The Reality of Globalization

I notice that we are still blaming globalization for our economic ills.  If our job has migrated from Detroit or Manchester to Dhaka or Mumbai, we blame it on globalization.  If our former employer’s entire company now located in Shenzhen China, we blame that on Globalization.  If our wages have not risen for the past 20 years, we blame that too on globalization.

The problem is that we assume that globalization is based on government policy, or worse a conspiracy created by a cabal of multi-national corporations bent on world domination.

The reality is far different: not better, not nicer just different. Globalization is something natural.  It has much in common with the Atlantic Ocean.  The destruction wrought by hurricane Sandy or the flooding of low-lying areas in both the U.S. and Western Europe would never have occurred but for the existence of the Atlantic Ocean.  If we could somehow declare the Atlantic Ocean an illegal entity — and actually put a stop to it — Hurricanes and lowland flooding would be a thing of the past.

Our leaders ­do not take this course because they know that we cannot contain the ocean.  However, many of those same leaders believe they can stop globalization through legislation.

The history of the global garment industry should have taught us otherwise.  The U.S. (as well as the other industrialized countries), made every effort stop the transfer of local garment-making jobs to the developing countries in Asia.  They imposed the highest tariffs and the strongest non-tariff barriers in an effort to at least slowdown the rise of Asian garment imports.  Nothing worked.  In fact these protectionist moves were major factors leading to increased imports of “cheap” garments from Asia and the eventual collapse of the U.S. local garment industry.  High tariffs forced Asian factories to both increase productivity and move to higher-value-added products.  Quotas forced them to build factories in countries that previously had no garment exporting capacity at all.  As a result, what began as a cheap product industry concentrated in three Asian countries evolved into an all-garment industry, competent to export every type of garment, at every price level, from every country in the world.

Globalization has caused change, and that change has disrupted the lives of many people everywhere.  What began as a process to move unskilled and semi-skilled jobs to low labor-cost countries has moved up the economic ladder to the point where almost every job is at risk.  Where once only sewing and other factory jobs moved off shore,,  today increasingly garment sourcing is carried out in Asia by highly qualified Asian professionals.  We are now moving  product development off shore to those same Asian countries.  Eventually only sales, marketing and the designer’s first sketch will remain in our home importing countries.

In the final analysis, the only safe jobs — those that cannot be moved — are either at the very bottom, such as floor sweepers, bus drivers, and  hamburger flippers; and those at the very top where those truly creative people ­operate.

The other side offers a more positive result.  The first stage of globalization produced jobs at close to subsistence wages with sewers working long hours in sweatshop conditions.  That is now changing.  Wages in most garment exporting countries are currently rising by over 20% per year.  A sewer in in Vietnam is now paid $250-$300.  Wages in Cambodia and Indonesia are currently above the $200 mark and in Indonesia and Bangladesh.  A sewer in china — the world’s largest garment exporter is now paid between 2500-4000 RMB ($500-$800) per month. And, in every one of these countries factories are finding it increasingly difficult to find workers.

That same globalization which has kept wages down in the U.S. and Europe, is forcing wages up in what we once euphemistically termed  the third-world.  Globalization is ineluctably leading to a global paradigm where the same job receives the same pay, everywhere in the world.

As with every other natural process, globalization is not fair.  High wage earners in the industrialized West see their wages fall and their jobs disappear, while the in the developing East, workers see their wages rise and new jobs appear. As with the Atlantic Ocean The globalization process is beyond control.

In one respect, we can take comfort.

To be born in the United States or Western Europe provides a great advantage:  the opportunity to succeed.  This is where, those who come from modest backgrounds can obtain a first class education; where those with new ideas and viable plans can obtain the support necessary to bring these ideas and plans to fruition.

Finally, the U.S. constitution guarantees its citizens life, liberty, and the pursuit of happiness.  That constitution does not guarantee a job.  That right was guaranteed by Joseph Stalin’s 1937 Soviet constitution:  a state where you were guaranteed  job but not not life, liberty or the pursuit of happiness.

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