4.10 Challenges for Democracy


To what extent does globalization contribute to sustainable prosperity for all people?

Democracy Means the Right to Choose


We usually think of democracy and capitalism as going hand in hand. However, when the citizens of a country have the right to choose their leaders, they also have a right to decide how the economic system should be used to suit best the needs of the people. Does that always mean private ownership of all property? Does it always mean that corporations and private property owners should operate without any controls? A democracy can manage its economy in many ways.

Canada has a mixed economy: an economic system that contains various elements of private enterprise and public enterprise. The government owns some of the natural resources in the country. Canadian timber ownership is at the heart of the softwood lumber dispute with the United States. Canada also has rules for how businesses can operate. It taxes individuals and companies, and it uses tax dollars to provide services such as education, roads, police, health care, and social services for its people. It tries to prevent every company from forming a monopoly, and it encourages fair competition.

Globalization presents a challenge to Canada because it recommends an unregulated flow of capital and the privatization of resources. The North American Free Trade Agreement (NAFTA) led to concerns that more Canadian companies would become foreign owned, and that has definitely happened. Some recent examples of this are:
1. The Hudson Bay Company Sold to American, Richard Baker, 2008
2. Tim Hortons Sold to Burger King, 2014
3. Direct Energy Sold to United Kingdom, Centrica, 2000
4. Canadian National Railway Largest Shareholder, American, Bill Gates

Democracies do not always support globalization. Democracies do not always support free trade. According to the principles of globalization, governments should not interfere with the free market. But many countries in South and Central American are doing that on their way to development. These democratically-elected governments do not want the great inequalities in income that are part of globalization, nor do they want to see the exploitation tactics used by many large multinational corporations. Instead, they want to see the profits of industry distributed more equally among the people. They want to maintain their sovereignty.

Since the end of the Cold War, democracies have sprouted on every continent. As countries become more integrated due to trade and technology, they also become more politically connected. This can lead to increased demands for greater political freedom and democracy. Hungary, Czechoslovakia, Nicaragua, Chile, Indonesia, Serbia, Ukraine, Congo, South Africa, a united Germany, Palestine, the Philippines, Malaysia, Bolivia, and several others have made the transition from some form of dictatorship to giving the people a say in what kind of government they want after years of undemocratic rule.

Globalization does not always lead to democracy. Globalism is supposed to flourish under democratic rule. Free trade is supposed to lead to greater political freedom. However, authoritarian regimes can use globalization to create prosperity without creating democratic freedoms or greater human rights.

Today, China is the most populous country, with over 1.38 billion citizens. India at 1.32 billion follows closely. Both countries have extensive natural resources and a huge supply of people willing to work for low wages because of the poverty in their nations. Because of their size, both nations are appealing to transnational corporations who want low-paid workers and more consumers for their products. Although huge global corporations have a great deal of power in setting the terms of agreements with smaller developing countries, no single company is more wealthy than China or India. No single company can tell China or India when, where, and how they are going to conduct business within their borders.

Think about

Canada, India, and all Latin American countries except Cuba are democratic countries. Their people want to benefit from increased trade and the other benefits of globalization. However, their governments have adopted different approaches so their people can benefit. As Venezuela and India show, a nation can still be a democracy and benefit from increased connections with the world without following a particular approach.