Globalization is a double edged sword. For the first time corporate entities in the First World are being bought ["occupied"] by those from the "Third World". Though rare this phenomenon never fails to shock the advocates for free trade.The story of India's Lakshmi Mittal -- who is based in UK [his first name is the same as the Hindu goddess of wealth] is the third richest man in the world and is attempting to buy Europe's biggest and the World's second biggest steel company -- is raising interesting issues. The World's biggest company is Mittal Steel.
Read here The Globalist's interesting take on the subject.
Last year Lakshmi Mittal threw the World's most expensive wedding party, estimated at $60 million for his daughter Vanish. The poverty in Third World can at times be astonishing!
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The article, “Steel Giant Tries to Get Even Bigger,” describes Arcelor as wary of a take over by Mittal Steel. Mittal Steel is the world’s largest steel company, owned by Lakshmi Mittal, third richest man in the world. Arcelor is a European owned steel company and is Mittal Steel’s largest rival.
Mittal recently bid $24 billion in cash and stocks for Arcelor. He has also assured Arcelor that if his bid is accepted, he will let their management remain in the new combined company, keep Arcelor’s existing plants open, and keep pre-made agreements with its staff. And yet Arcelor is still wary about being taken over by the Indian owned steel giant, despite the company’s good standing and generous offers. The facts in this article seem to point out that the only reason Arcelor shies away from Mittal Steel is that it is an Indian owned company. This reveals Europe’s concern over losing its companies to the Third World.
It’s fascinating to see how these three articles not only compliment each other and the issue at hand, but the idea of globalization as well. The single issue of Mittal Steel is complex in itself, but when combined with the notion and perplexities of globalization it becomes even more circuitous.
What I found most interesting of the three articles was the description of Mittal's daughter's wedding. It was incredibly symbolic of globalization in every form. This is most obvious in the basic elements of the wedding. Father of the Bride. Mittal is of Indian decent and is London based in both business and social life. This is an automatic fusion of European and Asian culture not only for the Mittal family, but for all of their employees, family, friends, and acquaintances. Location. The wedding took place at a premier location in France, yet held a majority of Indian traditions. Guests. The 1,000 guests arrived from all over the world to celebrate and partake what became a festival of globalization. Even the “Bollywood” production that was presented is representative of the American influence that “Hollywood” has had around the globe. Finally, the fifty-five million dollars that Mittal shelled out for his daughter’s wedding event is the result of successful globalization. His fortune is the product of Mittal Steel’s truly global establishment and amalgamation of French, Indian, Dutch, and various other European and global influences. As Mittal’s example shows, the globalization age is upon us, and as The Globalist article states, those not willing to, “ride the tide of globalization,” are foolishly ignoring the new direction of the world’s movement.
It’s common knowledge that every girl deserves to feel like a princess on her wedding day. Clearly Mittal takes this very literally.
In all seriousness though, I wanted to ask my fellow bloggers a question apart from the business and globalization aspects of these articles.
I, personally, would never tell someone how they should use their money. Mittal earned his fortune fairly and legally and isn't using it to harm other individuals. Thus, it seems clear to me that there is nothing morally wrong with him spending over $55 million on his daughter's wedding.
However, we are about to spend an entire semester discussing the plights of some of the poorest countries in the world. Billions of people in the world haven't enough food or clean water, and hundreds of thousands of children are dying because they don't have access to simple and relatively inexpensive antibiotics. Thus, does a little red flag go up in any one else's mind when they hear of people spending that kind of money on such luxurious weddings?
Again, I am not saying that I think it's morally wrong for Mittal to spend his money as he wishes. At the same time, I feel many of us wonder where or how we can find the resources to aid nations in need, while in fact those resources are being used to ' buy [Vanisha] the Eiffel' (BCC News: Glimpsing a fairy tale wedding)
Thoughts?
In response to Whitney's question of whether the over-the-top spending on the wedding could be better spent, I have some thoughts. Perhaps one piece of information that would better place the context of the wedding's price, is the amount that Mittal Steel and Mittal personally donate to charitable organizations on a yearly basis. The mere fact that a man has the ability to fund a 55 million dollar wedding does not inherently mean that he does not help those around him.
In addition to that idea, the thought that just because an individual has money they need to give large quantities of money to charities is unfair. These people may be more fortunate than others, but the money is still their hard-earned money. Society can not expect the wealthy individuals in the world to take on the burden of fixing the poverty problems present worldwide.
This really shows how the third world and the first world are all going to blend together into what we used to be, one world. There's going to be opposition from politicians, people, groups, governments, etc. but if the technology/infrastructure exists to make this sort of thing work, eventually it will happen. The Europeans are afraid of change, they're used to the places they work at being owned by their people, their culture. But what they dont see yet is that it doesnt matter that an Indian firm is taking control of a French (or European) firm, the better way to look at it is a successful firm taking over another successful firm so that they can both benefit. Nationality and origin dont mean as much, especially if the production and management stay in the same place.
Onto whitney's question, the juxtaposition of a extravagant wedding and the poverty of many 3rd world countries is odd and unsettling. While definetly an unequal distribution of wealth, that doesnt imply that it's an unfair distribution. Like Josh said, it would put things into perspective to compare his luxury spending to his charitable giving. What's better, a mogul who makes billions yet still lives a frugal lifestyle, or a hypothetical Nittal who spends 100 million on weddings (and other goodies, ski doos, villas, private islands) but gives 250 million to charities?
"Society can not expect the wealthy individuals in the world to take on the burden of fixing the poverty problems present worldwide. "
Who can we expect to then? The people with nothing? I'm not saying that just because you're wealthy you've directly used (or abused) someone in order to get that wealth, but if someone's wealth is built upon the exploitation of those in poverty then I believe that the wealthy person is morally obligated to fix those problems because they helped to create those problems! And I believe we're all tied to some sort of exploitation, either through the past, slavery, colonization, or the present, economic dominance/threat of force. We should figure out who's benefited/profited the most from unjust treatment (thereby perpetuating and ensuring the poverty) and put more responsibility on them, but we can't just point fingers and hope someone else does something. We all need to chip in and collectively solve problems.
I dont know whether or not Mittal is charitable, but regardless the extravagance is odd. How can you blow $127 million on a house when the country you're from still has deep poverty? It might not be wrong, but it definetly aint right...
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These articles demonstrate a sort of superiorly the Europeans possess. It seems as if the main problem with Mr. Mittal's plans has to do with Europeans not wanting to work for and be owned by an Asian. One may raise the point that Arcelor previously was a multi-national corporation, so why would it have a problem with foreign ownership?
I believe the answer lies in geography and history, not economics. Europe, although not a single state, still shares a common economy, continent and somewhat of a common culture and ethnicity. Working for a foreigner, especially one of a different race and from the third world can understandably shock to Europeans. I am not insinuating this is racial-superiority, but a surprise.
What I found most interesting about Sheshabalaya’s mock speech was the section where he speaks of “putting and end of [to] ‘us and them.’” And being “a small example for the larger world.” This is a prime example that a multi-national corporation is truly can be a benign tool of, and not only product of, globalization.
As for the descriptions of the Mittal wedding, it is, for the most part, irrelevant except for the fact that it demonstrates the amount of capital Mittal has. It seemed like they had a good time
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"How can you blow $127 million on a house when the country you're from still has deep poverty? It might not be wrong, but it definetly aint right..."
I think Stefan's quote is really more of what I was getting at... I didn't mean to imply that Mittal is a bad, immoral, or irresponsible person for having a lavish wedding for his daughter, so my apologies if that is how it was interpreted. Like I said, it is his money and he is free to do with it what he wishes.
I merely meant to pose the question that in light of the staggering number of people in extreme poverty in this world, is there such a thing as unnecessarily selfish exorbitance? In other words, is there a point where the needs of mankind do (or should) supercede a person's freedom to use their money for their direct personal interests?
Sheshabalaya’s article reveals how rapidly globalization is affecting the world at the present moment. The shareholders of Arcelor fear merging with Mittal’s company because they are weary about the effects of ownership by a developing country. Since the shift of economic power from First World countries to Third World countries like India and China has been so rapid, the shareholders fear that combining with such a global company will lead Arcelor into the “hostile” and unprotected waters of the recent boom in economic globalization. However, Sheshabalaya’s article shows that despite this fear, Arcelor is only hindering its future growth by resisting the pressures of globalization.
As far as Whitney’s question goes, although I believe that it is unreasonable to spend so much on weddings and houses among other material possessions, I think that it is important to view the subject from an economic perspective. Two principles of economics apply to the situation of Mittal’s money spending: first, people respond to incentives and second, people face trade-offs. Mittal’s ambition is merely a response to the incentive that if he works hard and acquires a lot of money, he will be able to pay for an extravagant lifestyle. Without this incentive, people such as Mittal would have much less ambition, and the economy would suffer greatly as a result. Also, the trade-off between efficiency and equity is closely tied with the incentive argument; in Mittal’s case, using his money to alleviate the poverty in India would increase equity but only at the cost of efficiency since he would have less of a personal incentive increase his salary and expand his company. Thus, in a strange way, the economy as a whole benefits from these extravagant and irrational purchases of industry leaders.
I wonder which is the bigger problem here: it is that Arcelor might be sold off to a third world country or is it that Europe itself will be losing some of its own economic and industrial prowess. I would have to suppose that regardless of the nationality of the buyer, Europe would still be losing out. Perhaps the fact that the buyer is from a third world country only adds insult to injury. However, I feel this situation illustrates perfectly the difficulties faced by first world countries during the process of globalization, that is, first world countries are going to have to give up more and more of their status as economical and industrial leaders. Yet, I think that both companies could benefit greatly through the merger, though I'm slightly skeptical of Mittal's ambitions. Moreover I'm interested in what Mittal means by his "longstanding belief that industry should be consolidated to stem the historical cycle of boom and bust". At what point does this consolidation constitute a global monopoly? Why don't we let Bill Gates buy up the second largest computer software company in the world?
As far as the wedding and the house goes, I can't believe he would spend that kind of money outside his own country, more or less in a first world country, when he knows first hand the conditions of India. No wonder they are still a third world country. He could of had a month long wedding in India for that kind of cash. Lastly, I got five bucks that says this marriage ends in divorce within a year.
I found the Globalist response to the current discussions of Mittal Steel to be very interesting. In the letter they proposed, the portion suggesting a possible alternative outcome if Mittal was instead a Frenchman named
Michel was very telling of issues we face in globalization. The fact that Mittal, a man from a developing nation, is the third richest man in the world and has enough money to take over a European (read: developed world) company is surprising or even unsettling to many. It turns the common notion of poor, underdeveloped, undereducated people in Third World nations on its head, proving that the stereotypes and generalizations that are often made are not always applicable. It also shows the fear of change and lack of control that many people in the developed nations feel, as developing countries take a larger role in world economics and politics. Granted, Mittal does not represent all people from developing nations, many of whom are still living in extreme poverty, but he does represent the trend of a more integrated world. It will be interesting to see the outcome of Mittal Steel's proposal.
The article from The Globalist brought up a great point about the protectionist attitudes of some countries. With the rise of globalization, I think one could make the prediction that eventually the concepts of national pride and self-protection may not be as important as they once were. As communication and information technologies advance, it's creating a stronger sense of "global community".
People may soon be spending less time asking "What's in our country's best interest?" and more time asking "What's best for the global interest", as the latter seems to be becoming the more relavent question.
If Arcelor seriously took these questions into consideration, it might change their perspective on Mittal's proposal.
The two articles on Mittal Steel’s recent $24 million bid to take over its European competitor, Arcelor, highlight a perfect example of the inevitability of globalization. Mittal, currently the world’s largest steel company, placed the bid in attempts to gain an even higher percentage of the global steel market—globalization at it’s best. Unfortunately, the articles also explain how Arcelor is hesitant to accept the offer.
Arcelor officials expressed their fears that the acquisition will result in the loss of numerous European jobs. But in fact, Mittall and the company’s chief financial officer addressed this concern by expressing that they “would like Arcelor’s management to become part of the new organization….they would honor all of Arcelor’s existing agreements with its subsidiaries and staff, and that there would be no plant closings” (NY Times). Thus, it seems that Arcelor’s tentativeness actually stems from nationalistic pride—they are “worried about the loss of a European steel champion” (NY Times). They would rather give up the potential to form “an even greater steel giant with a leading position in the Americas, Europe and Africa, annual revenue of nearly $70 billion and 320,000 employees” (NY Times) than to see their company come under foreign ownership—a very anti-globalistic perspective, I must say!
I believe in the theory of capitalism. I believe in a free market system based on the private ownership of the means of production and the distribution of goods. Just as we discussed in class today, I am also inclined to believe in the “protestant work ethic” that gives the element of dignity to labor, working hard, and getting your hands dirty. It is a known fact that the driving force behind capitalism is profit, and I am completely fine with a person working his way up to become a billionaire like Laskhimi Mittal has. To an extent….
It seems to be the consensus among the peers of the class that we are all fine with Mittal having his money, and some are even fine with his lavish spending as long as he donates to charities; which we do not know for sure that he does. I think the real issue here one that transcends India and even globalization. In most Third World nations (and even in a lot of what we would call “modern” nations as well), one of the major problems is that of the socio-economic gap. The gap between the rich and the poor is absolutely astounding when contemplating education, resources, and life opportunity; unfortunately, this gap continues to grow.
"Society can not expect the wealthy individuals in the world to take on the burden of fixing the poverty problems present worldwide."
The problem with this quote is that regrettably, the onus and responsibility must fall on them to a certain extent. With wealth comes power, and with that power, the ability to make changes to government, state, and local institutions. As Stefan Wirth commented, “the wealthy person is morally obligated to fix those problems because they helped to create those problems.” This is not to say that a wealthy person should be blamed for all the problems of social inequality that exist, but I believe that it is their moral obligation in part as a human being to assure the prosperity of their fellow man. It is time for the world to step outside themselves and stop focusing on how just they can prosper, and start looking out for the collective good. Inevitably, as the World moves in a positive direction and benefits, so does the individual.
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"Society can not expect the wealthy individuals in the world to take on the burden of fixing the poverty problems present worldwide. "
I completely agree with the above quote and the idea that society can not expect or compel the wealthy in the world to take on the monumental task of conquering world poverty.
This is an issue to be dealt with by governments. The only entity that can be considered responsible for the well-being of a people is that population’s government or other authority that they willingly answer to. Companies and sources of personal wealth should not be looked to in order to resolve this situation.
I believe Mittal Steel is doing a great service to the world in its business. It is channeling billions of dollars into the economy and providing investment, trade, and job opportunities around the globe.
The idea of a $150 million price tag for a wedding is indeed staggering and perhaps unsettling, but it is certainly not futile. Can you imagine how many people were employed in the lavish Mittal wedding events? How many caterers, hotel staff, security officers, and others were paid directly out of Mittal’s pocket? Although many of these may have been French, an even more important service was paid to the people of India.
This service was the preservation of Indian culture; a culture which was ever-present in the Mittal nuptials. The spirit of India and its people, whether wealthy or poor, was celebrated. Does culture or economy take priority with the Indian people? The idea that many in poverty view their status as a test from God, as Dr. Khan mentioned in class on Wednesday, is an important element to consider. The majority of those in poverty choose to deal with it and live contently with the life they have given by God. Although I do not intend to condescend the severity of poverty, or the need to assist those facing it, I believe that culture would likely take priority with Indians.
So, although Mittal is spending extravagantly, at least it is with care to his Indian heritage and paying homage to the people of his native country. He in no way should be expected or demanded to contribute to charity or “take on the burden” of impoverished India. Mittal is paying enough service to the world already, and should not be chastised for doing so.
To go along with the analysis of Mittal's spending habits it is important to take economics into account as Christie pointed out. Although rich people of the world should not be required to give to charities, many of them do. Although most of them would probably admit to feeling some amount of social pressure to do so, one of the most important determinants of philanthropy of the world's wealthy is personal interest. When a person is able to observe the world and become interested in a cause it becomes economically worth their while to invest in that cause. In Lakshmi Mittal's case he has launched a trust to encourage the development of young sportsmen in India. This was the product of Mittal's observance of a less than par Indian team at the 2004 Athens Olympics. Although many people may see this as a lesser cause on the grand scale of things, it is important that he is investing in something he believes in.
(read more at http://www.nriinternet.com/Section3Who/WhoEurope/UK/Mittal/Mittal_Champions_Trust/INDEX.htm )
As the world's wealthy become more worldly it is likely that more and more causes will be attended to through various charities and donations. The increasing globalization of the world only aids this process and gives the wealthy more causes to potentially observe and donate to.
"This is an issue to be dealt with by governments. The only entity that can be considered responsible for the well-being of a people is that population’s government or other authority that they willingly answer to. Companies and sources of personal wealth should not be looked to in order to resolve this situation."
While the above comment seems to make logical sense on the surface, I think a deeper and more analytical look must be taken. The onus and responsibility of a state's and its subsequent populations' well-being must fall into the hands of the government. However, if we continue to take a look at how most governments are run and who influences the decisions that are made at that political level, one will find that it is the wealthy hold a lot of sway. Not to say that most governments are merely puppets made to dance by those that hold the most capital, but to deny that those of the elite class do effect certain governmental decisions would be naïve. Therefore, the wealthy must work in conjunction with the government to create public policies that will allow for the growth of economic equality.
The article about Mittal's daughter's wedding is an incredible example of the good that globalization can do. Although indian, Mittal chooses a European location, while still maintaing traditional indian aspects of the wedding. The bride and groom both seem to be wearing traditional indian clothing, and the party was entertained by bollywood actors, while eating indian food. The wedding however, took place in a chateau in France. I think this shows the spread of culture, which is an important part of the good of globalization.
It was also interesting to me when the article stated that the bride was the "daughter of one of the wealthiest Asian men in the world." He is the third wealthiest man in the world. it seemed almost odd to even bring up the fact that he is asian, as if it's surprising that an asian man from the so called "third world" is wealthy.
I think the imaginary draft of Mittal's speech by Ashutosh Sheshabalaya is brilliant. It really cuts deep som raw issues in globalization. Arcelor, from this article, and also the Herald Tribune artile, seems to be very reluctant to sell to Mittal Steel. It is very possible that they do not want to sell to an Indian man as many have said. A.B. has a Mittal asking the shareholders, would they think differently if Mittal was born a European, and not in a Third World country. I believe it would. Many of the first world countries such as those in Europe, and the United States, still look down on many "third world" countries, despite their growth. Thus, although out front, people say they want to globalize, they still have their prejudices. For example, as JJK points out, since the 1970s, China has been experiencing "overall economic growth rates that averaged abpit 10%... It has the second largest economy in the world after the US, and accounts for nearly 12% of the global GDP." Yet, many, including the text book still includes China in the "Third World" even though the number one holder of the US debt is China. I think many of the less fortunate countried during the World War were doomed when they were given the name Third world, because it has stuck in many minds as backwards, and "not as good." This has left many prejudices in peoples' minds.
The case of Mittal's steel company is a perfect example of the spread of globalization. By buying Arcelor, he is advancing both companies and making them better competitors in the world steel market. This deal gives both companies, Indian and European, opportunities for growth and continuing success. I really liked Mittal’s definition of globalization, when he said, “most of us welcome the immense new opportunities in a world where neither capability nor success is measured by caste and religion, or hopefully by color and origin. This is what, to me at least, is the meaning of globalization.” This shows the rapidly advancing trend of integration between different parts of the world, one where religion, race, and nationality will have increasingly less significance.
On the other hand, integration also inspires renewed and strong feelings of nationalism and identity with someone’s own group as people feel threatened by competition from outside forces. An example of this is growing immigrant opposition in Europe. The Mittal case is also an example of this, as European owners of Arcelor are reluctant to hand over ownership outside of Europe. However, it doesn’t seem that they will have much choice in the matter. Even if Arcelor decides to resist the merge, the article says that they won’t have many options since Mittal only has to get half of Arcelor’s shares, and shareholders will probably be open to switching. This shows that although globalization at times encourages protectionism and nationalism, these sentiments will not characterize the future of global affairs, but will be overtaken by stronger forces such as economics and desire for personal gain.
After reading the article here, I decided to google Mittal and see what else came up. It turns out, that not only the French, but also the British are paranoid of Mittal's successes. According to this article, opposing parties accused Tony Blair and his Labour Party of aiding foreign companies instead of struggling domestic ones. It certainly seems like first-world countries want all of the benefits, such as cheaper labor and factory space, but none of the compromise, such as foreign competition that comes with globalization.
Personally, I am a bit of a realist and feel that it is a leader's responsibility to protect the interest of his state first. But in the long run, I feel that if globalization is to develop and lead to the goals that many of the richest nations claim to hold, such as ending poverty and reducing the rich-poor gap, we must allow the global system to unravel as it will.
I am sure that most people have now heard about President Bush endorsing the takeover of shipping operations at six major U.S. seaports by a state-owned business in the United Arab Emirates. I was wondering what everyone thought about the whole situation…..is it just an attempt for the Dubai-owned company to enhance it profits and is merely being viewed in a negative light because of the company’s foreign ownership (similar to Mittal Steel’s attempted acquisition of Arcelor)? Or, is it a security risk to the U.S., because of supposed links between the United Arab Emirates and Al Qaeda?
I came across this article (http://www.csmonitor.com/2006/0214/p04s01-woaf.html)that offers a very interesting perspective on current globalism and the path that it is taking into the future.
At the center is Brazil's president Luiz Inacio Lula da Silva. He has recently returned from a campaign across Africa to rally the "global south". His mission is to encourage a new form of globalization. He is advocating a change in the course of globalization, a change that will focus more on the "global south" and the poorer nations of the world.
Silva acknowledges that the "rich" nations of the "first world" are slowly beginning to recognize this change. However, it is at a pace that Silva is hoping to speed up with his efforts in Africa and abroad.
What I found most interesting about this article was the fact that it approached globalization as such an established idea. Such an established idea, that it is now being reformed and analyzed so deeply.
Enjoy the article and please comment!
The article that Nicole posted points out an interesting contrast between the attitudes of the leaders of developing nations. They all favor, as the article says,
"a multi-polar world in which the US is no longer the undisputed power."
However they differ in their methods to change the current system. While some leaders, such as Chavez in Venezuela, see Globalization as a tool used by the West to manipulate the poorer nations, whereas other leaders, such as Lula and Mbeki of Brazil and South Africa respectively embrace globalism but only want to change the system so that their nations will succeed in the global world.
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