Technology & Trade

Making Globalization Work to America’s Advantage

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By William Reinsch:

While there has been a lot of discussion about trade during the campaign, particularly TPP, there has been somewhat less talk about the underlying force of globalization that has brought us to where we are today. Trump has made reference to it — he appears to be against it — but Clinton has had little to say on the subject. 

This is in contrast to her husband, who, if he didn’t exactly embrace it, certainly acknowledged it. His most memorable comment about it, which is still true, was in a speech in the mid-1990s where he said, to paraphrase: globalization is not good. It’s not bad. It’s here. And that became an important feature of his administration — the inevitability of global economic integration and how the United States could best prepare for it and thrive in the new kind of economy it would create.

But is it really inevitable and irreversible? The answers to those questions are “yes” and “no,” respectively. With respect to the latter, there have been at least two times in history where one could argue the world — or at least the Western world — went backwards, unraveling economic and other connections that had developed. One was the centuries following the collapse of the Roman Empire, and the other was the better part of the last century from the onset of World War I through well into the post-World War II period.  In that time, which featured two world wars and the Great Depression, global trade tanked. It did not reach 1913 levels again until 1970. While the world ultimately recovered in both cases, neither could be called a pleasant experience for those who lived through part of it (or, like my 100-year-old mother-in-law, nearly all of it). Both were the product of cataclysmic events that shook the West to its core, destroyed existing political institutions and rule of law, and decimated economies. Not a course of action I would recommend.

On inevitability, however, the answer is clearly “yes.” The reason is because globalization is not driven by politicians or even economists but by advances in transportation and communication — in other words, technological improvements that make the world flatter, faster, and closer together.   

Two hundred years ago, most people never got more than 50 miles from where they were born. Today, many fly to London or Paris on vacation. Our fresh flowers come from Colombia. Our fresh fish go to Tokyo. The invention and subsequent explosion of containerization has revolutionized the ocean freight business. 

When I was growing up, air mail was fast. Overseas phone calls were rare, expensive, and operator arranged. Today, actual mail is disappearing, except for the catalogs, replaced by the PC and the smart phone. If you are a college freshman today, you may never have used or even seen a record player or 8-track, a black and white TV, or a typewriter — things that were routine for my generation and novel for my grandparents. Our kids don’t remember life without microwaves, Instagram, or Netflix.     

These changes have enabled a world of electronic payments and global value chains that is not going to be unraveled except by another cataclysm. And if you think about it, most of us don’t really want it to go away, not just because of the disruption and uncertainty that would replace it but because we like the benefits globalization brings. Fresh fruit in the winter? Check. Skype? Check. Non-stop flights to Europe and Asia? Check. Pokemon Go? Well, maybe not, but you get the idea. 

There is no question the speed, scope, and complexity of these changes make us nervous. People feel that their lives are spinning out of control. Today’s good job and good salary is next week’s victim of downsizing or offshoring. As the treadmill moves faster, more and more people worry about being thrown off. Where is the psychic, as well as financial, safety net? Does the virtual company provide anything beyond virtual benefits?

Under these circumstances, it’s no surprise people want to get off the train — and some of them seem to think they can get off at Pleasantville in 1956. Sadly for them, we’re all stuck on the train in the present. The choice is not between now and the halcyon days of yesteryear (which were not all that great anyway). The choice is between moaning and whining about what the world has come to and figuring out how to make globalization work to our advantage. We may not be able to turn back time, but we certainly can sand the rough edges, fine-tune our economy to make it more competitive, and enhance Americans’ skills to make them better competitors. 
William Reinsch is a Distinguished Fellow with the Stimson Center, where he works principally with the Center’s Trade21 initiative.

Photo credit: Tracy Hunter via Flickr
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