ethical quagmire after German public television aired a documentary in which workers said security guards from Hensel European Security Services (H.E.S.S.) intimidated them, searched them for pilfered food, and spot-checked their cramped living quarters unannounced. The program showed some guards wearing clothing from Thor Steinar, a German fashion label popular with the country’s neo-Nazi community. Amazon immediately stopping doing business with H.E.S.S., whose executives denied the allegations and said, “We explicitly distance ourselves from any form of political radicalism.” Germany’s Labor Ministry is also investigating. The relaxing of labor laws in Germany several years ago to allow more temporary workers is being criticized for contributing to the problem of poorly paid, sometimes mistreated workers, but the strongest criticism from labor groups is directed at U.S. companies that they say take advantage of looser labor policies and evade responsibility by turning it over to third parties.
With concerns over jobs and labor practices, the anti-globalization fervor is just getting hotter—and is not likely to dissipate anytime soon. In the end, it is not whether globalization is good or bad, but how business and government managers can work together to ensure that the advantages of a global world are fully and fairly shared.