Cold Water on Globalization

By James R. Edwards, Jr. on January 2, 2013

The globalization pendulum may be swinging back toward a healthier position, columnist Robert Samuelson observes. Several decades in the making, the globalization trend might be subsiding a bit. This has ramifications for immigration, as well.

Back in the '80s, "globalization" and "interdependence" and other such terms were invoked to promise a bright, universally prosperous future. Back then, most people thought of this development in terms of trade. Everybody knew that free trade equaled a win-win scenario for both trading parties. (And remember that Republican and Democratic administrations alike have pursued essentially the same trade policies over the past several decades.) One side sold its goods abroad, while the importing side got goods for cheaper than they could be produced domestically. The whole "global village" zeitgeist took hold, at least among elites.

Increasingly, multinational executives and government trade officials conceived of economic globalization in much broader terms than merely production of tangible goods. With technological interconnectivity, services could be offshored, too. Think foreign-accented call center operators trying to figure out how to help you from the other side of the world with something like your insurance or computer support, dealing with customers' idioms and cultural context that the operators utterly fail to grasp.

Lawmakers forsook bilateral trade treaties for "trade agreements" that were easier to enact. Trade negotiators began including visa provisions in trade deals, thus equating the free flow of people with the free flow of goods and services. NAFTA notoriously breached the visa wall.

The resulting economic effects unbalanced the scales. "For years, the world economy has been wildly lopsided: China and some other countries ran big trade surpluses; the United States was perennially in massive deficit", Samuelson writes. "Similar imbalances existed in Europe."

This theory has had significant real-world effects. Manufacturing plants that had been the foundation of good-paying, family-supporting jobs in communities across America began to shutter and relocate to Mexico, China, and other low-labor-cost countries. Their cheap labor became a major selling point in seeking to attract unanchored industrial giants away from the developed Western nations that had birthed them. (It remains so — witness Chinese wage increases giving Vietnam a shot at selling its even cheaper, more communistically controlled wage rates.)

The reality of globalization has proven a mixed bag at best and harmful at worst. What far too many American families have seen from this theory are their jobs disappearing and nothing comparable replacing them. You can now buy cheap clothes made in Third World sweatshops, but it can be extremely hard to "buy American" in any meaningful way. Middle-class real wages have remained stagnant over this time and, in certain sectors, declined.

But Wall Street and other money hubs have prospered. There's the disconnect, both during the booming economies of the Clinton and Bush years and the depression of the Obama years, of measuring "economic growth" by a rising stock market and corporate profits and other macro measures, while many middle-class Americans have not only not experienced a "boom" but have had to stretch their paychecks thinner and thinner as best they can to make ends meet.

Samuelson cites the Louisville manufacturing site of General Electric. Its 23,000 manufacturing jobs in 1973 have dwindled to a mere 3,600 today — and the smaller number represents a 90 percent increase over a year ago.

But the shine of globalization has worn off. A whole range of factors help explain the reversal, among them hardball Chinese economic policies; Chinese wholesale piracy of intellectual property; lax standards that result in adulterated products, including pharmaceuticals, landing on U.S. store shelves; the revelation of of human rights abuses and human trafficking in those Third World countries; Islamic intolerance and violence against Western executives and facilities; malware installed in computers built in foreign factories.

As Samuelson notes, "trade and international money flows are slowing and, in some cases, declining." And, as indicated above and by Samuelson, a trend could be developing of major companies returning manufacturing operations to the United States. This development remains minute at this point, but it involves some major players. Among those firms onshoring some manufacturing jobs are Apple, General Electric, Otis, Wham-O, and Ford.

While a slight bump of manufacturing jobs in the United States is encouraging, it's not a wave yet. The U.S. Business and Industry Council, representing small and midsized American manufacturers, is skeptical that it's much more than selective highlighting of a few instances and the ignoring of broader data points.

During this sustained stagnant economy, high unemployment, corporate second-
guessing (to whatever extent) of globalization, and continued public skepticism toward high immigration, it's a good time to press the demand that onshoring of any manufacturing jobs shouldn't be accompanied by liberalized immigration or amnesty. Just as watchful lawmakers in Congress reined in the trade negotiators and vigilantly guard against the inclusion of visas in trade deals, it would be helpful to press officials hard to ensure that any gains in new jobs benefit American workers and not imported workers.

Along these lines, in its trade policy document, the Selous Foundation urges:

NAFTA has become less about free trade than about "development" and "wealth transfer" from the American taxpayer to the Mexican government through the creation of self-perpetuating and extra-governmental agencies like the North American Development Bank (NADB), which the American people know little or nothing about. Further, the proposed creation of a North American Investment Fund to close the income gap between the U.S. and Mexico will neither improve NAFTA nor the U.S. trade deficit, since under its present configuration, Mexico does not serve as an American export platform but rather as an import platform from Asia. NAFTA has failed to achieve its objectives, while imposing large costs on the United States. NAFTA's abject failure calls for America's complete withdrawal and a new way of thinking on free trade – international commerce "free" of government direction.
The United States should seek to protect itself from the spread of violence and corruption in Mexico by strengthening border security. It should also pull back from further economic integration with Mexico because of instability south of the border and the need to rebuild America's own industrial and financial capabilities. The national unity and independence of the United States is threatened by transnational business interests who seek to substitute foreign commercial ties for domestic partnerships, so policy must favor internal development as the Founders envisioned. As Alexander Hamilton put it in his famous 1791 Report on Manufactures:

"Mutual wants constitute one of the strongest links of political connection....It is a truth as important, as it is agreeable, and one to which it is not easy to imagine exceptions, that every thing tending to establish substantial and permanent order, in the affairs of a country, to increase the total mass of industry and opulence, is ultimately beneficial to every part of it."

Those "mutual wants" that strengthen our country's "political connection" should include both immigration and trade policies that each help "establish substantial and permanent order" within our nation and among the American people, from the displaced factory worker now in his 60s and subsisting as best he can to the high school graduate who can't seem to get to the first rung of the career ladder to the native-born black or Latino in his 20s who seems unable to get ahead because of intense labor competition from illegal aliens and the latest chain migrants to the legal immigrant who obeyed the law and now finds herself vying for jobs with illegal aliens who every time can afford to work for worse pay and in worse conditions.