Globalization: The St. Olaf Opportunity
By William L. Carlson
Friday, May 7, 2004, Honors Day Convocation

President Thomforde, Dean May, Pastor Benson, members of the Board or Regents, honored Scholarship providers, my faculty colleagues, and most important to you the students who are honored today and who are the focus of these remarks.

Since St Olaf is a leader in international studies I would like to consider today a simple topic: Globalization. We all have a clear definition of this word - just like the five blindfolded men who were asked to describe an elephant based on their touching some part of the anatomy. Here I will take the approach of an economist and focus on trade and the potential for economic growth. Economic theory clearly shows that everything being equal, trade leads to increased wealth. Before my economics colleagues jump out of their seats and drag me out of here for heresy, let me add that everything is almost never equal and that provides interesting discussions for economists.

To begin let us consider a broad historical perspective. Globalization in modern terms can be thought of as having three different phases . Phase I occurred between about 1870 and 1914 and was made possible by the technology of steam driven ships. This period featured increased trade and financial investments, the initial opening of Asian trade and large movements of people through immigration both from Europe to the United States and between Asian nations. In this phase people were moved to perform jobs instead of moving jobs. The level of trade relative to total world output in 1914 was not to be achieved again until about 1980. Phase II included the period from 1950 to 1980 and was made possible by the technology of containerized shipping. This period emphasized world sourcing of goods and provided export led growth for countries such as Japan, the Asian Tigers and for the rebuilding of Europe. Phase III is our present phase which adds information technology to containerization. This has resulted in world sourcing for all types of goods and services. Now we can move jobs instead of people. Countries such as China and India avoided world trade in Phase II and their people suffered. Subsequently they have opened to trade in Phase III with the resulting economic growth and life has become better for many people - but not for all people.

Now let us contrast this with an artist's perspective of globalization . My friend and colleague Mac Gimse created a magnificent sculpture for the Peace Prize Forum. Through this sculpture and the related poem he has linked our heritage to this world more beautifully than I can hope to do here today. From his poem

"Mothers cradle child on child,

and fathers search the fresh of earth,

to pass their hands of nurturing

through the springtime of our birth."

Here we have Norwegian immigrants coming to this land in Phase I of Globalization --- linking to the soil, raising their families, and developing institutions - such as St Olaf-that provided education for growth in this world. His poem goes on to note that these immigrants helped their children learn and develop into leading citizens. In economic terms we speak of investing in "Human Capital" leading to economic growth. Professor Gimse's poem and sculpture end with the uplifting words

"So stand, flesh-on-bones,

wake now you and all humanity,

to speak our single-throated story

that beyond the stones which hold our walls,

we are cradled, all and only,

by the sea."

From our birth in this land we are led to improve the world and help our 6.3 billion sisters and brothers. Those of us gathered here had enough sense to choose our parents wisely and we have been richly blessed.

With these two perspectives in mind let us now consider the condition of the world. From estimates made by the World Bank we find that 20% of the world's 6.3 billion population live on less than $1 per day (that is over 1.2 billion people), 21% have not completed primary education, girls are much less likely to participate in primary education compared to boys, the under-five infant mortality rate in the world is 122 per 1,000 live births in the poorest countries compared to 7 in the highest income countries. . These are sobering numbers and demand a world response. The United Nations and the World Bank have adopted the Millennium Development goals to substantially improve these conditions by 2015.

To meet these Development goals the World Bank estimates that 30 to 50 billion additional dollars per year will be required . Increased foreign aid will be needed from the wealthiest nations. Overall the U. S. spends about 0.1% of its total economic output on foreign aid, -- about $10 billion-- compared to about 0.2% overall for the other developed nations in the world. Recall that the United States will spend more than $87 billion in Iraq. Our level of foreign aid is, to put it politely, quite embarrassing!

World economists have worked to ensure the stability and growth of the world's financial sectors. In a number of cases this has led to increased hardship for the poorest people leading to negative criticism of globalization. But these financial sectors are also a source for the reduction of world inequalities. Countries without a strong financial sector do not have the same opportunities for economic growth that is needed to improve the lives of its citizens. The major impacts of micro banking illustrate this at the village level. Second, strong financial systems encourage savings and provide investment funds for growth in all economies . Third, the financial sectors provide ways to gain surplus wealth for both positive and negative uses. Increased trade and financial activities have increased total wealth but do not require sharing. But there are also many examples of increased sharing such as the many scholarship endowments that have been provided by those in this audience who are honored today along with our students.

The World Development Report 2004, prepared by the World Bank, notes that economic growth alone is not sufficient to reduce poverty in the world . They particularly emphasize the need to improve the delivery of education and health care services for all people. These aid resources must be directed so that poor people receive the major benefit. This will require the creation and implementation of government policies that efficiently direct services to the poor . Without supportive governments in poorer countries aid resources are often wasted. In order to be effective these governments will require well educated and committed professional policy-makers and managers. Dedicated and sensitive providers - such as teachers and nurses- must also be enlisted to help the poor develop themselves and their children. Many of these human resources must come from countries that have been richly blessed such as the United States.

Competent and dedicated professionals are critical for improving life for millions of people. Our St Olaf education has provided students with the opportunity to be competent and rigorous scholars and capabilities to be dedicated professionals and leaders. In addition our sense of values leads us to share these blessings with all. St Olaf students and faculty have traveled and studied all around the world . We have met beautiful people, observed cultural differences and noted differences in resources and opportunities in the countries visited. From these meetings many students have become personally committed to lives of service. This explains in part the overrepresentation of St Olaf graduates in service related organizations and careers.

With the combination of financial resources and dedicated professionals important help can be provided. To borrow from an old saying, If we give a man a meal he will be happy and thank you, but if we help a woman obtain a college degree she will be secure for life - but she may take your job!

Many studies have shown that educating women results in increased production and improved family planning. Students on the Global Semester have seen how the daughters of our cook, who came from a local village in southern India, were educated by Christian schools. They are now completing MBA degrees that will provide them with their own opportunities.

Current political debate often deals with the availability of jobs in the United States. Students have seen the growth of high technology information based companies in India that supply professional services to the United States and Europe at lower costs. Is the success of a person in India, China, South Korea, or anywhere in the world a threat to our success in the United States? I suppose the answer to that question is yes if we see the world in a static sense. If the world is limited to one that assigns wealth to those of us who now have it and ignores the possibilities that others also need resources to purchase goods, then opportunities will be limited to those with power. In that limited world the amount of professional work that needs to be done in the world would be restricted. Following this argument if a person in India is able to do my job as well as I can and will work for less income then she is a threat. But for example India has an overall literacy rate of 60%. That is 400 million people who cannot read or write and thus cannot participate in the modern world economy. So maybe my new job or the new job for my educated friend in India should be to provide education, health care, and job opportunities for those 400 million people. Then those people can work, consume and provide jobs for others. This story can be repeated in many places in the world.

Bringing the poorest people into economic consumption will lead to many other problems. How do we allocate the world's resources and learn to use them more efficiently? How do we deal with pollution, waste control, and global warming? How do we deal with population control? How do we deal with conflicts and terrorism? And you can add to the list. But certainly there is enough work to go around, especially for people who have a high quality education.

These are not merely idealistic musings . We note that from 1990 to 2001 the number of people in the world who live on less than $1 per day dropped by 340 million. This resulted in large part from the opening of the economies of China and India to world trade and their resulting economic growth. These two countries have 2.3 billion people or one third of the world's population.

But if we continue to waste people and resources in God's world she will not be pleased with our stewardship! If a few are allowed to consume wastefully we have sinned. If we spend excessively to fight wars we have sinned. If we do not treat our world neighbor as a child of God we have sinned.

So have we provided you with the answer? Of course we as faculty never do! You have certainly learned that in your years here! When we get to tough questions we ask you to conduct some research or better yet put the question on the final exam! So on behalf of my colleagues seated before you, I assign you the task of solving this problem.

We have outlined the issues . Our world has changed in many ways under the heading of Globalization. A great piece of sculpture has shown us a vision and how we have been blessed by receiving many resources. This vision and our study at St Olaf and abroad have provided an understanding of the problem. Your study in this place has provided you with the background to begin this project.

We will be available during office hours to answer your questions . But the assignment is yours! You will have 25 to 30 years to turn in your report and implement it. Well maybe 35 years! But no more time will be allowed. The Registrar and the Dean will be after us for the grades and we will need some time to evaluate your work. So class is dismissed! Go and serve the world!