Economic Globalization

As globalization becomes less about the future of business and more about current happenings; America as a whole has some introspective soul searching to do. America has enjoyed so much prosperity that, in general, we assume it is destined to continue without too much effort. Now that we are seeing and feeling the effects of a recession things must change. As stated in this article, America has to start acting. With this being an election year politicians need to take an economic refresher course. We all can agree that when we import illegal immigrants to take US jobs unemployment rises and wages become depressed. The concept we are not grasping as a nation is that importing Chinese garbage, otherwise known as goods, does the same thing. It’s time for politicians and citizens alike to make a global stand for our economy and put principles of sound business into practice.


Anonymous said...

The problem is with how globalization was handled. It should have been handled in stages. Where you have a series of dams along the path based on the level. So with europe we can have free trade because wages are on par and the difference is less. Small business can compete locally without being undermined by wage arbitrage.

Another solution is some form of one world currency that is based on value. The old fashioned types like to talk about gold, but anything that can be stored, even oil can act as a such. The point being that a financial collapse with a store of value isn't really possible. It's only really possible when fractional reserves are used and you loan out that value where it can be wasted.

That has a consequence as well but people who choose to store their value should have that ability. Those that want to loan their value should be seperate and take their own risks without the rest of us.

I don't care if corporations go over to other countries and start industry. I do care if they use wage arbitrage though.

You can't increase the amount of labor without decreasing the wages. Americans have not had prosperity for the last 20 years, they used credit lines. Any American who attempted to live within their means saw a decline in their living standard. The saves were punished by inflation from their neighbors being able to tap the credit spigot. And that credit spigot was a Tsunami.

Now we have a situation where all the store of value of the dollar is basically held by countries like China, Japan and others. If they dump our treasuries our nation would become basically a third world country over night. We really can't tariff them at this point, it would cut our throat.

Basically it's to late. If we attempt to protect our labor now it's akin to closing the barn door. The best thing we can do is attempt to get our monetary policy under control. Until wages balance globally, and I don't see how they can with manipulated paper currency, there is going to be labor arbitrage.

This is only going to hurt average Americans in the long run. I don't see how this can benefit us any longer. The wages must balance which means Americans must take a paycut to whatever the global average wage is. Or very near it until balance occurs. The market will force this to happen through inflation, financial collapse and other catastorphy. It won't tolerate the imbalance. Any place that has weakness in the dam will have a leak. If that leak explodes, as we see in the financial market it could be devastating.

After all we created one big market with free trade. If your neighbor in that market is earning 10 dollars a day either he is going to have to come up to your level or you are going to be out of job or take a pay cut. The tariffs were used to protect the markets and keep capital investment at home. But that is over now and to late.

American's, especially the 30 year olds and their children can only pray they won't be living in a 3rd world nation. They have to pray that India and China catch up quick because we are one economy now. And there is nothing we can do about it that won't make things worse.

The main thing we can do is find a way to get our currency cleaned up. Use precious metal or anything that can store value. That's likely also why there is a commodities boom at this time. Everyone is attempting to store the value of their earnings as the dollar collapses.

Dr. Tufte said...

This sounds like demogoguery, not economics.

We can stop all the goods coming in any time we want by dropping big sharp boulders in our harbors, digging up the roads that cross our borders, and dynamiting all the runways.

We can stop the people coming across the border from the south by poisoning all the water sources, and releasing feral dogs, and translocating our grizzly bears to the border regions.

We don't do any of this because it is stupid. This suggests that worries about globalization are very overblown. Get some perspective folks: you're a lot richer than just about anyone in history. Life is good. It isn't about work or labor, it is about goods and services and leisure. And you have a lot of all of them.