Globalization

8 Basic Lessons in Economics #1

I'm not a conservative which means I deal in facts. Here are a few facts about globalization:

• Trade Makes a Nation Richer - It is simply not possible for every nation to be self-sufficient. Every nation, even poor ones, have a comparable advantage that makes trade worthwhile. For us, it is technology. For the Saudis, it is oil. For poor countries, it is cheap labor. Yes, cheap labor helps the poor workers in our trading partners.
• Trade Creates Losers - In the long run, globalization helps an economy create many more jobs than will be lost. That is small consolation for those who lose their jobs in the intermediate aftermath of a free trade deal. We can, and we should, do everything we can to help those who have been harmed by globalization.
• Protectionism is Bad Long Term Policy - Refusing to trade with "sweatshop" nations is essentially the same as imposing crippling sanctions on some of the poorest people in the world. Sanctions make the poor poorer.
• Trade Lowers Costs of Goods - Cheap imports are good for our own poor. It allows their limited resources to be used for more. It expands their standard of living. Lowering prices works the same as increasing income.
• Trade is Good for Poor Countries - Without global trade, the poorest countries would not have access to consumers in the world's largest markets. Export jobs in the poor countries tend to pay more than other jobs in the same countries. Poor countries gain money, technology and skills through trade that they would not receive any other way.

If I support globalization, can I still be classified as a card carrying liberal? I think so, because I believe that globalization is a good thing. In fact, I would argue that globalization is inherently liberal policy. What else would you call economic policy that raises the standards of living of both partners? 

Yes, I'm well aware of the negative aspects of globalization. These are real problems and those who fail to deal with them cause real harm to real people. 

Here in the United States, we must do more to help those whose jobs are lost to globalization. We must do more to retrain workers for jobs in emerging industries. We must expand the safety net in order to mitigate the financial hardships brought about by globalization. We must improve our system of education to make sure that the high wage, high reward jobs remain American. We must support labor unions to protect the economic progress of those whose jobs remain. 

As for our trading partners, we have to use pressure to press for better working conditions and fair wages. We have to use pressure to force our trading partners to improve their education systems so that kids spend their childhoods learning rather than working in factories. We have to use pressure to ensure that unions are treated with respect by the law so that workers in developing nations can bargain for better treatment.

We cannot, however, make things worse for these people by withdrawing our trade. As Paul Krugman, a rather prominent liberal economist has said, "(A)nyone who thinks that the answer to world poverty is simple outrage against global trade has no head ... The anti-globalization movement already has a remarkable track record of hurting the very people and causes it claims to champion."

Globalization is not a problem ... our failure to protect the "losers" of globalization is a problem. The lesson we should learn is this: Globalization is good long term policy. As liberals, we have to think of the long term, while working to alleviate the negative effects of the short term. To not think of the future is to not think as a liberal.

Lessons Learned from Naked Economics: Undressing the Dismal Science by Charles Wheelan. The opinions expressed are mine and not necessarily those of Mr. Wheelan.