Globalization vs. Anti-globalization

As the world grows in population the distance between the nation states is shrinking.  The factors that have aided the diminished distance are: Reductions in Barriers to trade, taxes, tariffs, transportation costs and technological advancements.  All these factors have led to increased global trade; imports and exports are taking place at a historically high level, which has led to specialization in specific industries.  The once separate markets and economies of the world are rapidly becoming intertwined with one another.  Visually this can be thought of as wires twirling through the air centrifugally becoming intertwined.

As this weave grows, businesses are gaining access to efficient forms of production and labor unseen in their home countries.  This allows businesses to outsource jobs that can be done cheaper and more efficiently abroad, thus positively impacting domestic consumers by offering lower prices.  Additionally, as jobs are outsourced abroad, nations are buying and selling to one another and thus experiencing positive economic gains.

However, this also leads to the loss of domestic jobs, which contributes to higher unemployment and lower living standards.  Although proponents for globalization state this trend is merely generational.  Merely generational?  An entire generation of unskilled workers will lose jobs to foreign markets where wages can go for as little as 48 cents per hour, while skilled workers will see a rise in income and a demand for their services.   This is unacceptable in a world of nearly 7 billion people; where skilled workers are the outliers and unskilled workers are the majority.  One may argue that although problems exist with globalization, it is a utilitarian effort, benefitting all nations that participate.  The antithesis is, a generation of unskilled workers will be unemployable in their domestic nations and will either have to succumb to lower wages or migrate to foreign nations to find employment.

Why are unskilled wages declining and jobs moving offshore? While skilled jobs are increasingly being demanded at a premium?  According to Charles Hill, Professor of International Business at the University of Washington, “The apparent decline in real wage rates of unskilled workers owes far more to a technology-induced shift within advanced economies away from jobs where the only qualification was a willingness to turn up for work everyday and toward jobs that require significant education and skills”.  Additionally according to Hill “One estimate suggests that wages in China will approach Western levels in about 30 years.  To the extent that this is the case, any migration of unskilled jobs to low-wage countries is a temporary phenomenon representing a structural adjustment on the way to a more tightly integrated global economy” (Hill).

The solution to this problem is not restriction on free trade and globalization, but increased investment in education (Hill).  In doing so, nations will see a decline in unskilled workers, and an increase in highly skilled workers.

In economic terms, the production possibilities frontier shows that specialization in a specific industry benefits separate economies when they trade, even if one nation is more efficient at producing the imported goods than the other.  The argument is that when both nations specialize in specific industries both gain more resources collectively than possible as individuals.  This can be seen as Mulberry being able to produce pasta and make beds with its given resources better than Canal.  However, if Canal wants pasta and can also make beds then Mulberry and Canal can benefit from trade.  When Mulberry and Canal trade both countries are able to consume more as a result of specialization and trade.   Of course this is a simplistic view of a vastly complex issue, but it puts the thought in easily understandable terms.

According to Hill, “Free trade does not lead to more pollution and labor exploitation, it leads to less” – in the long term.   According to Hill,  “While pollution levels are rising in the world’s poorer countries, they have been falling in developed nations,” however, carbon dioxide is positively correlated to a nations wealth and is “an important exception” (Hill).  Global efforts by the UN to reduce carbon emissions has seen little light under the dark CO2 cloud created by many developed nations, especially the United States, who has refused to sign global agreements which it claims would hinder economic growth.

In regards to Globalization and National Sovereignty Hill states that:

“Today’s increasingly interdependent global economy shifts economic power away from national governments and toward supranational organizations such as the World Trade Organization, the European Union, and the United Nations.  As a result, critics claim, unelected bureaucrats now impose policies on the democratically elected governments of nation states, thereby undermining the sovereignty of those states and limiting the nation’s ability to control its own destiny” (Hill).

However, if countries are unsatisfied with bodies serving to protect their collective interests they may withdraw their support and the supranational organization will fall (Hill).   According to Bloomberg News Report, “The world is changing those institutions are not keeping up.  We in the states elected Barack Obama we called for change, well he represents change but the institutions around him have not changed they are not keeping up, they are falling back on the old ways and that’s how empires crack fall and get left behind that’s how new empires rise.”   Institutions like the IMF and the WTO are too static while the dynamically shifting global financial markets are moving too fast for them to handle.   Additionally according to Bloomberg, “ How can you have consultants from the IMF and World Bank fly into a country and advise on village economics when those consultants have actually never spent a night in the village?”

As cliché as this may sound, America is a melting pot of all the world’s people.  In an optimistic viewpoint our color is red, white and blue, our religion is any, our culture is all and the unanimous belief is that anything is possible here.   But is globalization possible? The unequivocal answer is yes.  Globalization is certainly a fantastic trend, provided that corporations adhere to regulations in regards to labor and environmental exploitation.  However, investments in education and green technology must be made first.  Additionally Multinational enterprises must be responsible by proactively creating and implementing ethical codes of conduct for their suppliers.  If this is possible Globalization is possible. 

What do you think? 

Here are some links to sites that discuss Globalization:

http://www.imf.org/external/np/exr/key/global.htm

http://www.globalpolicy.org/globalization.html

http://www.investopedia.com/articles/economics/10/globalization-developed-countries.asp

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About michaelpinto

I am forging my own path while in search of the way. I am obsessed with creating, imagining, and innovating. My goal in life is to create the impossible and make it simple. I am a lover of music, art, meeting new people, conversation, orating, ideas, technology, imagination, and philosophy. My truest passions include trying to explain what the brain thinks and sees, making strangers smile, cooking for friends, and reading classics (Siddhartha by Hesse is my Favorite). I run, ride a motorcycle, snowboard, and skydive. I am a Marketing and Entrepreneurship student at Rutgers Business School.

2 comments

  1. Globalisation is finished, the cracks are there if people notice. Everyone is turning towards local concerns, trading locally, setting up their own markets and currencies. The global economic system is now widely regarded as out of touch, unfair, undemocratic and discredited. As the economic woes spread all nations will turn inwards and protectionist in outlook.

  2. Alex Jones, thank you for taking the time to read my article and comment. I believe that economic troubles may lead nations to become more protectionist, however, in order to maintain our way of life, it seems unlikely that people will ever pay the astronomical fees associated with domestically produced products as compared to cheaply (cost) produced products that are imported.

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