Globalization has several advantages, including ease of communication and transportation, cultural exchange, and new business possibilities. However, global economic interdependence has reduced the flexibility of the international financial system. Considerations regarding the effects of globalization on economic segregation have emerged. Analyzing the benefits and costs of globalization can give valuable insights into what actions governments, companies, and individuals can take to make the system stable and fair.
Though globalization provides opportunities for economic growth, the process suffers from imbalance. While big companies, developed countries, and wealthy individuals benefit from the financial possibilities of diversifying businesses and industries, their less successful counterparts often bear the negative consequences of unimpeded growth (Gray, 2017). Some of the causes are the different economic start points and unethical decisions in using cheap labor, relocating manufacturing plants, and using vulnerable populations to increase company profits.
Global economic inequality raises ethical questions regarding the responsibility of the rich. Trade liberalization only benefits one party at a time and vows a trading system that works in the interests of all participants (Targema & Msughter, 2017). Companies like Starbucks often use the tools of globalization to avoid their responsibility as large taxpayers (Gray, 2017). Governments do not get sufficient taxes to support their systems, while individuals may experience wage disparity and be forced to work in unfair conditions. Businesses should work with governments to develop transparent and efficient taxation. Countries must develop laws to regulate the economic and ethical effects of globalization on individuals’ financial situation and work rights.
A stable financial system is the backbone of globalization as it ensures a steady flow of capital and guarantees safe and predictable financial operations. Disasters, such as the 2007-2008 global financial crisis, can disrupt worldwide economic activity. The market crash resulted in financial problems in Europe and the United States, causing debt crises, unemployment, and financial instability (Amadeo, 2022). In the United States alone, $1.488 billion had to be spent under the American Recovery and Reinvestment Act of 2009 (Amadeo, 2022; Duffie, 2019). It is the responsibility of the wealthy and powerful to ensure that such crises do not happen again.
Though globalization allows for an accumulation of wealth by governments, firms, and individuals, an ethical distribution of this wealth should be addressed. The potential repercussions of excessive liberalization of economic activity have already been felt worldwide. It is vital to ensure that globalization’s negative economic and ethical consequences do not outweigh its benefits.
References
Amadeo, K. (2022). 2008 financial crisis: Causes, costs, and whether it could happen again. The Balance. Web.
Duffie, D. (2019). Prone to fail: The pre-crisis financial system. Journal of Economic Perspectives, 33(1), 81–106. Web.
Gray, A. (2017). What is globalization anyway? World Economic Forum. Web.
Targema, T. S., & Msughter, A. E. (2017). Book review: Joseph E. Stiglitz’s Making Globalization Work. [PDF document]. Web.