“Globalization is an exceptionally abstract concept to convey to the general public,” said Alan Greenspan to The Globalist in 2001. “Most of those who protest against globalization, though presumably driven by a desire to foster a better global society … hold misperceptions about how markets work – and how to interpret market outcomes.”

Fernando García Valdes and Eugenio Cordero Flores are both collectivo drivers in Olmué, a small village one hour northeast of the port city of Valparaiso, Chile. Collectivos are set-fare taxis that travel along set routes. Faster than buses and cheaper than taxis, they have become an integral part of the Chilean transportation system. Although García and Cordero are not officially trained to analyze and interpret market outcomes, they are on the forefront of globalization in Chile and among the very first to experience its real effects.

García is in his late thirties. He studied agriculture in university and worked in tourism until five months ago when he was laid off. To make ends meet, he took a job as a collectivo driver. “It is not my dream job,” he explains, “but I earn enough to support my wife and two children. I make 200,000 pesos ($300) per month. I do this only as an alternative until I find something better.”

Cordero is roughly the same age and the two men are friends. “I have worked all my life,” he says proudly. He explains that he enjoys driving a collectivo in comparison to his first job, loading and unloading stones from the riverbed for road building. “I don’t get blisters on my hands anymore,” he jokes.

Both men are worried. In the days leading up to the “Showdown in Iraq” (as CNN dubbed it), gas prices rose exponentially, exceeding 500 pesos per liter for the first time in Chilean history. “I am very concerned,” says Cordero. “This is the worst I have ever seen it. Gas has never been this expensive. The people who are most affected by this are the middle class.”

As gas prices rose, so did bus fares and the price of such food staples as bread and potatoes. Many Chileans were forced to change their daily lifestyle. “We are already working as much as we can,” says Cordero. “We cannot work more. With gas so high, we just earn less, so my wife does not drive the car anymore and my brother does not drive to work anymore. We pay more for bread and they ride the bus.”

In the past, such spikes in the price of gas were softened by government subsidies, but the cumulative effect of the global economic slump has drained the government coffers. “The government used to subsidize the cost of petrol,” explains García, “but now there is no more money left.”

García believes that President Lagos has honestly tried to improve the economic situation but is not certain that a free trade agreement with the United States is necessarily the solution. “Already Lagos must deal with problems from the right. People who have money in Chile are right-wing and they do not like Lagos because he is a socialist. Instead of investing in their country now, they are waiting for a right-wing government.”

Since the highest 20 percent of the population in Chile hold over 61 percent of national income, whereas the lowest 20 percent of the population hold only 3.5 percent, García’s analysis may not be too far from the truth. “If this continues and these businessmen make deals with Americans, I don’t know that the government will be able to control anything anymore. Who will protect us – the people who don’t have money?” asks García.

García vocalizes the same concerns as many globalization critics. They fear that the predominance of market forces will cause a general weakening of the state, as governments all over the developing world are exhorted to become more flexible and more competitive.

By definition, globalization involves the increasing interaction of the world’s peoples through their national economic systems. In theory, the trend of increasing integration of economies, in terms of not only goods and services but ideas, information and technology – has tremendous potential benefits for developing countries. Simply stated, open and free trade between countries breathes new life into stagnant economies, provides new markets for already developed economies and promises individuals in developing nations higher standards of living and more opportunities.

The reality of globalization is quite different, however. As markets are captured by multinational corporations, governments become spokesmen of economic forces, rather than protecting their population against these forces. The fact that 500 corporations control 70 percent of total world trade and six of these control 100 percent of world trade in the staple grains of rice, wheat and maize only goes to reinforce critics’ concerns.

The direct result of this lack of governance is a general lack of confidence in government policies and a sense of disempowerment among those whom the global system fails to protect, people like García and Cordero. Their sense of disempowerment is likely to increase once the free trade agreement is signed.

Despite its geographic isolation, as the sole remaining member of the South American ABC grouping (with Argentina and Brazil plagued by economic and political instability), Chile is on the brink of signing a free trade agreement with the United States after two long years and 14 rounds of bilateral negotiations.

Free trade agreements however, do not ensure free trade. With one side levying all the restriction, and the other making all the adjustments, free trade is hardly fair trade.

Once they enter into the agreement, Chile, like many other countries, will be engaged in a race to the bottom as it is forced to shoulder the costs in order to attract the foreign investment it so desperately needs. But even increased foreign investment does not promise to provide steady employment for Chileans.

“Even if you have a job, you can never be secure. Things are different now. Even though the unions used to be so strong and they improved the conditions for the worker, now they have no power,” explains García.

“Companies can just close down from one day to the next. Many people must do odd jobs to survive, like selling sandwiches or driving collectivos,” says Cordero, glancing at his friend.

Economies are now based on smaller and more flexible production systems and workers are more likely to be in the service sector or engaged in the burgeoning informal sector in order to ensure their livelihood. Increasing informalization of labor renders it virtually impossible to protect workers effectively.

The US-Chile trade agreement promises to be another asymmetric deal where the North insists on the South opening markets and eliminating subsidies, while it continues subsidizing its own farmers and protects itself from competition. Special interests in industrial countries will take precedence over all else and Chile could risk its political autonomy.

Even though Greenspan himself admits that “the best single action that the industrial countries could actually take to alleviate the terrible problem of poverty in many developing countries would be to open, unilaterally, markets to imports from these countries,” there is no possibility of that ever happening. In the same interview with The Globalist, Greenspan also admitted that “American trade laws and negotiating practices are essentially adversarial... We would never put ourselves in a position where we envision the actions we would take to be of assistance to the rest of the world but to the detriment of the US.”

With this “US first” mentality, it is no wonder that globalization is not universally recognized as successfully enhancing standards of living and promoting civil values worldwide. On the contrary, it will only serve to aggravate inequality.

García and Cordero may not be trained economists, but they do understand something that Greenspan and other “globalists” may not fully comprehend: the reality of life in Chile today. “I don’t know if this globalization is a good idea or not. But I do not see what the point of putting more things on the shelves is if we have less and less money to buy them. What does it matter that my son can buy computer games, if making a simple living is more and more impossible?” says García.

--Nurhaily Zaki is a contributor to Political Affairs.