Globalization is Not Evil
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.