5.4.3 Challenges for Democracy
Completion requirements
5.4.3 Challenges for Democracy
Is there a connection between globalization and freedom?
Democracy means the right to choose our leaders.
Usually, we think of democracy and capitalism as hand in hand. However, when the citizens of a country have the right to choose their leaders, they also have the right to decide how the economic system should be used to suit 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.
Socialism in South America: The countries of Central and South America were colonized by Spain. Many of these nations unsuccessfully pursued trade liberalization to achieve prosperity. They allowed foreign investment and encouraged free trade. Many borrowed heavily with the encouragement of the IMF, yet their economies suffered. In the past few years, the people of many of these countries have chosen new ways of running their economic systems. They have decided to increase the role of the government and limit the role of free trade so that the majority of people in their countries can prosper.
Under globalization, if Mr. Chavez wanted a high rate of economic development, then he should have allowed globalization to proceed without government interference. Then, transnational corporations would invest, and their profits would trickle down to the people. But Chavez and the majority of Venezuelans who voted for him disagree. They believe that globalization is not providing prosperity for all people. They acted against the following ideas:
Other countries in South America are beginning to follow similar policies. The leaders of these countries are not willing to allow the free market to determine what is best for their people. They are going to decide for themselves.
Watch either of the following movies:
Democratic India was slow to embrace globalization. India is the second-fastest growing economy in the world after China. In 2018, its economic growth was 7.1%. However, its economy has not expanded by adopting free trade and privatization completely. The government was very careful that foreign products could not come into the country and take away jobs from its people. The government wanted to ensure profits from economic growth stayed in India. Instead, it practised slow and steady planning to move ahead by developing its infrastructure.
What do you think?
People all over the world want to benefit from increased trade and the other benefits of globalization. However, their governments have adopted various 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.
Should governments ensure globalization will contribute to prosperity for all?
Usually, we think of democracy and capitalism as hand in hand. However, when the citizens of a country have the right to choose their leaders, they also have the right to decide how the economic system should be used to suit 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.
Socialism in South America: The countries of Central and South America were colonized by Spain. Many of these nations unsuccessfully pursued trade liberalization to achieve prosperity. They allowed foreign investment and encouraged free trade. Many borrowed heavily with the encouragement of the IMF, yet their economies suffered. In the past few years, the people of many of these countries have chosen new ways of running their economic systems. They have decided to increase the role of the government and limit the role of free trade so that the majority of people in their countries can prosper.
Case Study: Venezuela
Venezuela is a poor country with vast oil resources that were controlled by foreign-owned
transnationals for many years. The gap between rich and poor was huge. President Hugo Chavez was in power from 1999 to 2013. He was able to mobilize the poor to vote for him by promising them greater justice and prosperity. His programs to fight poverty, disease, illiteracy, and malnutrition were very popular. To pay for these programs, Chavez
nationalized or took control of important industries, particularly oil. He believed that when transnational corporations are involved in the oil and gas industry, the profits leave the country and benefit only a few people. If oil is owned by the government on behalf of the people, the profits can be used to benefit the average person.
Chavez has used oil revenues to establish a network of health clinics in low-income neighbourhoods in Venezuela. These clinics are staffed by well-trained Cuban doctors whose services were exchanged for cheap Venezuelan oil. As well, the government provides subsidized food for the poor and has redistributed land to the peasants so that they can make reasonable livings. Interestingly, the government of Venezuela has supplied cheap heating oil to the poor in the United States.
Hugo Chavez opposed contemporary globalization including free trade and the involvement of transnational corporations in support of his belief that this will not provide prosperity for everyone. What does the information on the chart tell you? Was Chavez right?
Chavez has used oil revenues to establish a network of health clinics in low-income neighbourhoods in Venezuela. These clinics are staffed by well-trained Cuban doctors whose services were exchanged for cheap Venezuelan oil. As well, the government provides subsidized food for the poor and has redistributed land to the peasants so that they can make reasonable livings. Interestingly, the government of Venezuela has supplied cheap heating oil to the poor in the United States.
Hugo Chavez opposed contemporary globalization including free trade and the involvement of transnational corporations in support of his belief that this will not provide prosperity for everyone. What does the information on the chart tell you? Was Chavez right?
Hugo Chávez
Source: Dilma Rousseff
Source: Dilma Rousseff
| Economic Growth 2012 | |
| Venezuela | 5.6% |
| Canada | 1.7% |
| World | 3% |
Under globalization, if Mr. Chavez wanted a high rate of economic development, then he should have allowed globalization to proceed without government interference. Then, transnational corporations would invest, and their profits would trickle down to the people. But Chavez and the majority of Venezuelans who voted for him disagree. They believe that globalization is not providing prosperity for all people. They acted against the following ideas:
-
Free trade
-
Transnational corporations
-
The invisible hand
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That the government should stay out of the economy
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That governments should not own industries or natural resources
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That governments should not impose regulations on companies that invest in their country
Other countries in South America are beginning to follow similar policies. The leaders of these countries are not willing to allow the free market to determine what is best for their people. They are going to decide for themselves.
Digging Deeper
Watch either of the following movies:
- The Take (Canadian film about the takeover of an automobile plant in Argentina)
- Even the Rain (Spanish, with subtitles, about the Bolivian Water War of 2000)
Democratic India was slow to embrace globalization. India is the second-fastest growing economy in the world after China. In 2018, its economic growth was 7.1%. However, its economy has not expanded by adopting free trade and privatization completely. The government was very careful that foreign products could not come into the country and take away jobs from its people. The government wanted to ensure profits from economic growth stayed in India. Instead, it practised slow and steady planning to move ahead by developing its infrastructure.
Reflect
What do you think?
People all over the world want to benefit from increased trade and the other benefits of globalization. However, their governments have adopted various 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.
Should governments ensure globalization will contribute to prosperity for all?