Globalization Now Eats The Hands That Fed It
If it`s a tsunami you`re afraid of,
what happened in the Indian Ocean last month is probably
not what you should be worrying about.
The tsunami Americans need to fear
is the man-made wave of globalization that has helped
gut the American work force by exporting its jobs
overseas in part through the cute little trick known as
"offshoring." We know the threat is big because
even Business Week started paying attention
In its Dec. 6 issue Business
Week sported a sizeable article titled "Shaking
up trade theory" by Adam Bernstein. The
article is newsworthy because, for probably the first
time ever, an establishment business magazine raised
some serious questions about the free trade dogmas that
underlie globalization and much of the economic theory
and policy of the last several decades.
For a pillar of the business
establishment like Business Week to do so is a
bit like Scientific American raising questions
about the law of gravity.
What worries a good many of the
economists cited in the article is that the basic
assumption of free trade theory—the doctrine of
comparative advantage, as it`s called—doesn`t add
up. Under the doctrine,
economists have concluded that countries gain more than
they lose when they trade with each other and specialize
in what they do best. Today, however, advances in
telecommunications such as broadband and the Internet
have led to a new type of trade that doesn`t fit neatly
into the theory. Now that brainpower can zip around the
world at low cost, a global labor market for skilled
workers seems to be emerging for the first time—and has
the potential to upset traditional notions of national
The article cites no less an icon
of the economic high priesthood than Nobel Prize winner
Paul Samuelson, who recently raised his own questions
about the benefits of free trade in the Journal of
Economic Perspectives. Mr. Samuelson`s questions had
some negative answers.
As Business Week summarizes
fact that programming, engineering, and other
high-skilled jobs are jumping to places such as China
and India seems to conflict head-on with the
200-year-old doctrine of comparative advantage. With
these countries now graduating more college students
than the U.S. every year, economists are increasingly
uncertain about just where the U.S. has an advantage
anymore—or whether the standard framework for
understanding globalization still applies in the face of
so-called white-collar offshoring."
Not all economists agree, and the
article offers a nutshell of the debate that`s beginning
to ripple through the academic and business communities.
But what`s news is that there`s a debate at all.
For nearly two centuries the
doctrine of comparative advantage,
formulated by economic theorist David Ricardo in the
early nineteenth century, has held much the same status
as the Virgin Birth. Now even the high priests are
starting to doubt.
One reason they`re doubting is that
long been known that free trade scuttled blue-collar
workers out of their jobs, nowadays it`s starting to
carve into white-collar workers. That
means—eventually—the kind of people who write about
trade policy—like Mr. Bernstein and his friends.
"Until now," Mr. Bernstein
writes, "the pain of globalization has been borne by
less than a
quarter of the workforce, mostly lower-skilled
workers, whose wage cuts outweighed the cheaper-priced
goods globalization brings."
But someone else is sharing the
pain—namely, the very class that thought free trade was
such a hot bargain.
Mr. Bernstein cites a study from
Forrester Research in Cambridge, Mass., as offering
"the most detailed projections so far" of
how bad the white collar hit might be.
The Forrester study sees "the
pace of U.S. job flows abroad averaging 300,000 a year
through 2015, probably a conservative estimate.”
"Already, some 14 million
white-collar jobs involve work that can be shipped
electronically and thus in theory could be moved
offshore," yet another study has found.
"White-collar workers have a right to be scared,"
says Harvard University`s labor economist Lawrence F.
It`s hardly surprising that nobody
paid much attention to the real costs of free trade and
globalization until they started eating the very people
who promoted them and gained from them. That sort of
thing is common enough throughout history.
It remains to be seen if the
wreckage of the white collar class—the business,
political and intellectual elite of the country—turns
out to be quite as devastating as some of the pessimists
If it weren`t for the problem that
the wreck of those elites would probably wreck the
country along with them, we just might all be better off
if the devastation turned out to be real.
CREATORS SYNDICATE, INC.
Sam Francis [email
him] is a nationally syndicated columnist. A selection
of his columns,
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