
Is globalization to blame? - rwmj
http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2016/11/is-globalization-to-blame.html
======
YZF
This is just like the headlines in Bloomberg every day. Stock market went up
due to X and went down due to Y where X and Y are some random nonsense.

Trump was elected because some humans (something around 0.3% of the
population) happened to feel some different emotion on the day of elections
vs. what they felt the last elections. The shift has been small. There's no
one factor that explains it.

The world is changing. Like I heard some pundit say the cause for this change
was not globalization or trade agreements. The cause was the microchip. Anyone
who thinks automobiles will again be assembled by hand in some factory in the
rust belt just needs a reality check. Those jobs are gone. They're never
coming back. It's not due to globalization. It just happens that in very low
wage countries it might make more sense to do more things by hand vs.
automation but the Chinese assembly worker isn't stealing an American assembly
worker's job.

The US (and maybe other countries) needs to accept the world is changing and
to find ways to adapt to this change. Unfortunately it seems most people
aren't thinking along these lines and IMO that's partly due to a long history
of "each to his own". Erecting walls and barriers to try and keep the world
the way it was isn't going to work but also having a fraction of the
population that is making profit from the change while the rest is going down
won't work either. Looks like you guys have at least 2 years to think about it
now.

------
taurath
Globalization (and corporatization) creates money vacuums, and dead spots in
the places that they replace.

Walmart/Amazon/Etc vacuum money and resources from the local (or "local-ish")
community to their respective profit centers. It used to be small towns would
be relatively self sustaining and much of the money staying within local
boundaries, and while the cost of goods was higher at least buying them would
support local businesses.

When a factory leaves a town or a company goes under from overseas competition
it creates a big gaping hole in the local economy that frequently doesn't end
up being filled. There are no companies coming back, and no capital available
in the area anymore since all profits are sucked up.

Maybe all this is inevitable, but it doesn't quite seem so to me.

~~~
maxxxxx
The last 30 years have shown that growth through globalization mainly benefits
the top few percent and hurts the rest. For most people wages have stagnated
or gone down. You can get cheap T-shirts while housing prices explode. I bet
with more automation even in China a lot of the factory workers that escaped
poverty will get stuck at low wage jobs or get laid off soon and be poor
again.

I hope people everywhere will develop an understanding that growth that isn't
widely distributed is useless or even negative.

~~~
Retric
It's location specific. It hurts the lower and middle classes workers in
developed countries and helps almost everyone else.

Utra cheap Wal-Mart goods are great if you are retired and living on a small
retirement. Or worked in a non factory job in the first place.

A soul crushing factory job is still better than manual farm work in a
developing country. Those same factory workers add a lot more income for local
economies in developing nations.

It also tends to harm farmers in developing nations. But, that's largely from
first world farming subsidies.

PS: After China replaces those workers with robots they will be poor in a
developed nation which is generally a lot better than being poor in a poor
nation.

~~~
cousin_it
It hurts developing countries too, e.g. no incentive to give people a good
education for free if you'll just lose them to brain drain. Globalization
allows the best workers worldwide to spend their time solving the most
profitable problems, i.e. rich people problems.

~~~
Retric
That brain drain also tends to remit a lot of money back to the developing
country. Even without family in the area many people spend 10-20 years in the
west then go back with significant capital.

------
rdtsc
Interesting enough the left, for example Chomsky, has been talking and
opposing globalization / NAFTA for years.

[https://chomsky.info/secrets03/](https://chomsky.info/secrets03/)

(excerpt)

\---

The day after NAFTA passed, the New York Times had its first article on its
expected impact in the New York region. (Its conclusions apply to GATT too.)
It was a very upbeat article. They talked about how wonderful NAFTA was going
to be. They said that finance and services will be particularly big winners.
Banks, investment firms, PR firms, corporate law firms will do just great.
Some manufacturers will also benefit-for example, publishing and the chemical
industry, which is highly capital-intensive with not many workers to worry
about

Then they said, Well, there’ll be some losers too: women, Hispanics, other
minorities, and semi-skilled workers-in other words, about two-thirds of the
work force. But everyone else will do fine. Just as anyone who was paying
attention knew, the purpose of NAFTA was to create an even smaller sector of
highly privileged people-investors, professionals, managerial classes. (Bear
in mind that this is a rich country, so this privileged sector, although
smaller, still isn’t tiny.) It will work fine for them, and the general
population will suffer.

The prediction for Mexico is exactly the same. The leading financial journal
in Mexico, which is very pro-NAFTA, estimated that Mexico would lose about 25%
of its manufacturing capacity in the first few years and about 15% of its
manufacturing labor force. In addition, cheap US agricultural exports are
expected to drive several million people off the land. That’s going to mean a
substantial increase in the unemployed workforce in Mexico, which of course
will drive down wages.

\---

Note at the bottom the connection between immigration (another hot topic) and
NAFTA. I am not sure Trump ever mentioned that, probably not but Chomsky did.
I remember reading that from him the first time.

------
lossolo
It was beautiful vision for corporations, get cheap workforce overseas. Invest
billions into China and then wait for those billions to get back to USA. It
was true in the beginning because China imported a lot of tech and goods. They
didn't have their own tech. Everything would work great but Chinese were not
so stupid, they thought we can create our own products with same quality with
our own tech with money we got from west. So they built universities and took
best minds from west to teach in those schools. Then they started to make
their own products that started to compete with those that need mid-high tech
knowledge to produce. At this point globalization stopped being golden egg of
western countries economies. That's why you see decline in growth in high
developed countries in Europe and USA.

~~~
droopyEyelids
It's insane that anyone didn't see this coming, because the whole ideological
content of the cultural revolution dealt with how international capitalist
enterprise can be used to remove wealth from a country, and how to fight
against it.

~~~
toomuchtodo
Warren Buffet saw it coming _years ago_. He even made a cartoon about it!

[https://www.youtube.com/watch?v=5DvuyvuHmJI](https://www.youtube.com/watch?v=5DvuyvuHmJI)

This clip is from a documentary called IOUSA. A condensed version of the film
can be found here:
[https://www.youtube.com/watch?v=O_TjBNjc9Bo](https://www.youtube.com/watch?v=O_TjBNjc9Bo)

------
gragas
It makes me very glad that we are starting to question globalization. Whether
or not it is a bad thing --- and it may very well be a good thing --- is still
an open question in my mind. But for decades now it seems that globalization
has been very unjustly considered good by default.

~~~
omegaworks
It's "good" but good is a moral argument. We have to examine it on a deeper
level, who wins and who loses.

According to economists, it's good because it grows the pie. It makes everyone
wealthier.

According to labor, the pie grows but disproportionately the benefits accrue
to capital. Without support, whether it be redistribution via tax or job
retraining, labor can not react to shock as efficiently.

~~~
AnimalMuppet
Who loses? Labor in the developed world.

Who wins? Labor in the developing world. In the past 30 years, _half a billion
people_ have been dragged out of poverty. That's an enormous win...

... at the price of the US and European working class. That's a very big loss.

~~~
woofyman
Causing Political instability in those countries is dangerous

------
r00fus
Does anyone actually think globalism is going to be stopped? My guess is it
will be harnessed. Corporations fled the US to increase profits - both to
preserve taxes and ignore environmental regulations. Given no regulation to
prevent/dissuade the exodus, they outcompeted the ones who didn't.

It would now take a very large effort that would look like protectionism to
bring all that back. Can Trump administration pull that off?

~~~
sintaxi
All it takes are tariffs and the economics of having manufacturing over seas
becomes radically different.

~~~
r00fus
Agreed, but easier said than done. Also it's unclear if Trump will be able to
sell it to his multinational corporate supporters.

------
Animats
The reason for the "productivity" decline may simply be that manufacturing and
agriculture don't have many employees any more. Only about 10% of the US
workforce is in agriculture, manufacturing, and mining. Those are the areas
where, historically, there's been huge productivity growth. That's how that
number got down to 10%. Yet US manufacturing output is at an all time high.

"Productivity" at the macroeconomic reporting level is total output / total
workers. So productivity increases in manufacturing are divided by the total
workforce size, which dilutes them.

Job growth is in the areas where productivity is low, such as health care and
education.

------
adwhit
I don't think many people blame globalisation. They blame neoliberalism, of
which globalisation is just a small part.

Neoliberalism is a political project that has been dominant in the West since
the mid '80s. Other elements of neoliberalism include:

    
    
      - The decline of trades unions
      - Financialization
      - Power-biased technical change
      - Lower minimum wages
      - A meaner welfare state
    

There you go, I just made sense of the blog.

------
carapat_virulat
> \- The decline of trades unions.

That's directly linked to globalization. When you can easily move your factory
to Mexico or China trade unions lost all power.

------
bufordsharkley
One thing not mentioned is that:

1) In booming urban areas, price-of-living can outpace the return to wages--
not everybody is benefiting, and landlords/homeowners are benefiting more than
most.

2) In depressed rural areas, there is likely more people allocated here than
there should be-- many oughta be reallocated to job-rich places like cities.
However, this mobility is thwarted by high cost-of-living in cities.

~~~
bufordsharkley
Anyway, I wholeheartedly recommend reading Henry George's "Protection or Free
Trade"[0], which both identifies why free trade is the right way forward, but
also identifies all the suffering it is causing today. (The chapters "The real
weakness of free trade" and "The real strength of protection" are amazingly
insightful to what's happening to Trump's America.)

[0]
[http://www.econlib.org/library/YPDBooks/George/grgPFT.html](http://www.econlib.org/library/YPDBooks/George/grgPFT.html)

------
rokosbasilisk
Probably. Considering the rise of nationalism all over the world from western
europe to even india and the phillipines.

~~~
rwmj
It's actually worth reading the article, since he links to a few studies that
show globalization is not to blame for falling wages and living standards
(although of course many do blame it nonetheless). The comments below the
article are mostly good too, poking a few holes in his argument.

~~~
linkregister
Indeed! I wish HN had comments sections that good. They're civilly debating
with references, without demonizing the opposing side.

------
DonaldFisk
James Goldsmith predicted problems with globalization in 1994:
[https://www.youtube.com/watch?v=4PQrz8F0dBI](https://www.youtube.com/watch?v=4PQrz8F0dBI)

------
return0
> If you’re spending $5 on a Chinese T-shirt rather than $10 on a US-made one,
> you’ve got $5 more to spend on other things.

Thats disingenuous, you spend $5 less in total in your country.

~~~
rwmj
Shop will get 50%, supply chain a bit more, and the Chinese sweatshop under
$1.

I think the real problem with this argument is that housing eats up such a
large part of wages these days that a $5 saving on T-shirts is more than eaten
up by rents and lenders. It's house prices more than anything which stop me
and many of my friends from enjoying anything like the lifestyle that our
parents had.

~~~
hood_syntax
Housing really is crippling purchasing power for young people especially. Rent
is rising at a ridiculous rate.

~~~
abakker
But, as long as inflation measurements includes housing, we really hide the
true cost of globalization. We have relative deflation in the cost of good
produced overseas and cheapened by labor arbitrage, but loose monetary policy
is not evident in those diminished captital flows. Instead, too much money is
chasing a stagnant supply of housing and inflates the value further. Net,
central banks target inflation, globalization and labor arbitrage cheapen
goods, while the lack of any globalization or arbitrage or supply drives the
cost of housing up and up. In the end we balance it all out, and it looks like
monetary policy is a very low-res tool.

