The globalisation counter-reaction
This is a must read on the history (well, the last 150 years) of globalization.
Without cheating, can you guess what year this quote was written:
“The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit, and reasonably expect their early delivery upon his doorstep; he could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world, and share, without exertion or even trouble, in their prospective fruits and advantages.”
This quote could very well have been written this morning. We still order goods with our telephones (albeit a smartphone), tea (or coffee) is readily available in our homes or at the Starbucks that is invariably within walking distance, the purchase of many goods and delivery is almost immediate with Amazon, and investing in natural resources and new enterprises is buying stocks or commodities.
Hopefully I convinced you this was written this morning as the quote actually came from 1914.
Most economists should agree a global economy is more efficient and provides the most consumer surplus. In other words, the cost of goods can be minimized. The migration that comes with globalization is a benefit as it increases competition. In the first episode of globalization migrants moved from developed nations to developing nations. This means they can help build up the new nation with their knowledge and experience from the developed world. In the current stage of globalization we see migrants come from developing nations to developed. This is likely due to the corruption that exists in non-democratic nations. In any event, the difference does not mean these migrants are not benefiting the economy. Rather, it is the opposite. The migrants coming from developing nations tend to be low skill workers. Therefore they are able to work the low skill and low wage jobs; which opens up and allows those with more skills to seek better opportunities instead of being stuck at a low skill job. This is beneficial for consumers.
Unfortunately, many perceive globalization to be a way for other countries to steal from our pockets. The truth is nobody is stealing from anybody. Global trade is consented upon by both parties. This means that the terms are perceived to be fair by the transactors. In the Knight’s mind, there are no losers in global trade. One party (say the U.S.) gets to purchase goods for a lower price, and the other party (say China) sells more goods. The money saved by the purchaser can be used to buy more goods or save/invest. The money raised by the seller can be used to improve efficiencies and lower prices further. The loser will be the global economy if we get into populist trade wars under the guise that “we are protecting our people.”