When a child looks at a globe for the first time, she doesn't really understand that it represents the place where all of us live. It is only after some explanation that the realization hits; she twirls it around, points to a spot the size of a few states, and says, "That's me. I live here." With that act comes an acknowledgement that we're all on that ball together. Later, some also realize that when one spot on that globe crashes, we all feel the impact. And in reverse, when one part soars, it's either carrying us with it or riding on our backs.

Back when it took months to get information and products from place to place, either overland or by sea, global economic connections already existed. But today, rapid advances in communications technology have allowed traders to keep constant track of the price of their products on the other side of the world. A few hundred years ago, a businessperson waited anxiously at the dock to see whether his ship had foundered in a storm or had brought his fortune in silk or spices. Today, it is actually profitable to produce fabric in one country, send it to another country to be pieced together into clothing, and then send it to another country for final finishing.

But the current economic globalization extends through at least three layers: international trade, foreign investment, and financial speculation. The first, international trade, involves the sort of trade described above, where a company in one country buys and sells from other companies in countries all over the world. Or, increasingly, multinational corporations will have factories and subsidiaries in many countries and integrate the work of each with the others. This type of trade amounts to about $7 trillion each year according to United Nations estimates. And David Moberg in the "The Neighborhood Works" claims that between one third and one half of international trade are transactions between the various parts of these multinationals.

The second layer of economic globalization, foreign investment, involves investors from wealthy countries like the United States buying shares on the stock exchanges of other countries. Mutual funds that invest in foreign markets have become very popular, at least until the latest Asian crash. In fact, massive and imprudent foreign investments played a major role in the Southeast Asian crash, since returns from those ballooning economies sucked in huge amounts of cash that was spent to overbuild and overproduce. Foreign investments also involve direct investment from companies which build factories in other countries or buy subsidiaries which are located there. The maquiladoras on the U.S.-Mexico border are direct investments where companies have moved factories in order to take advantage of cheap labor and low costs.

The third layer, financial speculation, is when individuals buy something when its price is low and then sell it when its value goes up. Speculators buy money, real estate, stocks, bonds and other financial assets. The problem is, some speculators don't simply allow market forces to bring them profits. They attack the currency of countries with [weak economies] and actually throw them into chaos by [buying huge amounts of currency when ____ and then dumping it back when _____].

There is no doubt that globalization has caused incredible advances in productivity overall and great profit for those who have the money to take advantage of it. But what are the current dangers of this global economy? William Greider, in his op-ed article for the New York Times entitled, "When Optimism Meets Overcapacity," identifies the two factors of overcapacity and deflation as the biggest threats. Overcapacity occurs when industry is producing more goods and services than consumers can afford to purchase. For example, if I own a factory which produces a million luxury yachts each year, it is unlikely that there will be enough people in the marketplace with enough money to buy all those yachts. Since I can't sell all those yachts, I start to cut the price on them until it is low enough for people to afford them. But as a result, my profits may drop so much that I have to cut the cost of producing those yachts to make any money at all. The easiest way to do that is to either fire some of my workers or cut their pay, or perhaps both. When this pattern occurs throughout the economy, as in the Depression of the 1930's, this cycle of declining prices and wages is deflation.

Globalization itself is creating overcapacity and deflation as competition heats up between companies in different parts of the world. Greider says, "The fierce cost-cutting competition leads companies to take measures-cutting labor costs, modernizing production, trading jobs to gain access to hot markets-that both erode the worldwide consumption base and create excess output." What he means is that the wages of workers have not kept pace with the price of the things they want to buy, since corporations in competitive world markets have to keep wages low to survive.

Thailand is a perfect example. Huge foreign investments kept flowing into the country, much of which was spent on things like expensive real estate which created quick and large profits. They built far more office buildings than could ever be occupied, and they neglected to build the skills of their workforce or even the country's infrastructure. When the balloon burst and the investors could not be paid back, foreign investors abandoned Thailand and the whole country came crashing down. This occurred all over Southeast Asia, an area previously used as proof that free market economics can work for everyone.

Thirty years ago, globalization in the American South occured as domestic and international corporations moved in to take advantage of corporate welfare, cheap labor, and cheap land. But often they didn't stay, because there is always a better deal to be found somewhere else. Since corporations can communicate internally with lightning speed and move the products quickly to wherever they want them to be, they don't really care any longer where they are located, as long as their costs are kept low. So many of the factories which the South gained from other areas have now moved on to other countries.

So what should be done? In an article for "The Nation" called "Saving the Global Economy", Greider tells us, "Like it or not, we are all in this together now, rich nations and poor alike, all riding on the same runaway train. Globalization of markets means there's no place to hide. Americans are not going to get out of this-the continuing loss of good jobs, the long-term depression of wages-until they learn to think globally, and to devise remedies that do not depend on throwing poor people over the side."

VOP focuses on a few areas of economic change which we think will help the global situation and also help low- and moderate-income people here in Virginia.

1) Living wages. A key handle in the fight against overcapacity and deflation is worker pay. If we can force corporations to increase real wages and create stable employment for working people, transferring some of the profits from upper management to the baseline worker, then perhaps we can decrease the problem of overcapacity. Coalition of labor unions, citizens groups, non-profit agencies and religious institutions can come together to demand labor rights, including decent wages and the right to organize.

2) Tax reform. First, we must end the corporate welfare that subsidizes the rapid moves of multinational factories from place to place and country to country. Our governments should stop passing out money to reinforce this behavior and start taxing it instead. Corporations only do it because it is profitable; if we tax it, they'll stop doing it. Second, we should put more money in the pockets of the working poor through things like a state Earned Income Tax Credit and the elimination of regressive taxes like the sales tax on food. This accomplishes the same thing as raising a poor family's take-home pay, allowing them to save more and purchase the things they need, reducing overcapacity. Third, we should raise taxes on the richest parts of our society, which would prevent the excesses of wealth which fuel this ridiculous race.

3) Work with the Federal Reserve Bank to show them that the economy isn't working for everyone. We are trying to convince the Fed to use its influence with banks to invest in community development projects around the region. We also want them to include the interests of low- and moderate-income Virginians in the decisions they make about interest rates. Cuts in rates allow wages to go up, and the accompanying danger of inflation seems slim at the moment, since overcapacity creates the exact opposite, deflation. This will mean lower returns on investments, but stock prices on Wall Street could probably use a healthy dose of realism anyway.

A final danger of economic globalization is that a frenzied demand for profits is destroying the environment in which we live. Eventually, we are going to have to come to terms with the fact that endless economic growth cannot be sustained forever, since we are rapidly using up the physical world that allows us to build things. Perhaps as time goes by economic globalization will have a positive effect: it will convince us that we are all connected in a web that we cannot destroy without destroying ourselves.