1971 Nixon dismantled the Brinton Woods system deregulated currencies, ending the gold’s role in finical trading. He introduced the flotation system that expanded the unregulated capital and the formation of globalization. This gave way to tax inversion, cheap export, low wages, overseas head quarters and increase corporate profits.
There are two important consequences of globalization. First, it exploits the developing nations. The developing countries have two-tiered society; a segment of extreme wealth and privilege, and a segment of huge misery and despair people. In the developing world it produces vast ignitable ethnic wealth imbalances. Second, globalization has a political dimension. In the international dimension the governing structures changes from national states to break up system with no national boundaries from national economy to international economy which means an international executive replacing Colonial Imperials with “New Royally age” and “in effect world government”. Decision making accounts to the transnational corporations the structures raise decision making to the executive level, rather than elected officials or governments creating democratic discrepancy and isolation from governing institutions. The sense of nationalism will be replaced by multinational companies and interest groups will be the managing directors of the nation’s wealth, politics and economy.
International trade has a positive effect as nations trade. There are many advantages efficiency, maximum utilization of resources; comparative advantage, minimizing waste and cost efficiency are the major economic advantages of trade. Trade has facilitated major social and economic opportunities. Transfer of technology, innovation, economics of scale and cheaper goods. Bill Gates Microsoft has contributed much to the world living standard by introducing computers and providing low cost computers to the less fortunate.
Nevertheless, Globalization on the other hand has debilitated the world economy. One cause is the enormous increase in the amount of unregulated, speculative capital. The figures are really astonishing. In the 1970, about 90% of international capital was used for long-term investment more or less productive things and 10% for speculation. By 2000, 90% of capital had reversed to speculation none productive sector of an economy with low growth. Capital flows are fast and huge scale transaction and short term speculative money that are main causes of the financial melt down and the recession of 2008.
Amy Chua in the book ‘World On Fire’ states that; it was taught that Globalization with its economic power would transform the world into modernized, peace loving nations but what has happened instead is the world has turned into disarray with ethnic conflict, militant groups, nationalism, expulsions, massacres, confiscations, renationalization, transfer of wealth from poor countries to rich countries and genocides.
Amy Chua states; in the third world it has introduced false hope led by American promotion of free election and democratization without the precondition for democratic governance. In countries where market-dominant minority and poor indigenous majority the force of democratization and Globalization collides as globalization enrich the minority; democratization increases the power of the majority. Where by the majority demands the share of the wealth “Indonesia for Indonesians” “Venezuela for Pardos” “ Yids out of Russia” “Hutu Power” “Kenya for Kenyans” these charges backlash against markets, targeting the market-dominant minority’s wealth or ethnic cleansing by majority-supported ethnic violence, as occurred most recently in Rwanda, Iraqi and Ethiopia. Globalization has been the main ingredient outside the Industrialized West as an instigator or remuneration for confiscations, autocracy, and mass slaughter. Kenyan’s tiny Indian minority in alliance with the Kikuyu during Jomo Kenyatta and later with Daniel Arap Moi with his cohorts Kalenjin constituency jointly owned extensive businesses with major Kenyan Indian families were the richest; whereby the main cause of the 1982 ethnic riots with anti-Indian violence in the urban centers. “pro-foreign investment government” Sierra Leone is one good example of globalization gone wrong. Lebanese entrepreneurial who controlled the country’s commerce and diamond trade were known as the “invisible government” of Sierra Leone. The government in alliance with western advisers and Lebanese plutocrats siphoned off the nation’s wealth at the expense of the countries development. By the 1990s Revolutionary United Front (RFU) was formed with the RFU with its reign of terror destroyed Sierra Leone killing over 100,000 people and displaced over 5 million people took over the diamond mines and the Lebanese plutocrats left the country. In 2012 the amount of wealth that was transferred and haulage from Africa was $450 billion dollars.
In Pakistan, Zulfikar Ali Bhutto won the support of the impoverished mass accusing the “Twenty Two Families” almost all Mohajir immigrants from India of stealing the nation’s wealth. Nationalization happened in many countries Bolivia, Mexico, Peru, and Zimbabwe with the support of the indigenous majority against market-dominant minorities. This nationalization was never against private property rather the wealth of a hated ethnic minority. “The true owners of the nation” in Zimbabwe the seizures of white-owned farmland were the quintessential expression of ethnic nationalism directed at “outsider” market-dominant minority. The White “foreigners” third generation Zimbabweans 1% of the population yet controlled 70% of the country’s tobacco and sugar farms.
In short globalization concentrates capital in the hand of the few billionaires and transfers money from poor nation to that of the wealth nations. In the cases of the Third World Nation’s Globalization perpetuates a market dominant minorities. One needs to pay attention to the monstrous imbalances that globalization produces and the market disparities. What is needed is an economic and political system that brings about fair trade, democracy, equality, diversity, justice and quality of life for all.