Aloof in the Global Economy

Recently I came back to the United States to promote my new book, after an extended stint at my home in Buenos Aires. Down there, I usually write during the day with newscasts from CNN International or BBC World playing in the background. Since I cover the global economy, it's a useful way for me to get a sense of what's going on in the world without leaving my living room.

Naturally, when I moved into a rented apartment for a month in New York City, I wanted to keep my routine going. The basic cable service my landlord had installed included CNN, Fox News, MSNBC and Headline News. But guess what? It was almost impossible to hear anything that wasn't about Don Imus, Virginia Tech or Iraq.

Those are all important stories, of course, but they're not the only things that matter to Americans. Even those of us who never leave our hometowns are tightly connected to the global economy.

For example, if you own a credit card, your interest rate is determined by the demand for borrowing everywhere else in the world. Every time you make a charge, you are dipping into a finite, global pool of credit - and thus making credit infinitesimally tighter for everyone else. And don't even get me started on oil, which not only fuels our cars and heats our homes, but also contains the basic ingredients for plastics. Or maybe you don't use plastics. (That was a joke.)

The fact is, virtually nothing in the American economy exists in a vacuum. The prices of the products you buy depend on the prices of raw materials sourced from around the world, as well as the prices of competing imports. Your wage depends on how much the fruits of your labor are worth, here and abroad, and also on how much someone else overseas might charge for the same work. The rates of return on your investments in stocks and bonds depend on the rates of return of all the other publicly traded securities in the world. And yet, we Americans pay very little attention to what's happening in the rest of the world.

Perhaps it's because we're used to being at the top of the heap. After all, for the past 60 years or so, most things economic have gone our way. But that might not be true for much longer. It's not just a question of when China passes the United States as the world's biggest economy, thus staking a claim to our political muscle at the World Trade Organization, the International Monetary Fund, the World Bank and a host of other international groups. It's the bevy of fast-growing countries who are all hot on our tails: India, Brazil, South Korea and many smaller contenders who together form a formidable pack.

Our ignorance is starting to cost us money. We're being blindsided by global economic trends that we ought to see coming. I'm not saying that a single person could stop layoffs due to outsourcing, the rising price of gasoline or the falling value of the dollar. But a well-informed person could begin to plan for these things. Moreover, a well-informed person could seize some of the opportunities that global economic trends create: chances to serve new markets, buy into new investments, learn new skills and enjoy new products. We Americans are notorious for being blinkered in our portfolios, keeping most of our money here at home while higher returns and more diversification are available abroad - are we missing out on other advantages of globalization, too?

It wouldn't surprise me if we were. In researching my new book, I traveled to a dozen cities all around the world. Everywhere, I found people who were in tune with economic issues outside their home countries - from a construction worker in far-flung Timor-Leste, to a dishwasher at a restaurant in Johannesburg, to an architect taking a stroll in Brussels. But when I asked a room full of people in San Jose yesterday whether they could tell me the results of France's first round of presidential elections - elections that will determine the economic future of a major trading partner, and perhaps the direction of economic policy in the entire European Union - only a couple of hands went up.

There's little point in blaming the media for the lack of international content on television and in print. They want to sell ads, so they show us what they think we want to see. But the blissfulness of our ignorance will soon come to an end, if it hasn't already. Globalization, good or bad, is here to stay. In fact, according to several economic metrics, it's actually speeding up. Yet our politicians, employers and unions won't necessarily protect us from its slings and arrows. They won't necessarily be trying to balance out the winners and losers in the rough transition process from a less-globalized to a more-globalized world. To a great degree, we have to rely on ourselves. Seeking out better information can be the first step.

Daniel Altman's new book, Connected: 24 Hours in the Global Economy, is being published today by Farrar, Straus and Giroux. He also writes a blog called Managing Globalization for the International Herald Tribune.

Connected: 24 Hours in the Global Economy

Managing Globalization blog