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May 17, 2006
Globalization, Part II
I recently had the privilege of hearing Jaswinder Ahuja deliver a talk on globalization. While there were a number of important points in his remarks, one key thought has stayed with me: The ultimate goal of any companies globalization efforts should be focused on accessing talent pools outside of the US, not simply finding a lower-cost workforce. From an economic point of view, it may lower the cost of labor (expanding supply with a fixed demand lowers the cost), but lower labor costs don’t really drive business growth. Growth comes from higher sales, typically into expanding markets.
Jaswinder also provided a list of issues a global company needs to face, and most of these dealt with overcoming the physical and social separation between the US and other geographies. This separation represents a cost to the organization involved – while an organization can use the temporal separation to it’s advantage (“round the clock” production), it’s extremely difficult to map some development and manufacturing operations onto this continuous model. The basic fact is that it’s not all that cheap to have a workforce spread out across the entire planet.
So I am completely baffled by the immigration “debate” going on. (NB: I hardly think it’s a debate – the President has offered nothing substantial other than half-heartedly trying to appease the rabid right, and a semi-functional guest worker plan outline) The discussion seems to be centered on the “to let them in or not let them in” point, when to my mind that’s the least of our worries. We should clearly let any and all into the country. It’s good for us: it improves the economy, it makes the nation a stronger, more divers society, and it’s the right thing to do.
While liberalizing the immigration policy will have a positive, long term effect on the US economy and our society, it will come with change. And I suspect this is the core issue – Americans in general are worried about keeping what they have. I suppose that makes sense to some degree, but what are we loosing by being so tight-fisted? We have so much more to gain than loose.
So I think there’s a second phase of globalization – where the borders of countries stop being so important. Think of it as the world moving to be with us here in the US. If we can get to this second phase, we’ll reap the benefit of an expanded labor pool, drive down the cost associated with getting access to that increased labor pool, and be the richer socially for all for this.
I do think it’s important to modulate some parts of immigration, less because it’s dangerous for our country, and more so that we can direct a good situation into a really, really good situation.
And finally, we seemed to have forgotten the national consiousness we once had, that was so eloquently expressed in Emma Lazarus’ Famous Poem The New Colossus and engraved on the base of the statue we revere as a symbol of our nation and our freedom: The Statue of Liberty
Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!"
As a nation, we should aspire again to this compassionate, generous vision of humanity.
Posted by pgutwin at May 17, 2006 12:33 PM
Comments
Dear P. Gutwin;
Globalization benefits corporations, not workers. Globalization drives wages and the standard of living of the common man to the lowest common denominator. You call this a good thing?
Globalization and fair trade agreements also eliminate tariffs, which fund the treasury. These tariffs protected the wages of American Workers, along with their jobs, against offshore labor for the first two hundred years of our Republic. The tariffs are what originally made this country great. They helped fund our infrastructure and a strong military. The high wages allowed the highest standard of living for the most people possible in this country. The taxes from those high wages went to the treasury.
Globalization eliminates worker environmental protections as well as consumer protections and truth in labeling laws.
Globalization and free trade agreements also eliminate sovereignty of nations. Citizens of "fair trade" partners are forced to yield their rights, their laws, their borders, and the power to govern themselves to foreign tribunals of a few faceless strangers who answer to no one.
Perhaps those that believe in the trickle down theory should be reminded that the trickle has dried up. You say globalization and unlimited immigration is good for reducing costs in the labor pool; but I fail to see how your view is good for the citizens who have to work for a living.
Your globalization panacea creates sub-standard wages for workers. It eliminates health insurance and other worker benefits. How do you finance any national or regional infrastructure without taxes from the working class? As the wages spiral ever downward so does taxable income. Your efficient corporations certainly won't be volunteering to help in that regard. It wouldn't be good for the bottom line!
In your world of unrestricted trade, there will be only ultimate corporate winners with no competition to hold down prices. Unrestrained capitalism essentially means that the big fish eat the smaller fish until there is only one fish in the pond for any specific market. I’m not an economist nor am I an expert in anything. I don’t think one has to be an economist to see merit in what I’ve said. It seems pretty evident to me.
The poem “The New Colossus” by Emma Lazarus, which was engraved on a bronze plaque in 1903 was romantic, philantropic, and an important part of our heritage. However, this classic piece is no longer apropos.
Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!"
It’s time for those who would immigrate to this country, because of poor conditions in their own, to stand up and change the conditions in their own country for the better. We did.
Perhaps you forget, are unaware, or deny that there is a subtle but serious overpopulation problem in this country. More immigrants? I think not. We're full up! Distributing masses of people here is not a solution. Only lowering the birthrate is. Endless growth in any entity in a finite world is destructive in the end.
I really don't see how you actually believe what you write unless you are an academic, a CEO, a member of upper management in a large corporation, or a stockholder in one.
One final note... The final result from globalization and unrestricted trade will be a number of rich and powerful corporations and virtual slaves who work for them. This certainly implies that there will be a huge disparity of wealth between a fortunate few and those in the much greater majority of unfortunates. Such a disparity of wealth is the fuel for revolution.
Therefore, Mr. Gutwin, we seem to disagree on almost every point in your post. I’m sure you disagree with the points in mine.
Posted by: Wes at August 4, 2006 5:30 AM
Thank you for your thoughtful comments. While I do disagree with some of the things you’ve said, I think you may have misunderstood one of my premise. In rereading my original post, I can see how you would get the idea that I was in favor of tariff-free world trade, and unlimited immigration into the US.
I was actually trying to say that these are not particularly good ideas, and although I highly favor much more liberal immigration and tariff laws, removing all restrictions is a bad idea for many of the reasons you outlined.
My core point is that we need to move to a more idealized trade and immigration policy because it respects both our own and other nations humanity. Restrictions in these areas put a huge wall of separation between us (the “haves”) and other less fortunate nations (the “have nots”).
My suspicion is that we are unlikely to agree – I sense strong emotional content in your reply, and my words are unlikely to change what your feeling. I myself am the victim of a large corporations’ response to globalization and do not enjoy any position of wealth or power. However, I am a student of history, and I see a lot more hope for peace and safety in joining with those around me rather than fighting.
Posted by: Paul Gutwin at September 24, 2006 2:02 PM