Why the Critics of Globalization Are Mistaken

Why the Critics of Globalization Are Mistaken

In the US I continually hear about how globalization is a false promise that has not and will not ever benefit the common working man in this country. And I struggle with this because I hear it continually while the arguments against that logic are in front of every single one of us every single day.

The major thing that I hear about globalization from Americans is how they have become poorer as a result of globalization. Certain jobs have left the US and headed elsewhere but in exchange for those jobs we have been able to keep the prices of our goods cheaper than they have ever been in this world. That little combination there makes it so we don't have to make as much money from a cash perspective to live the same lifestyle.

Now that simplistic argument above isn't much solace for the real people who have lost jobs in the auto industry, in the foundry industry, and so many others - and some of those people I know and it hurts to watch - but, and this is of such importance, over the long term we all win. Over the long term the system builds upon itself. There are pains at various points, like today with the US exporting our flawed economic policies, but imagine if something like this had happened 50 or 75 years ago. Bedlam, riots, and calls of the apocalypse. We are a stronger planet, we are more intertwined and we are managing a very significant loss of capital.

Globalization is good. To say it is bad is as foolish as an individual in the US saying that Florida should stop peach trade with Georgia because it takes away from the orange grower's ability to make money and keep jobs. Why haven't the orange growers begun to export to Georgia? Why hasn't the US gotten smarter and caught up with the world yet in manufacturing? Because it is a long process. The world is large and the shifts in the dynamics take time.

Be patient. We all will benefit.

Global Gain

A very well written article...

"But the very idea that we need to fear the global rise of living standards is flawed, because it assumes that everything else stays the same. It insists we are playing some sort of zero-sum game, and that for the developing world to rise, those in the West must fall."

A rising tide lifts all boats in a truly long term Capitalist world. People have been attacking Capitalism recently, but in reality, they should be attacking individuals.

Don't let simple minded people push you away from truth.

Globalization: The Ever Evolving Beast Begins Moving Manufacturing Home

The Cost of Shipping Goods is Rising

"The cost of shipping a standard, 40-foot container from Asia to the East Coast has already tripled since 2000 and will double again as oil prices head toward $200 a barrel, says Jeff Rubin, chief economist at CIBC World Markets in Toronto."

A company moved its manufacturing center to Kentucky from China after seeing the cost of shipping increase and keep increasing. This bodes well for globalization, and in the long term for you and I. Why?

To truly have fair & equal trade between countries you need to have fair & equal rules. The key point in this are taxes and government regulations in the various regions of the world. Most countries don't have the same environmental regulation (make note that for all of the past we have ravaged our country and only now are we pushing hard environmentally) or the same legal framework that increases costs of American firms.

When the costs associated with damaging the environment (more expensive food due to lost land and damaged water supplies, destruction of pristine lands that lessen revenue from tourism, unsustainable mining practices that increase the long term costs of retrieval of goods) are added back into the equation, when the costs of the ailing population (lower individual productivity due to more missed work days because of sickness, lower general production because of mental well being associated with the stresses of lack of nature and open spaces) are added back into the equation the costs begin to rise for these producers. It took America a long time to recognize, or stop ignoring these things and we are now paying our own price for our unsustainable long term development.

Now a days some of the more common economic issues are showing up - the American currency has fallen about 15% against the Chinese Yuan since 2006. That means that Chinese goods have increased in cost by 22% since 2006. Chinese inflation is roaring ahead well into the double digits due to wage increases, competition from firms eating valuable resources and - very importantly - the Chinese government is removing some of the subsidies it places on fuel.

With the cost of fuel increasing 40% alone in 2008 the containers that ship goods across the country are turning out to be much dearer in price to producers of goods. The above article mentions per container prices increasing 15% already in 2008 and another 5% hike is expected shortly. This will wear away at the financial benefit of shipping goods long distance.

This is the beauty of global trade. The imbalances that exist in the world - lower labor costs, incorrectly valued currency, undervalued fuel and unaccounted for costs - are slowly evened out. It will take a long time because it took 75 years for the United States to become dominant and over valued, but as long as we are patient we will all benefit.