Wall Street Journal Summary
Trading Barbs: A Primer on the Globalization Debate Globalization of world trade is a long term event that has been increasing living standards and overall economic welfare for many nations. However an increase in the number of job loses in industries that are exposed to international competition causes some people to dislike the effects of globalization. Angus Maddison believed that economic advancement over time was sustained by conquest or settlement of relatively empty areas that had fertile land, new biological resources or a potential to accommodate transfers of population, crops and livestock; international trade and capital movements; and technological and institutional innovation. Benefits of globalization stem from the benefits of free trade. Comparative advantage can create a beneficial outcome for all nations involved in trade. International income has increased household income by 7,000-1,300. Another benefit is the increase in the variety and price of goods and services available to consumers. Negative effects of globalization can be dampened by temporary assistance for declining industries. Short term assistance in the form of unemployment insurance and long term assistance in the form of education can very effectively combat negative effects of globalization. In fact, the percentage of educated workers has risen from 6% at the end of WWII to 33.3% today. The need for skilled workers in America may mean that some people lose jobs however it also gives people the opportunity at more advanced higher paying jobs and increased living standards.
Think Again: Globalization Globalization has both critics and boosters, the critics think globalization causes the same problems as its booster’s claims it solves. One thing is for certain globalization is here to stay. In this article many ideas about globalization are debated. The first idea is that globalization is a casualty of the economic crisis. However this is not true because globalization is much more than international trade and investment. Globalization did not die due to economic crisis in fact people are continuing to interconnect in all aspects of social life not just in economics.
The next idea is that globalization is nothing new. Indeed people have been spreading around the globe and early inventions such as telegraphs and steamboats started globalization. However in modern time’s new inventions like computers, internet, and modern transportation has increased globalization at an exponential rate. This rate of increase is like no other advancement in human history and has yet to reach full potential. In that sense modern globalization is relatively new.
Globalization does not mean Americanization because many cultures are spreading to global interest not just American ideas and products.
Globalization is not just for the rich in fact many countries around the world have decreased the percentage of poverty due to trade and investments facilitated by Globalization. Globalization has not really made the world a safer place. Even though there are fewer wars due to globalization other types of violence have become more widespread.
The financial crisis is not a result of globalization. The crisis is just one of the many problems on an international level that can only be solved through international collaboration and regulations.
Has Globalization Passed Its Peak? Not that long ago, the free worldwide flow of capital, goods, and labor, known as economic globalization seemed both inevitable and inexorable. Many nations embraced the rapid technological changes and international markets in order to liberalize there economies and maximize gains. Many policymakers focused on preparing people for a world of ever increasing interconnectedness. Due to the financial crisis of the 1990’s the American dollar fell in value and seemed to be heading towards a more drastic drop. As outsourcing continued the American middle class began to feel insecure. Historian Niall Ferguson and Harold James noted that the previous era of globalization from about 1870 to 1914 once seemed unstoppable but came to a disastrous end. They also warned that this could happen to today’s era of globalization. The technological advances that have fueled today’s era of globalization will continue, the cost of communication will continue to decrease. This will make it easier for companies to spread operations around the globe at the most cost effective places. Companies will also use scientific talents in other countries to create a new wave of technological innovations.
Globalization's Gains Come With a Price
While Poor Benefit, Inequality Feeds a Backlash Overseas Millions of low-wage workers in places like Mexico and other developing nations can benefit from globalization. Wealthy nations like America lose millions of jobs making apparel, electronics, and other goods. This does increase the wages of low skilled workers and gives them more opportunities. However economists agree that people with an educations and skills to take advantage of opportunities will be the highest paid workers. The fact is that incomes of low-skilled workers will increase, however the incomes of skilled workers will rise faster. In developing nations globalization has created a large middle class by lifting millions of people out of poverty. China’s low skilled income average has consistently risen and countries like Vietnam and Southeast Asia have also benefitted from opening their economies. This also resulted in an increase in life expectancy and improved health care, as well as educational opportunity. China is one of the fastest growing economies however the inequality in wages also increases. Since the year 2000 Mexico has an extreme poverty rate at fewer than 20% for the first time. Competition led to an increase in the need for skilled labor, investors either upgraded to better machinery or closed down. Expanded education is good at easing inequality by increasing the number of skilled workers. Many people have also migrated to richer countries to support families by sending money that will boost the economy and also give more opportunity to people seeking low skilled jobs.