Globalization Is Our Friend. Let's Treat It Like One.
By Pejman Yousefzadeh Posted in 2008 | Free Trade | Globalization | Protectionism — Comments (3) / Email this page » / Leave a comment »
Tyler Cowen has a great editorial highlighting the fact that despite all of the protectionist and antediluvian commentary to the contrary, globalization continues to reap wondrous and highly desirable benefits for the international community:
THE last 20 years have brought the world more trade, more globalization and more economic growth than in any previous such period in history. Few commentators had believed that such a rise in trade and living standards was possible so quickly.
More than 400 million Chinese climbed out of poverty between 1990 and 2004, according to the World Bank. India has become a rapidly growing economy, the middle class in Brazil and Mexico is flourishing, and recent successes of Ghana and Tanzania show that parts of Africa may be turning the corner as well.
Despite these enormous advances, however, there is a backlash against globalization and a widespread belief that it requires moderation. Ordinary people often question the benefits of international trade, and now many intellectuals are turning more skeptical, too. Yet the facts on the ground show that the current climate of economic doom and gloom simply isn't warranted. The classic economic recipes of trade, investment and good incentives have never been more successful in generating huge gains in human welfare.
The globalization process has had its bumps, of course, as reflected recently by rising commodity prices, but that is largely a consequence of how much and how rapidly prosperity has grown. Countries like China have become richer so fast that global production of energy and food have been unable to match the pace. But rapid economic growth is the right direction, even if some of the remaining poor are suffering from high food prices.
[. . .]
Trade advocates focus on the benefits of goods arriving from abroad, like luxury shoes from Italy or computer chips from Taiwan. But new ideas are the real prize. By 2010, China will have more Ph.D. scientists and engineers than the United States. These professionals are not fundamentally a threat. To the contrary, they are creators, whose ideas are likely to improve the lives of ordinary Americans, not just the business elites. The more access the Chinese have to American and other markets, the more they can afford higher education and the greater their incentive to innovate.
Conservative and liberal economists agree that new ideas are the fundamental source of higher living standards. We urgently need new biotechnologies, a cure for AIDS and a cleaner energy infrastructure, to name just a few. Trade is part of the path toward achieving those ends. A wealthier China and India also mean higher potential rewards for Americans and others who invest in innovation. A product or idea that might have been marketed just to the United States and to Europe 20 years ago could be sold to billions more in the future.
Those benefits will take time to arrive, but trade with China has already eased hardships for poorer Americans. A new research paper by Christian Broda and John Romalis, both professors at the Graduate School of Business at the University of Chicago, has shown that cheap imports from China have benefited the American poor disproportionately. In fact, for the poor, discounting in stores such as Wal-Mart has offset much of the rise in measured income inequality from 1994 to 2005.
Read on . . .
Read the whole thing. And note as well the following statement Professor Cowen so rightly makes: "If we are too apologetic about globalization, we can feed core irrationalities, instead of taming them." Quite so.
Naturally, I was directed to the Cowen editorial from a Cowen blog post. The post rightly notes that the creation of stronger social safety nets have historically done nothing to alleviate irrational concerns about globalization, so the next time someone comes along and tells you that if only we expand government's reach yet again, we can have all of the globalization that our hearts desire, be sure to check your wallet. Additionally, note the referral to this paper, which shows--yet again, one might add--that oursourcing has done nothing to drive down wages.
Finally, let's recall again that there has been one major Presidential candidate who has consistently been right on the issues of trade and globalization. That would be John McCain. There has also been one major Presidential candidate who has consistently been wrong on the issues of trade and globalization. That would be Barack Obama.
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Globalization Is Our Friend. Let's Treat It Like One. 3 Comments (0 topical, 3 editorial, 0 hidden) Post a comment »
Do you wonder why Gas prices have risen 400% since Bush took the oath of office?
Do you wonder why are national security is being threaten and we can no longer make the equipment we need to run our own military? "Keeping US Defense Technology Secure in the Global Arena" http://www.humanevents.com/article.php?id=26837
Do you wonder why the nation's industrial base is shriveling up and we import more and more every year?
Do you wonder why more and more of USA corporations are now foreign owned.
Becuase, we transferred a large portion of the USA's wealth to other countries and this Post above explains it perfectly -
"More than 400 million Chinese climbed out of poverty between 1990 and 2004, according to the World Bank. India has become a rapidly growing economy, the middle class in Brazil and Mexico is flourishing, and recent successes of Ghana and Tanzania show that parts of Africa may be turning the corner as well."
A greater range of consumer options is a source for prosperity.
The China/Walmart effect is disruptive in some sense (many manual labor jobs are lost), but it helps more people than it hurts.
The ability to buy inexpensive clothes, electronic products, automobiles, etc. is a source of prosperity for the country.
Other countries turning the corner is good thing. We can cut off the foreign aid spiggot.
We lost more jobs because of technology than because of trade.
China lost manufacturing jobs last year due to technology.
US companies own foreign companies, and foreign companies own US companies.
And, the price of gas is increasing because of supply and demand--China and India both places increases on the demand side and the failure of the US to increase its domestic supply.
With the exception of military related technologies, trade is a benefit and a challenge, but it is not a threat.
Do I really care if the degreaser used for my industrial process is manufactured in China?
Here's some aspects of globalization that worry me.
1. Sovereign Wealth Funds: How many American corporations and other parts of America should Middle East Muslim oil shieks be allowed to buy? Should Dubai have been allowed to operate U.S. seaports, given that they had always recognized the Taliban as the legitimate government of Afghanistan?
2. Media: A major reason for the rise of anti-American movies, TV shows, etc., is that these days, the bulk of Hollywood's revenue actually comes from overseas sales--and so Hollywood has to cater to overseas markets. A movie glorifying America will bomb everywhere else in the world, whereas Europe and the Third World will flock to watch movies bashing the U.S. or the West. Hollywood made lots of money in the Middle East with their pro-Muslim, anti-Christian epic "Kingdom of Heaven." Finally, al-Jazeera has been lobbying to become a standard offering on U.S. cable and satellite providers. What kind of sense does that make when we're fighting a War on Terror, and al-Jazeera too often sides with our adversaries?
3. National Security: We could never have won the Cold War, if we had been utterly dependent on the USSR for our raw materials. How do we expect to win the War on Terror when we're utterly dependent on the Islamic world for our oil? Or if al-Jazeera becomes as familiar and credible a news source to Americans as CNN?
4. Immigration: Part of globalization is a frictionless movement of labor to where it can be most profitably employed. And right now, that movement is from Latin America to the United States--12 million illegal immigrants + millions more legal ones--with all the resulting socio-cultural dislocations and potential for bilingualism that this produces. You can't shut off the law of supply and demand with a fence. As long as there is an economic demand, you'll be playing a futile game of Whack-A-Mole trying to close it down here and there by law enforcement means alone. The idiotic War on Drugs and the rise of black markets in every country where there are shortages, should have convinced us of that by now.
These issues should worry any conservative. The vision of the world that the globalists seem to have, is to turn the planet into one giant EBay--one giant flea market in which labor, capital and services are sold from anywhere to anywhere. Well, we conservatives NEVER liked the "one-world" concept when socialists were proposing it. And guess what, even if it turned out to be a "one-world" based on capitalism, we should still have problems with it. There's more to life than money and trade. There are issues of culture, sovereignty, national security, community. Globalization respects no political boundaries and can undercut those bonds holding a society together--unless it is managed.
This is another area where conservatives should part company from libertarians. We conservatives don't subordinate absolutely everything to the market. We are also nationalists and upholders of Western culture, in addition to being upholders of capitalism.