As the U.S. economy struggles to recover from the worst recession in 70 years, we face a new, much more challenging world. Economic globalization means that more countries are exporting their goods, generating first-rate research, and attracting investments: besides China, we compete with Brazil, India, South Korea, and Turkey. Although terrorism, elections, and natural disasters dominate headlines, globalization has been the most powerful trend over the last thirty years. Despite the recession, it shows no sign of abating. Dealing with globalization may tempt us to see other countries as simply our competitors -- or worse, as our enemies. If we are to deal with globalization more wisely, the lessons of history are crucial to understand.
Globalization is not completely new. A century ago, the world economy went through a similar dramatic expansion. "For economic purposes all mankind is fast becoming one people," wrote James Bryce in 1903. For the first time, a world wide web of telegraph lines, centered on London, sent news and prices around the globe. The United States became an industrialized country because of millions of immigrants and a mountain of European investment. Tragically, the first era of globalization ended badly -- in two world wars, Communism, fascism, the Great Depression, and the Cold War.
Why? Those who suffered from rapid economic change were often recruits for violent solutions; war could undo decades of economic progress. In short, those who gained from economic globalization became complacent about the need to maintain it and cavalier about the costs it generated. Old industries declining, migration, social problems in rapidly expanding cities -- all of these occur almost inevitably with economic growth. If social policies do not cushion the costs and help people adjust to the changes set off by economic growth, the entire system supporting economic growth can be undermined. At the same time, international peace and cooperation have been crucial to economic globalization. Prosperity in the long run depends on peace. The first era of globalization occurred in the late nineteenth century because Europe experienced the longest period of peace in its history. Only one, brief war -- the Crimean War -- occurred among more than two of the Great Powers. World War One broke out in part because leaders in Germany thought they could use violence to strengthen their country's position in the world economy. Instead, they nearly destroyed the entire world economy, and brought on more war. By the time Europe stabilized again, after a second, more awful war, the world economy was no bigger than it had been 35 years earlier, with a much larger population to feed.
History also teaches us that we can do better. Nothing illustrates that nations can learn from the past as much as the difference between what the United States did in 1919, at the end of the First World War, and what we did in 1945-48, after the Second. In 1919, we turned our back on Europe and its problems. The world economy limped along and eventually collapsed into the Depression, while the unsolved problems of the War led to dictatorships and more war. After 1945, we did better. The United States created a range of international institutions in the late 1940s -- the UN, IMF, World Bank, NATO, the alliance with Japan, and the GATT, the forerunner of today's World Trade Organization. We also helped Europe set up what eventually became the European Union. With all their imperfections, these institutions and the cooperative agreements they support still provide a framework for worldwide economic growth. Because of them, we can travel, send money, buy and sell goods, and communicate among the nations of the world in a way that would have been unimaginable just a few decades ago.
In tough times, it may be tempting to turn our backs on the rest of the world or to think that economic growth, once begun, runs on its own. But we depend on our global economic ties for future growth. By investing in our greatest resource -- people -- and improving our transportation and communications infrastructure, we can compete much more effectively than by tariffs or trade disputes. The history of the last century teaches us that dealing with the inevitable costs of globalization and working to maintain a peaceful world order are essential to all of us. Our generation has an opportunity to make great gains from a return to worldwide economic growth -- but we must distribute the gains more fairly and work to build a cooperative international order. Our competitors are also our customers and our potential partners in a better world.
Carl Strikwerda is president of Elizabethtown College at work on a book: The World at the Crossroads: The Great War and the 21st Century.
And globalization necessitates global institution building and global community.
But "someone" is using all the institutions to steal from others whose SOVERIGN people own their territory and culture.
People who continue to be hurt are going to look to Sherrod Brown-type politicians. This will likely stall but not stop trade agreements.
If the long run the people being hurt are just going to get hurt, and those wringing their hands will continue to enjoy prosperity. The most interesting question is what will happen politically, especially as the injured head toward retirement with a major drop in their standard of living. Seniors tend to vote in high percentages.
1) pick any 100 years you wish
2) research it - any way you wish (newspapers, magazine articles, academic studies, advertising, radio, tv,, etc.)
3) upon due diligence, identify the top three issues of that time frame.
Students were always SHOCKED to learn how little we've learn in 100's of years.
If history is our teacher - I wonder - what kinds of students are we?
http://souldancer.org/souldancing/archives/377
In gratitude I bow to every person who actively learns from every lesson they experience . . .
Is this a call to take money/property/assets from those with more and give it to those with less? Is this a call for owners to pass on more to their employees in wages and benefits while at the same time competing against lower priced labor and other resources in the global economy? I am not quite sure what this means although there is much of interest in this article.
It's also a question of security. The downside to globalization is that an uncontrolled event on the other side of the globe can bring your own domestic economy crashing to the floor. And that event is just lurking around the corner.
While they call the populace lazy their only interest is in creating systems to nickel and dime.
Our commodities and health care are the most expensive in the world. All so the elite can tell us sacrifices have to be made as they profit selling to the highest.bidder.
It is not the commodity and service that is expensive but the number of elite waiting to skim off of the top.
Thanks for a well-written piece. It is worth considering exactly HOW we might distribute gains and build a cooperative international order. One of the reasons we are having trouble with both those ideals is that we have a global monetary system that is unsound and unstable. Succeeding in distributing gains more fairly and building cooperation within this flawed system is all but impossible.
In the late nineteenth century Europe experienced free trade and peace partly because of stable, sound money. Britain went broke with WWI, effectively ending the true international gold standard, and we supported the pound with expansionary credit policies in the 20s. Boom, then bust, then chaos. The seeming stability of the post-war Bretton Woods system was also doomed to eventually fail due to the conflicting demands of having the dollar as global reserve currency.
http://en.wikipedia.org/wiki/Triffin_dilemma
The current era of globalization represents not the truly free trade of goods and services, but a chaotic, complex, mercantilist currency war fed by our unique ability to fund consumption by printing the global reserve currency - rather than by producing like amounts of real goods and services. This has led us down a dangerous path of excess consumption, mostly in the form of government spending. Things will have to change, either the hard way or the REALLY hard way.
http://www.cobdencentre.org/author/lehrman/
http://www.morganstanley.com/views/gef/archive/2006/20060303-Fri.html
Globalization's New Underclass
"Stephen Roach (New York)
Billed as the great equalizer between the rich and the poor, globalizatÂion has been anything but. An increasingÂly integrated global economy is facing the strains of widening income disparitieÂs -- within countries and across countries. This has given rise to a new and rapidly expanding underclass that is redefining the political landscape. The growing risks of protectionÂism are an outgrowth of this ominous trend.
It wasn’t supposed to be this way. GlobalizatÂion has long been portrayed as the rising tide that lifts all boats. The surprise is in the tide -- a rapid surge of IT-enabled connectiviÂty that has pushed the global labor arbitrage quickly up the value chain. Only the elite at the upper end of the occupationÂal hierarchy have been spared the pressures of an increasingÂly brutal wage compressioÂn. The rich are, indeed, getting richer but the rest of the workforce is not. This spells mounting disparitieÂs in the income distributiÂon -- for developed and developing countries, alike.
The United States and China exemplify the full range of pressures bearing down on the income distributiÂon. With per capita income of $38,000 and $1,700, respectiveÂly, the US and China are at opposite ends of the global income spectrum. Yet both countries have extreme disparitieÂs in the internal mix of their respective income distributiÂons...."
===
But we don't compete with them. Apple buys its iPads from Foxconn. Where's the competition? That's not competition. That's a buyer-supplier relationship. Our monied elites, who used to pay us to make the stuff they then sold to us, decided to hire someone else to make the stuff they sell us. Again, that's not competition; that's labor arbitrage.
Meanwhile, since we lost our jobs, we're running out of money with which to buy the stuff our monied elites want to sell us. In a nutshell, that's basically why the economy is in the dumps.
For the most part, incomes were raised because governments and organized labor forced Capitalists to raise them. Without those efforts labor would still be paid, as was correctly assumed by classical economists in their day, a 'subsistence' wage.
We need to reset our definition of Capitalism by including the metric of social welfare. Negative consequences of production must be factored into the costs of production rather than ignored as though the costs don't exist.
We can no longer live in the fantasy world where such costs are ignored.
Sorry, incorrectly assumed.
Who forced Henry Ford to raise wages?
http://en.wikipedia.org/wiki/Efficiency_wage
He is right, we have learned from our experiences, but not in the form of peace and compassion; we have gotten better at getting what we want without using the military, and covering it up under the guise of Democracy.
For the wealthy countries of the world, like those found in North America and Western Europe, globalism has been an unqualified disaster. Since 2001, the year China was granted full WTO status (similar to a Free Trade Agreement), the U.S. has lost 50,000 manufacturing jobs per month (1).
The reality is that it is impossible to compete with countries that treat their citizens like machines. We were promised that if we welcomed China into the world economy they would reform their society. Instead, they string nets between buildings to catch the "jumpers" (2).
However, globalism is an excellent system for those on top of the food chain. The number of mega-yachts has increased by more than 400% in the last fifteen years. (3) We should not expect the easy cooperation of the Aristocrat.
References:
1. http://theeconomiccollapseblog.com/archives/how-can-america-create-wealth-if-our-industrial-base-is-destroyed-50000-manufacturing-jobs-have-been-lost-every-month-since-2001
2. http://www.bloomberg.com/slideshow/2012-03-30/inside-apple-s-foxconn-factory.html#slide9
3. http://www.msnbc.msn.com/id/25804188/ns/travel-luxury_travel/t/where-big-boys-go-berth/
This is not really true.
"China has a middle class that is already 300 million strong and will reach 800 million by 2025... the size of the global middle-class could increase from 1.8 billion to 3.2 billion by 2020 and to 4.9 billion by 2030. Asia will account for nearly 85 percent of this growth, with China and India experiencing the most significant increase."
check out this chart!
http://thechinaobserver.com/2012/05/10/forecasting-growth-of-chinas-middle-class-consumers/
I responded no. Why?
I asked the live audience members to applaud if they've ever paid for any kind of educational experience for anyone. (Received a polite round of applause.)
I then I asked that those that applauded, by the sound of their applause - to demonstrate how proud they are of their role in paying for that educational experience. (The sound raised the roof!)
I turned to the interviewer and shared that I have a goal to feel that proud a million times over! Meaning, until I've personally paid for 1,000,000 people to receive all the educational experiences they need to do what they LOVE to do (to include training programs, certification programs, colleges, universities, guru's of any kind), I'm can't call myself a millionaire.
I further shared that until I can call myself a millionaire, I'll consider myself a greedy soul should I have more than I need to live on stashed away in some bank account . . .
The audience gave me a standing ovation!
This is the path I walk . . . a most rewarding one!!
"Economic growth" is defined as "worldwide" and "growing," but without ever describing what it is. It does not matter if a nation is importing all kinds of "economic growth" if as a result its own citizens are not working. It does not matter how well a farmer thinks that he is eating, if he's eating from a restaurant and not from his own fields.
The European Union is in some ways a microcosm of this "globalization" idea, being played-out completely in the very small territorial real-estate of Europe, and it is failing. Yes, goods are being traded back and forth, pouring out from the poorest producers to what are now the richest consumers, but there is no reciprocal exchange, and there is no national protection because there is under this system no national identity. Under "globalization," nations don't matter; only goods and prices, what you call "growth." If the EU were a well-constructed experiment, it would be prospering now as its inventors envisioned that it would do. It's instructive now to see why it is failing in Europe ... because the very same ideas are simultaneously failing, worldwide.