How Has the Global Economy Shaped the United States?
November 6, 2018 9:56 AM   Subscribe

What Is Globalization? After centuries of technological progress and advances in international cooperation, the world is more connected than ever. But how much has the rise of trade and the modern global economy helped or hurt American businesses, workers, and consumers? Here is a basic guide to the economic side of this broad and much debated topic, drawn from current research.
posted by infini (20 comments total) 15 users marked this as a favorite
 
Interesting backgrounder that would be really good in a high school social studies class or a 100-level survey. I found the connection between globalization and growing income inequality in the US to be sort of tenuous as presented (also good to point out that this is a US-centric study).

It was also produced and published by the Peterson Institute for International Economics , or PIIE, which seems to be frequently cited by NPR (I was unaware of this since I don't listen to NPR). I guess you could say that PIIE is "neoliberal" (i.e., pro-free trade).

Personally, globalization has directly benefited me by lowering the cost of living in the high-cost countries where I live (Canada and Japan). I also benefit from globalization by being able to work with clients all over the world, allowing me to boost my wages (locally, wages are quite low).

I didn't see it in the link, but no mention of how globalization affects GHG emissions and climate change.
posted by JamesBay at 10:16 AM on November 6 [1 favorite]


I just finished reading The Collapse of Globalism, from almost 15 years ago, where author John Ralston Saul writes that globalization already had failed back then.

“Now, after 30 decades, we can see the results,” he says starting on the first page, about this “experimental economic theory presented as Darwinian fact. It was an experiment that attempted simultaneously to reshape economic, political and social landscapes... [T]he globalization model of the 1970s and ’80s has faded away. It is now, at best, a regional project – that region being the West.”

Additionally, “[T]he Globalist crisis has been caused by a mixture of ideology, which should be taken half seriously, and bad management, which ought not to have been taken seriously at all. But the managers were so seduced by what they thought were new abstract global theories that they lost track of the people whose lives were affected by their administrative methods... We [have been] caught up in an artificial negative tension between a theory of global economics and a reality in which people live. And we do live in real places.”

What’s really been happening, Saul goes on, “is a chaotic vacuum, one filled with dense disorder and contradictory tendencies. [And as for] which parts of the Globalist belief system will disappear and which will stay, we have no idea.” The vacuum, he says, “adds an element of even greater uncertainty because economics is a romantic, tempestuous business, rather theatrical, often dependent on the willing suspension of disbelief by the rest of us.” Economics “has slipped toward truth of the insistent, religious sort,” he says. “The believers believe, but the world moves on.”

Another problem is that a lot of people feel “as if the moving of goods across borders was the purpose of civilization.” In any case, “Most of the foreign exchange movements are about speculation, not investment or wealth creation. The amounts involved are 40 to 60 times that of real trade. [And a] quarter to a half of today’s trade involves transnational corporations moving pieces around inside each of their own international structures.”
posted by LeLiLo at 10:25 AM on November 6 [4 favorites]


It's not a bad primer on global trade, if you're not familiar with the issue certainly. However, it glosses over a lot of nuanced issues—as neoliberal economists are wont to do—and it's also not coming from what I'd call a disinterested or neutral source. But it is a good encapsulation of the typical macroeconomic arguments for free trade.

The problem is in the stuff this argument hand-waves away as seeming details to be dealt with, like job training. This is mildly infuriating. It's like describing how nuclear fission works with some ping-pong balls and then saying "see, and that's why nuclear power plants are great! We just need to work out a few implementation details!" Those implementation details are the hard part. International treaties? Getting one country's leading elite to agree with another country's leading elite? That's easy. (The fuckers all probably went to college together, after all.)

No, the hard part is in doing global trade without screwing people over. "Job retraining" is, at least as far as I've ever seen it, a myth. If you hear someone talking about job training as a mitigation for economically neutron-bombing a whole bunch of cities and the industries on which they depend, reach for your revolver. At best, job training is a generational program. Someone who has spent decades becoming an expert at a particular skill is not going to just take some comm-college classes and hop smoothly into another industry. They'll still be barely competent at their new job when they should have been retiring from the old one (not, of course, that they'll actually be retiring or anything, since their pension probably vanished along with their old employer).

And while neoliberal economists love to harp on and on about the peace-promoting effects of global trade, they seem to ignore the corrosive effects of domestic economic destabilization. It's well understood that having a lot of angry, disaffected young people is not healthy; I think we can consider the question of what having a lot of angry, disaffected, now economically-redundant older workers does as answered. It's not good, and if we could have avoided it by shaving a few points off of GDP over the last few decades by not allowing those industries to collapse in the face of competition faster than we could deal with the consequences, that would have been money well spent.

Full employment is more important than making luxury goods cheaper. Economic growth uber alles is a failed policy. It's politically destabilizing, it's contributed to the rise of authoritarianism and the far right, it's helped break labor unions, it's bad for the environment, and insofar as it treats GDP as the sole KPI by which success or failure is measured, it's frankly dehumanizing.

Economists who treat the political side of the trade equation as Somebody Else's Problem are irresponsible. If you built a chemical plant and flushed waste down the sewer, knowing that the sewage treatment plant was just going to dump it in the river, you'd be a monster. So too is anyone proposing unfettered free trade, knowing full well the limitations of the US government and our ability (or lack thereof) to deal with the predictable consequences, and of the way elites would use the resulting economic destabilization to loot and pillage. You can't just take the bits and pieces you like about globalization and then suggest that the rest are somebody else's problem to fix. The US isn't, and never was, going to create a huge welfare state system to cushion the blow of failed industries. Anyone who thought so was in fantasyland; that's not how we do things. If you open the middle class up to exploitation, they're going to be exploited by the wealthy. That's what globalization, as practiced in the US, did and does.
posted by Kadin2048 at 11:01 AM on November 6 [13 favorites]


Full employment is more important than making luxury goods cheaper. Economic growth uber alles is a failed policy. It's politically destabilizing, it's contributed to the rise of authoritarianism and the far right, it's helped break labor unions, it's bad for the environment, and insofar as it treats GDP as the sole KPI by which success or failure is measured, it's frankly dehumanizing.

We are lurching towards full employment in the US and we have all of that. Are you saying that that the 2008 financial crisis helped the rise of the far right? I disagree. I'm sorry but I just don't see them as very connected.

Yes, treating GDP as the only important variable is kind of terrible, but all those other effects are mostly artifacts of racism and income disparity, which are not aspects of 'globalism'.
posted by The_Vegetables at 11:20 AM on November 6


Reminder that "globalism" is a term that white supremacists use for their supposed conspiracy of international Jewish elites who control the world, basically replacing the "New World Order"/"One World Government" the same white supremacists were ranting about in the 90s.

It's not the same as "globalization", and using the terms interchangeably is extremely dangerous.
posted by tobascodagama at 11:50 AM on November 6 [7 favorites]


There are plenty of things we could have done to help people transition, but we have instead been moving the opposite direction for the most part.
posted by wierdo at 11:56 AM on November 6 [1 favorite]


We are lurching towards full employment in the US and we have all of that. Are you saying that that the 2008 financial crisis helped the rise of the far right? I disagree. I'm sorry but I just don't see them as very connected.

Hate to break it to you . . .
posted by Kitty Stardust at 12:51 PM on November 6 [4 favorites]


@Vegetables, maybe you're new to the topic, but you're way off.

lurching towards full employment

It really depends how you measure it. Now, current U-6 is 'only' 7%, but that also largely misses the concept of the quality of employment. When someone loses their industrial union job and gets a job flipping burgers, they 'feel' different.

Economic security is a multi-faceted thing and it's clear from a wider set of data that as global supply chains extend, they stretch the people that are part of them.

other effects are mostly artifacts of racism and income disparity

I almost don't know where to start here. Income disparity is exactly one of the key metrics of an increasingly fragile economy. Racism is a dense subject, but it's fully coupled with how people view outsiders as economic threats. 'Took ar jobs' and all that.
posted by Reasonably Everything Happens at 12:54 PM on November 6 [3 favorites]


Racism is a dense subject, but it's fully coupled with how people view outsiders as economic threats. 'Took ar jobs' and all that

If you're blaming globalism, you're simply looking for an excuse. Curiously, racism and authoritarianism have never needed one. It's always in fashion. You could just as easily blame high crime. Which, like unemployment, is something needing to some a message to fit one's favored narrative these days.

Want to blame globalism? Start with interstate commerce. Arguments are the same, and equally weak.
posted by 2N2222 at 1:52 PM on November 6


Now, current U-6 is 'only' 7%, but that also largely misses the concept of the quality of employment.
I agree with that, but I don't really see the difference between 93-97% (for example) employment, and I'm not the one that made the claim than anything less than full-employment is due to globalism or counter to the goals of globalization or whatever you want to call it. And yes, changing job mix is a problem in the US, but 'globalization' is not the cause of that. Increasing income inequality is. Also the idea that the US is going to riot and rage at that bottom 10% of our population that can't get jobs but not advocate for that same group for literally anything else? Sure.

I would further argue that the level of unemployment in the US is specifically managed internally and would be managed roughly the same without global trade, as it was during the 2008 crisis.

And 'no', I'm not new to the topic, but I am really tired of people coming up with nonsense reasons why the exact same economic system we've had in place since (basically) the founding of the US (or at least 1865 when mercantilism approximately ended) is now somehow a problem. I am asking to show real work and not boogeymen and quarter-truths. The economy did not change with Ronny Reagan to any real extent - yes he and Thatcher did hate social programs but what did Jimmy Carter do when an energy crisis hit?: He went on tv and told people to put on a sweater, which is the Democratic version of austerity.

And I would argue that 'globalism' is "same as "globalization" That's why Trump uses the world 'Nationalism' unironically as the counter. He gets lost in that you aren't supposed to say that the ability to dictate tariff policy is meant to favor any particular country out loud - but that the policies can be exactly the same.

'A fragile economy' has nothing to do with globalism/globalization, or if it does, then why doesn't it effect the Nordic countries quite as much? Are they shrinking from global trade? HINT: no. Or to fix our inequality, we could simply pay some Americans less and redistribute their income to others without making any changes to our trading policies.

In short, if you think the solution to fixing the US' 'fragile economy' is to limit globalization/global free trade, then Trumps border policies totally make sense. I mean, if you believe "they took our jerbs" framing. Who cares if individuals view outsiders as economic threats? That's why we aren't supposed to put the ignorant and uniformed in charge of our national trade policies.
posted by The_Vegetables at 2:02 PM on November 6 [3 favorites]


As tobascodagama already said once, conflating globalism (whatever that is, haven't heard about it out here in the rest of the world) and globalization (and its discontents, per Stigleitz) is *very* dangerous, and we're seeing the effects of the ignorance in the ongoing kindergarten class recess that is foreign policy.
posted by infini at 4:10 PM on November 6 [3 favorites]


Are you saying that that the 2008 financial crisis helped the rise of the far right? I disagree. I'm sorry but I just don't see them as very connected.

Did someone disprove the base idea that fascism is in significant part a reaction to the ruling class bombarding everyone with propaganda to disguise the fact that they're to blame for everyone's misery?

That the trains are full because of migrants, not privatisation, that queers damage the family, not patriarchy, that your neighbour stole your job, not the invisible fist of the market, that there's crime that straight up doesn't exist, so we need more cops,

that there is a secret conspiracy of globalists, as opposed to an open tyranny of capital?
posted by AnhydrousLove at 4:23 PM on November 6 [2 favorites]


racism and authoritarianism have never needed one

Maybe in a literal sense these people don't need a reason. But the success of reactionary politics is often exactly tied to economic duress. The results are literally all over the place in history. Start with the French Revolution and work forwards or backwards.

I don't really see the difference between 93-97%

If you don't see an issue with almost a doubling of a given metric, well, I don't know what to tell you. I guess we just adhere to different views of economics.

the exact same economic system we've had in place since (basically) the founding of the US

Again, really missing some key points in history here. The role that local demand played in the Colonial (or post Civil War) economies compared to now is like night and day. Nevermind factors like urbanism, technology, labor migration, financial markets, etc, etc. It's like you're saying Morse code is pretty much the same as an iPhone.

The thing about Reagan vs Carter. I mean I almost think you're just trolling at this point.
posted by Reasonably Everything Happens at 7:55 PM on November 6 [2 favorites]


In short, if you think the solution to fixing the US' 'fragile economy' is to limit globalization/global free trade, then Trumps border policies totally make sense. I mean, if you believe "they took our jerbs" framing. Who cares if individuals view outsiders as economic threats? That's why we aren't supposed to put the ignorant and uniformed in charge of our national trade policies.

This.

If you advocate a policy that has the same results as that of racists and xenophobes, it doesn't really matter why you have that policy, does it? Doesn't matter if you're anti-globalist, or anti-"globalist", good intentions or not, the results are indistinguishable. That alone should cause one to examine the wisdom of anti globalization policy among the more thoughtful. That it's viewed as progressive is just mind boggling and indicative of how truly fucked we are.

Again, if international trade is so awful, why isn't interstate trade just as bad? Certainly, some States have had to deal with economic upheaval with the inequality that exists between states. Industrial giants in the north have seen industries collapse when they move south... to another state. California has seen industries and jobs and migration move to States where it's far cheaper to do business. Why not restrict the ability of capital to cross state lines? The same principle is at play here. And if this stuff makes good sense to you, be aware that you are on the fringe, and not in a good way.
posted by 2N2222 at 4:05 AM on November 7 [1 favorite]


The difference is freedom of movement.

The only trade union I know of that does it is the EU, and I suspect that's more due to the fact the European project was started to prevent war as much as it was to create wealth. You certainly don't see anyone pulling for it in NAFTA.

What that tells me is that it's something that benefits labor a lot more than the rich.
And we can't have the benefits of globalization flowing to just anybody, can we? (And yes that's sarcasm.)
posted by Zalzidrax at 5:19 AM on November 7


But the success of reactionary politics is often exactly tied to economic duress. The results are literally all over the place in history.

But no country can fully prevent negative economic effects either. "Bad harvests" and other calamities have been a thing all rulers have had to face in history. But what a good ruler would do is that they prepare for such times and when it occurs they are seen to take action, help as much as possible, and don't go around blaming others.
posted by FJT at 8:56 AM on November 7 [1 favorite]


The difference is freedom of movement.

Except anti-globalization people, even on the left, aren't campaigning for freedom of movement, they're campaigning against free trade. (I've been casually following this debate since the 90s, and it's only in the past ten years or so that I've seen freedom of movement come up regularly as a talking point.)

It's not surprising that "free trade sucks, end NAFTA" gets "no, free trade is good actually" arguments in response. It'd be a different debate entirely if the anti-globalization side started with "free trade requires free movement", but that's not their slogan.
posted by tobascodagama at 9:19 AM on November 7 [2 favorites]


Start with interstate commerce. Arguments are the same, and equally weak.

Trade within a largely-uniform regulatory environment, currency union, and with guaranteed free movement of workers as well as goods is very different from international trade as currently (or really, ever) practiced.

If the US States were still independent nation-states* with their own currencies, central banks, totally different regulatory schemes, etc., then... well, yeah. That would be pretty different. I bet you'd have all sorts of import duties, excise taxes, import/export caps, the whole nine yards.

Getting the various States to agree to freely trade among each other was a significant bit of political compromise to begin with; it does not follow that internal trade within a self-governing polity should follow the same rules as external trade with other sovereign states. Nobody seriously made that argument, at least in the United States in a way that was taken seriously, for well over a century after internal free trade had been established by the Constitution.** And I don't think it's coincidental that it didn't really gain traction as policy until the post-WWII era, when American geopolitical power was at its height, and presumably the US was in a position both to dictate trade terms to other countries and to occasionally take on trade deals that might not have made a ton of economic sense, but had the benefit of poking a stick in the eye of the Soviets. E.g. Nixon/China. (If those trade deals also hurt domestic political enemies—unionized industries, principally—well, I'm sure that was so much the better.)

* And if I were a citizen of the post-USA-breakup Enlightened Republic of Yankeedom, you can bet I wouldn't want any domestic (and presumably well-regulated, environmentally-sound, unionized, etc. etc.) industry competing with the slaveholding hellhole of the Deep Southern Neoconfederacy. A practical—if morally compromised—argument could be made for sourcing raw materials that just don't exist domestically, but there's no valid "comparative advantage" when the two sides aren't playing by the same rules. It's obviously a contrived example, but not that far from actual, frankly odious, trade relationships the US has.

** And trade between states still had what in modern parlance would be called "non tariff barriers" up through the late 19th century and the passage of the Interstate Commerce Act, mostly via state regulation of railroads—the dominant path for domestic goods transport at the time—until this was preempted by the Federal government in 1887. Interestingly, from what I can tell the passage of the Act was less a desire to remove trade barriers in the form of patchwork state regulations, than because the railroads had succeeded in getting state regulations invalidated by the Supreme Court the year before (Wabash v. Illinois), forcing Congress into action. It had the effect of creating a centrally-regulated interior transportation market, though, even if the previous system hadn't been viewed as a problem per se at the time.
posted by Kadin2048 at 12:26 PM on November 8 [1 favorite]


It'd be a different debate entirely if the anti-globalization side started with "free trade requires free movement", but that's not their slogan.

It would, but maybe give them some credit for realizing that trying to use free trade as a lever to bring about free movement of people is a silly plan. Or at least an extremely dangerous one, because it has the nasty failure mode of possibly leaving you with free trade without free movement, which is basically the worst of both. That's a big downside risk, particularly given that allowing people to move freely across the entire planet—considering all the practical barriers to doing so (economic, linguistic, cultural, infrastructural)—is an incredibly lofty, possibly practically unattainable, goal. I don't think it's even feasible—regional compacts like the Eurozone aside, and the jury is still out on reach v. grasp there—within the existing nation-state framework, meaning that you're basically holding out for a complete global revolution or something.

Yeah, no, I'll stick with just not exposing workers to unfettered competition from unregulated markets.
posted by Kadin2048 at 12:34 PM on November 8


It's important to remember the context in which free movement happened in the past. Firstly, moving long distances took much longer and required a lot more money, even through much of the 20th century. There was also much less capacity to move large numbers of people. Lastly, at the time notions of residence versus citizenship (and thus voting rights) were quite different than they are today. I say this not to put down the basic principles of free movement, only to provide context.

Personally, I think that completely unfettered free movement often has terrible consequences, many of which are visible in our own country, should we bother to look. However, it is also clearly an issue of liberty, therefore we should default to the greatest possible freedom of movement.

Anti-immigration fools (at least the few whose view isn't founded on racism) do have some valid points regarding a society's ability to integrate large numbers of immigrants (or large numbers of children, for that matter) in a short period of time without resource shortages and other practical issues. Issues that sometimes lead to resentment among existing residents, even. That being said, they are fools, because those issues are drastically overblown and wouldn't really be an issue at 10 times the current rate of immigration into the US.

It takes time for people to establish themselves and contribute productively. Not very long, though, especially if there are networks in place to help newcomers get housed and employed quickly. That's why I think we ought to increase current immigration quotas by at least an order of magnitude as a start. That done, we can see how it works out over the course of a few years (I'm convinced nobody would notice anything but an unusually strong economy), and bump it up from there.

We should also make it a lot easier to get a visa. Who gives a shit if somebody who is not a known violent criminal (and thus would be ineligible for a visa under almost any circumstances anyway) might stay too long? Heaven forbid they generate even more economic activity and add to the wealth of our nation...

I just think that arguing for no limits whatsoever plays directly into the hand of the opposition when there's a perfectly reasonable middle ground possible. Not with the current institutions charged with enforcing our ridiculous immigration laws, I grant. Their Kafkaesque nature is both self evident to anyone even casually acquainted with them and a cancer upon any free society. Systems not designed from the outset to implement racism are possible and could replace what we have now, and would be more politically feasible.
posted by wierdo at 7:58 PM on November 10 [1 favorite]


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