Globalization--initial thoughts

Globalization is not a crisis by a major policy dilemma. Most economists indicate that a) globalization is inevitable (that is, trade will continue to increase between countries), that is overall a positive item, and that in the aggregate the US gains by it. These points I do not dispute. However it is on the micro level that the problems and inequities occur.

Winners and losers. Who are the winners of globalization: the large multinationals who now can offshore plants to India and China and pay labor one tenth of what it costs in the US, who can buy without regret materials, goods and services from non-US affiliates and save considerable bucks by doing so. And without cutting prices therefore gain tremendous profits from doing so. The next class of winners are the executives and investors in these companies who have seen their salaries and bonuses skyrockeet as well as the prices of the stocks. And the other winner, as the government reminds us is the consumer who due to all the cheap Chinese goods has gained a lower inflation rate of perhaps one less percent annually.

Who are the losers? Let us start with the millions of Americans whose jobs have been offshored (One economist in April in a WSJ article estimated that upwards of 45 million jobs are at risk due to globalization). We are not just talking blue collar but also professionals (computer programmers, radiologists, stock analysts, accountants). And yes, they do appreciate the smaller inflation but as their new jobs pay half of their old jobs, it is hardly noticeable (especially now with the doubling of gas prices, the drastic rise in dairy products, meats, etc it seems like inlfation of old is back). the middle class has not gained in median income in over thirty years while it appears the nouveau rich every day try to outdo each other with 500 foot yachts, skyscraper residences, auto fleets of vintage cars, etc.


It globalization is to ever regain any popular support it once had, there has to be a balance between the winners and losers and some of the gains must be reclaimed and returned to the losers. Luxury taxes... Progressive income taxes at the multimillion dollar level . . . higher corporate support and fees for offshoring (paying employees offshored an entire year's salary with benefits and providing retraining funds for several years) . . . etc are required to level the playing field.

Some economists indicate the American worker must retrain and retool through education to compete in this new economy. One small problem exists: most of the American workers in the lower and middle class are basically living paycheck to paycheck. Education takes time and money . . . both commodities not usually present and especially are not present if laid off. Second, the types of jobs indicated as necessary to compete internationally are technical and upscale and usually require at least a college degree if not multiple graduate level degrees. The assumption is that everyone can do this. Which is absurdly false. Perhaps half the populace is capable of a college degree. This half is the half most threathened by globalization. If they do not have the intellectual capacity for these advanced occupations (I am not putting down them just indicating the obvious truth), then what are they to do? If most of manufacturing jobs are offshored as is the customer support, what are they to do? Be retail clerks and hospitality workers at below poverty levels? This is the real dilemma.

My major concern with globalization and the US deals with two items: national security and manufacturing. I do not like the idea of subcontracting vital parts of defense to China, who is becoming more and more militant as they become an international economic giant. This portrays poorly for the future. And secondly, no country can exist as a virtual company, that is without a manufacturing presence since many multipliers of jobs depend upon its presence. The effect of globalization is to incur within the US an over $700-800 billion trade deficit yearly, an event that basically is transferring one percent of US total assets to foreign investors annually. In addition, the trillions of dollars of Government securities and corporate stock assets now in foreign hands (especially China) offers tremendous risk of financial blackmail. It is time to take back our future.

My proposal is as follows:'
1) To balance the winners and losers by implementing economic incentives as noted above
2) Any contractor or subcontractor that deals with the Department of Defense or any state guard or reserve outfil must fulfill its contract by buying entirely within the confines of the US.
3) The Federal government should follow suit and purchase entirely US made goods and services.
4) This should be followed by state, county, and local purchases.
These processes by their very mass (30% of GDP) should kickstart new manufacturing in the US
5) Made in America should be given shelf space, promotion and subsidies to expand manufacturing.
6) the recent crisises (and these are such) of Foodstuffs from China that were improperly prepared shows the need for greater oversight of goods entering the US.

comments?