Monday, November 27, 2006


Globalization And Job Loss

My opinion is that globalization is an unstoppable juggernaut, and that free trade is here to stay. It sucks eggs regardless. The article at the link below is a sketchily informative overview of American attitudes toward globalization, and how the issue is rapidly changing the political scene. The author tells us, "The new congressional lineup raises the prospect of the most significant globalization debate since the 1992 presidential campaign's bitter exchanges over the North American Free Trade Agreement (NAFTA)." Congressional offices and think tanks alike are hopping with activity over how to approach the touchy issue of free trade. One problem is that U.S. corporations are so deeply invested overseas, and vice versa, that protectionism would never be as beneficial as it might have been many decades ago. It might even hurt American companies more than foreign ones. Some of the exports on which we might levy tariffs are, in essence, the products of American corporations that have simply been manufactured overseas. "It's not 'them' exporting to 'us'," says Dartmouth trade historian Douglas Irwin. "It's multinationals' factories there exporting to us."

Washington economists are instead contemplating alternative approaches to helping American workers. These include revamping unemployment insurance to aid the longtime unemployed. Globalization has stimulated fear among American workers in all classes however, and even more must be done. Recent exit polls indicate that Americans who believe the next generation will have a lower standard of living outnumber those who think life will get better 4 to 3. 56 percent favor expanded trade, but only if more aid is given to American workers - and that's a big "if". One quarter oppose "trade liberalization" altogether because the social cost to Americans is too high.

The dramatic increase in globalization in the last twenty years owes as much to the end of the Cold War as it does to advances in IT and communications. It has boosted the American economy by $1 trillion, while incurring only $54 billion in job losses. Globalization does serve the American consumer by reducing the cost of many items, but the perception of its social destructiveness has been difficult to shake. Certainly, job losses in IT and engineering have been substantial and highly visible. Nearly 140,000 U.S. IT jobs - or one quarter of the total - were cut between 1999 and 2005. Even beyond the job losses is the deeper problem of escalating financial insecurity among those who are still employed. Middle class life has become more of a high-wire act than ever before. Middle class incomes have become so volatile that the typical family recovering from a job loss will lose 40 percent of its former income, while it lost only 27 percent of its income thirty years ago. Those who do become unemployed are out of work for two weeks longer on average than the 6.3 weeks that were typical during the 1970's. Coupled with these persistent recent trends is the fall in real estate values, which many Americans had been leveraging to stay out of debt.

Something clearly has to be done. Congressmen such as Sherrod Brown of Ohio and Jim Webb of Virginia are among those seeking out ways to alter the impact of globalization. "We don't know exactly what the new road is," says Lori Wallach of Global Trade Watch. "But we're going to hit the brakes on this road."

"Globalization debate will grow: Job loss in U.S. a big concern in free-trade discussion" from Florida Today

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