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Globalization is Not Evil

July 24, 2012

by J. Andrew Zalucky

A lot has been made in the press lately about Mitt Romney’s role at Bain Capital and his reputation for “outsourcing American jobs”. While it is true that in Private Equity the process for making companies financially viable often involves finding cheaper sources of labor, this does not mean that the leaders of that industry are “evil” and are intentionally working against the health of the American labor market. In a recent blog post, the Economist’s R.A states that:

the process of globalisation, which has moved billions of people out of dire poverty, is worth defending loudly and proudly, even if it came along with a costly side order of dysfunctional American politics and policymaking. We have a moral responsibility to be very clear about what aspects of globalisation we think should change and why, because the cost of encouraging a broader backlash against the process of liberalisation, with all the great good it generates, is simply too high.

He goes on to say what more populist members of the left (and the hysterical paleo-conservative and isolationist right) love to ignore:

The rise in worker bargaining power that occurred in the first half of the last century was a product of social movements, but those movements were enabled by the production technologies of the time, and it is the dissolution of those production technologies that has been most responsible for the weakening of labour’s position…Geographic concentration enabled worker solidarity, and the benefits of the agglomeration meant that employers couldn’t credibly threaten to move elsewhere. But the days of the large, urban industrial agglomeration are gone. If labour is to capture more of the producer surplus—or have more of a say in Washington, for that matter—it will be as a result of a social evolution that matches the production technologies of today.

As the saying goes- the American right wishes we still lived in the 1950’s, while the American left wishes we still worked in the 1950’s.

If we want to structure an economy that will allow for domestic employment with good wages and benefits, we need to structure our labor markets in a way that will improve our comparative advantage.

“So that means you want to destroy American wages and tear down all the important workers rights we’ve fought so hard for you heartless capitalist pig!!!”

No, this does not mean arbitrarily lowering all wages or breaking down important civil and workers rights, laws which I’ve voiced my reverence for in my previous article. However, pontificating on the evils of those who would hire workers overseas won’t do us any good- unless your conception of the good includes economic isolationism. After all, it is only the flip-side of the nationalist sentiment that some conservatives use to discourage foreign nationals from coming to the US to find work. Such sentiments have only translated into a convoluted immigration system that discourages people from staying here legally and encourages a black market of “undocumented workers”. Protectionism and isolation would only create its own complicated economic problems, rather than lower the unemployment rate.

Unless their assets are seized and all operations nationalized by their respective governments, companies of all stripes (publicly-traded companies, LLCs, partnerships, sole-proprietorships, ect) operate NOT as nationalistic entities serving domestic interests, but rather on behalf of their consumers, shareholders, and employees. Of course, the picture changes completely if the company broke the law (ie, Enron), but at the moment I’ve seen no accusations thrown against Romney in this regard.

And yes I know, a nation is not a company. The President of the United States must serve in the wider American interest, not the interests of one faction or another. But a past in private enterprise doesn’t just magically disqualify you from running for office.

3 Comments leave one →
  1. JUNOHOO permalink
    July 25, 2012 11:52 am

    Well, outsourcing jobs alone does not qualify one as “evil.” You are right. But I think the grievance against Romney isn’t because he merely sent jobs oversees, but rather that the entire premise of his campaign and legitimacy as a politician comes from the credentials of having managed a capital asset company successfully, and that success in the business world gives him the werewithal to run the country’s finances. I’m going to ignore the part about how he lied to the SEC (or American public?) about running Bain Capital in 99-02, which, on the principal of his own merits, should further remove his qualifications. Maybe that’s not evil either, but it makes for a shitty president.

    As it turns out, creating jobs in China may be beneficial in a firm’s interest of generating profit, but America as a government does not run to generate profit. It is in place to do what’s best for the American people. The governement is not the private sector and the interest of a private investment company rarely correlates to the interests of a country as a whole. It IS the country’s responsibility to do what’s in its people’s best interest, which is to regulate the global market on our end so as to keep our own economy healthy. Regretably to the neo-cons over at the Economist, this will likely include some sort of provisions for how firms should store or delcare their assets. In the case of Bain Capital, they are being accused of essentially generating profit from the American economy while outsourcing assets and labour oversees. Which means that the wealth they generate DOES NOT trickle down to the American public (also important to know that it goes largely untaxed, I would show you the evidence here but ahem *COUGH* I haven’t been able to find the tax returns…), but stays in the hands of the few investors that made it possible.

    “Unless their assets are seized and all operations nationalized by their respective governments, companies of all stripes (publicly-traded companies, LLCs, partnerships, sole-proprietorships, ect) operate NOT as nationalistic entities serving domestic interests, but rather on behalf of their consumers, shareholders, and employees.”

    I couldn’t have said this better myself. Companies are not countries, should why does Romney’s success in business supposedly translate to capability in managing affairs of our country? Can we really expect when Romney is elected that he will do anything other than act in the interests of the same elite aristrocrats whom he helped become so “successful” by outsourcing jobs at Bain in the first place?

    The arguement is not against Globalisation, it is against the super-rich’s exploitation of the current economic system, and their willingness to continue to hide this from the American people, all while talking about “creating jobs.” Mitt Romney is the embodiment of this problem.

  2. July 26, 2012 4:29 pm

    Thank you Jesse, always good to hear your input. This article was very much inspired by our discussion

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