Practically all well-known U.S. economists and policymakers have supported Globalization as if it were the Holy Grail, resulting finally in our current international economic crisis. There were two well-publicized reasons proposed to justify Globalization, and one (secret and undisclosed) which was the real reason for their wholehearted and sycophantic support. One of the former was the concept that free trade under Globalization would end trade competition among nations leading to world peace. The other was based upon an ideological concept derived from one of Ricardo’s economic theories called the Law of Comparative Advantage. This “law” was predicated upon the idea that the world as a whole would benefit when each country produced only those goods that it was most efficient in producing and leaving to other countries those products they excelled in. Both of these concepts have been proven unworkable in actual practice, but the economists and politicians have not given up on them regardless, mainly because they really were only pretexts for Globalization and whether they worked or not was immaterial. Why let reality stand in the way of a good story? The third and real reason that these "professionals" endorsed Globalization was that it was profitable for them to do so. Few writers or economists can propose anything contrary to the interests of the politically connected and be published or promoted. Only writers of inordinate prestige and integrity, such as Naomi Klein and Paul Krugman, can afford to take the risk. Naomi’s The Shock Doctrine: The Rise of Disaster Capitalism and Paul’s The Conscience of a Liberal are among the few books which dare to disclose the truth about the U.S. government’s unfair and damaging policies and practices. Conversely, the way to riches is by puffing lazy and incompetent “elites” and touting any program financially rewarding to them. Most honest economists, columnist or reporter will eventually end up poverty-stricken under these circumstances.
Another convenient claim, the concept that tariffs established by the U.S., the famous Smoot-Hawley in particular, were the basis of the economic collapse worldwide ultimately leading to the war, was also specious. The Fordney-McCumber Tariff (a Republican tariff) was passed in 1922 and had been in effect without problems for 7 years before the stock market’s collapse. Smoot-Hawley was just the last of a series of high-tariff law in the U.S., simply a continuation of U.S. trade policies prevalent throughout the history of the U.S. and primarily responsible for our great economic successes.
Many countries will be peace loving and friendly to the west as long as they are doing well economically. If not, they can be expected to revert to “uncooperative” competition and to acts offensive to competitor governments. What is happening in Russia today is an example. Public dissatisfaction caused by poor government policies and corruption, but blamed upon the U.S., has resulted in “unfriendly” acts by the current government. The gap between "have" and "have nots" worldwide, regardless of the causes, will tend to cause instability and aggression in many countries. The idea that Globalization will miraculously change this is pure fantasy.
The concept that the entire world will benefit from “free trade”, as derived from Ricardo’s laws, had been soundly refuted prior to the current world economic meltdown. Alan Greenspan in his paean to Globalization, greed, and the Republican Party, The Age of Turbulence, cited “well-documented evidence that competitive markets over the decades have elevated standards of living for the vast majority of Americans and much of the rest of the world”. He apparently had never seen or heard of Detroit, Bethlehem, or any of the eastern cities ruined by the loss of entire industries (textiles, shoes, electronics, steel, autos, et.al.) which had been the direct result of Globalization prior to the current economic debacle. Certainly with the economies of the entire world in disarray he would not now be able to claim this improvement in the standard of living for practically anyone, anywhere.
In dealing with the “efficiency” issue supposedly leading to such great improvements in worldwide standards of living, much of what has been claimed, such as the actual across-the-board implementation of “free trade” and its purported benefits, is fallacious or distorted. The low cost of foreign goods is not due to fair competition based upon the productive capacity of individual workers, but strictly upon worldwide wage levels determined primarily by international exchange rates. These exchange rates have been consistently manipulated by foreign governments in order to make their tradable products more competitive, a practice called “beggaring thy neighbor” in the past. This practice is a direct and significant violation of “free trade”. Japan’s spectacular economic success over the past 50 years was based upon the establishment of an undervalued Yen (established by U.S. authorities) designed to reestablish it as a powerful U.S. ally in the East. China‘s devaluation of the Yuan in 1993-1994 and peg to the dollar was not contested by the U.S. government although it was obvious that it would allow China to gain (and hold) a long-term supremacy over the U.S. in most manufactures. That too was done to “pacify” China. As a side “benefit”, these devaluations were the principle initiating cause of the Asian financial crisis of 1997, ultimately resulting in drastic losses of assets by other Asian countries, and deterioration of their already exploitative wage rates. If giving up worldwide supremacy in manufacturing (and its associated world economic and political leadership) is the cost of gaining friends, the U.S. has made a splendid bargain. The folly of this policy will become painfully evident when China’s GDP (and consequent military strength) overtakes that of the U.S. (about 2028 according to recent studies).
The major consequence of Globalization and “free trade” will be a lowering of wage rates (and worker and environment standards) to an exploitative one worldwide. Exploitative wage rates are simply rates insufficient to provide workers a "living wage", one that will not compel them to force their children to work and sufficient to provide money for their education. In Asia almost all workers have been exploited because of massive unemployed or underemployed populations in these countries. Each country has been desperately trying to employ its citizens at whatever wage rates are offered, and foreign multinationals (exploiters) have taken advantage of this.
In the interest of fairness for all workers worldwide, “equalizing” tariffs should be imposed by all countries on all imported goods which the home country itself could produce. An “equalizing” duty should be levied on all internationally-traded manufactures at a level designed to compensate for differences in worker’s wages and benefits. Those citizens unsatisfied with the quality or price of products produced locally would be free to buy foreign-made products but would have to pay duties in cases of unfair wage rate differentials. If no substantial wage differentials existed, there would be no duties. An equalization of effective worldwide labor rates was, in fact, a major feature of the Fordney-McCumber Tariff Act.
The manufacturing advantage enjoyed by current low-wage countries would be eliminated as the leaders of these countries realized that they were contributing funds to foreign governments (in the form of duties) which would not be necessary if they arranged equitable wages and benefits for their own workers. For all countries, local competition should result in the hiring of the most competent workers but at wages appropriate to any worker worldwide. Any worker anywhere, working in good faith, deserves a living wage. Anything short of this should be recognized as obscene. In addition, innovation would increase because new products developed under local competition would augment products developed abroad. The resulting income policies, coupled with fair tax policies, should eventually provide wage levels appropriate for workers worldwide.
One other consideration need hardly be mentioned but has dire consequences. Under Globalization, it will be necessary to “homogenize” the economic policies and social practices of the entire trading world, a relinquishing of sovereignty in many areas of government and society. It will require social-welfare oriented countries and conservative capitalistic ones to find common economic ground; religious and ethnic groups to agree on social policies contrary to long-held beliefs and traditions. To accomplish this will prove to be not only illusory but dangerous. How would the U.S. be better off by adopting those “international” wage policies which have left workers in the rest of the world poverty-stricken and unhealthy?
Globalization is 100 percent baloney. Globaloney, a term coined by Claire Booth Luce more than 60 years ago when it was first proposed, was baloney then, and is baloney now, only packaged in a different wrapper. Each country must be able to choose and support its own culture and be free to independently choose its own interests, pursuits, and way of life. Universal decent and fair trade practices will permit this independence and will do it without sacrificing these sovereign rights. If the U.S. government fails to face up to the consequences of its current policies of “free trade” under Globalization, we can all kiss off the “American way of life” that we have created and been so proud of.