The pros and cons of globalization (2023)

According to a Washington Post article: “Twenty years ago, globalization was launched as a strategy that would raise all boats, in rich and poor countries alike. In the United States and Europe, consumers could choose cheap items made by people thousands of miles away at wages much lower than their own. And over time, trade barriers would fall to further support multinational expansion and economic gain, while geopolitical cooperation would thrive."

Undoubtedly, globalization has been a good thing for many developing countries who can now access our markets and export products at low prices. Globalization has also been good for multinationals and Wall Street. But globalization has not been good for workers (whether blue-collar or white-collar) and has led to America's continued deindustrialization.

Globalization is a complicated subject. It is necessary to weigh the pros and cons before drawing conclusions.

Advantages

Proponents of globalization argue that it has the potential to make this world a better place to live and solve some of its deepest problems, such as unemployment and poverty.

1. Free trade must break down barriers such as customs duties, VAT, subsidies and other barriers between states. That is not true. There are still many obstacles to free trade. The Washington Post states: “The problem is that the major G20 countries have introduced more than 1,200 restrictive export and import measures since 2008.

2. Proponents say that globalization represents free trade, which drives world economic growth; it creates jobs, makes businesses more competitive, and lowers prices for consumers.

3. Competition between countries is supposed to reduce prices. In many cases, this doesn't work because countries manipulate their currency to gain a price advantage.

4. It also offers poor countries the opportunity to develop economically through the injection of foreign capital and technology and, by spreading prosperity, creates the conditions in which democracy and respect for human rights can flourish. This is an essential objective that has not been achieved in most countries.

5. According to proponents, globalization and democracy must go hand in hand. It has to be pure business, without colonialist intentions.

6. Today there is a global market of companies and consumers who have access to products from different countries. TRUE

7. A world power is gradually emerging instead of isolated sectors of power. Policies are merging and the decisions being made are of great benefit to people all over the world. This is simply a romanticized view of what is really going on. TRUE

8. There is a great flow of information between two countries that have nothing in common. TRUE

9. There is a cultural coincidence and each country learns more about other cultures. TRUE

10. Because we share financial interests, corporations and governments try to solve ecological problems with each other. – True, they talk more than they try.

11. Socially we have become more open and tolerant and people who live in another part of the world are not considered aliens. True in many cases.

12. Most people see fast travel, mass communication, and the rapid spread of information via the Internet as benefits of globalization. TRUE

13. Workers can move from one country to another to exchange skills. True, but this can create problems with existing work and downward pressure on wages.

14. Sharing technology with developing countries will help them progress. That's true for small countries, but the theft of our technology and intellectual property has become a huge problem for our larger competitors like China.

15. Transnational corporations that invest in installing equipment in other countries create jobs for people in those countries and often lift them out of poverty. TRUE

16. Globalization has given countries the ability to accept free trade agreements such as NAFTA, the South Korean Korus, and the TPP. True, but these deals cost the US many jobs and always increase our trade deficit.

Unlike

• The common complaint about globalization is that it has made the rich richer and the non-rich poorer. "It's wonderful for the managers, owners and investors, but hell for the workers and nature."

• Globalization should be about free trade with all barriers removed, but there are still many barriers. For example, 161 countries have Value Added Tax (VAT) on imports, reaching 21.6% in Europe. The United States has no sales tax.

• The biggest problem for developed countries is that jobs are lost and moved to countries with lower costs”. According to a conservative estimate by Robert Scott of the Economic Policy Institute, granting most-favored-nation status eliminated 3.2 million jobs, including 2.4 million manufacturing jobs. She estimates net losses from our trade deficit with Japan ($78.3 billion in 2013) at 896,000 jobs, plus an additional 682,900 jobs between Mexico and the US. Trade deficit increase from 1994 to 2010.”

• Workers in developed countries like the US face demands for wage cuts from employers who threaten to export jobs. This has created a culture of fear among many middle-class workers who have little say in this global game.

• Large multinational companies have the ability to take advantage of tax havens in other countries to avoid paying taxes.

• Multinational corporations are accused of social injustice, unfair working conditions (including forced wages, living and working conditions), as well as disrespect for the environment, mismanagement of natural resources, and environmental damage.

• Multinational companies, previously limited to commercial activities, are increasingly influencing political decisions. Many believe that corporations will rule the world because they gain power through globalization.

• Manufacturing products abroad in countries like China puts our technologies at risk of being copied or stolen, which is happening fast.

• Anti-globalists also claim that globalization is not working for most of the world. “During the recent period of rapid growth in global trade and investment from 1960 to 1998, inequality has widened both internationally and within countries. The United Nations Development Program reports that the richest 20% of the world's population use 86% of the world's resources, while the poorest 80% use only 14%. "

• Some experts believe that globalization is also causing the emergence of communicable diseases. Travelers bring deadly diseases like HIV/AIDS to the remotest corners of the world.

• Globalization has led to labor exploitation. Prisoners and child laborers are used to working in subhuman conditions. Safety regulations are ignored to make cheap products. Human trafficking is also increasing.

• Social welfare systems or “safety nets” are under severe pressure in developed countries due to deficits, job losses and other economic effects of globalisation.

Globalization is an economic tsunami that sweeps the planet. We can't stop it, but there are many things we can do to slow it down and make it fairer.

What is missing?

Leadership: We need politicians willing to stand up to scammers. One of our biggest problems is that 7 of our trading partners manipulate their currencies to gain unfair price advantages, increasing their exports and decreasing their imports. This is illegal under WTO rules, so there is a strong legal basis to tax their exports with some sort of tax until they stop cheating.

Balanced Trade – Most of our trading partners are able to balance their trade budgets and even run a surplus. We have made no effort to balance our corporate budget and have been running a deficit for over 30 years, resulting in a deficit of $11 trillion. The trade deficit is the leading cause of job death in our economy, especially in manufacturing. We need the government to come up with a plan to start closing our trade deficit, although this is not a political priority for either party.

Trade Deals: Both NAFTA and South Korea's Korus trade deals may have been good for Wall Street and multinationals, but they have destroyed American jobs and widened our trade deficit. The next trans-Pacific trade deal will do the same, and Congress shouldn't rush this bad deal for a dozen reasons.

Playing by the rules: China ignores trade rules and WTO laws with ruthless abandon. In addition to currency manipulation, they subsidize their state-owned companies to target our markets and they fund their state-owned companies that sell their products to the United States. They also steal our technology, sell counterfeit versions of our products, and impose tariffs and other barriers all the time, because we do nothing to stop them. China does not deserve to be on our list of favorite nations and we must tax their exports until they stop these illegal activities.

What is good for third world countries like Kenya or countries with enormous growth like China has not been good for American workers. Globalization is deindustrializing America as we continue to outsource both blue-collar and white-collar jobs. Defenders of globalization have argued that it is good because it has brought cheap imports, but it has not kept pace with falling middle-class wages and will not make up for the loss of many family jobs.

Globalization is like being crushed by a snow avalanche. You can't stop, all you can do is swim in the snow and hope to stay on top. I would say that the United States should try much harder to swim through the snow and stay on top. We can't stop globalization, but there are many policies and strategies we can use to make it fairer. We can enforce trade laws, force the competition to follow the same rules, and stop giving our competitors the tools (technology and R&D) to win the world war.

Mike Collins is the author of Saving American Manufacturing. His website is www.mpcmgt.com.