The global economy and local stress

Filed under: Contributed Column,Opinion,Print | Tags:

There are those, like Thomas Friedman of the New York Times, who want us to get over our economic gripes about outsourcing and realize that by the 21st century things are “Made in the World.”

Forget about where something is made, and get used to the fact that the global economy is here to stay: Whoever provides the cheapest labor force or raw materials is chosen.

Whoever responds to a call for proposals, architects from Germany or interior designers from Brazil, is competing with the entire world, regardless of the target location.

In the Digital Age, physical or geographical location means nothing. Any set of ideas or designs or drawings can be digitally transported across oceans and mountain-ranges in seconds. The Internet has connected us socially, professionally and financially. Experts can bid from anywhere to perform tasks anywhere they are needed.

I met a physician in South Africa that was reading and interpreting MRIs and X-Rays for hospitals in the United States. Her services were rendered during the day (her time), while it was night-time here. Isn’t this efficient? Doesn’t is solve our fast-pace hunger for immediate responses?

There are others, like Joseph Stiglitz, winner of the Nobel Prize in Economics (2001), who is concerned about the optimistic view of globalization. For him, there is a fundamental asymmetry between the developed and developing countries, such that the kind of policies imposed by the former on the latter would cripple any potential benefits that could come from “the removal of barriers to free trade and the closer integration of national economies.” What is good for Germany may not be good for Egypt or even Greece (as we have recently seen).

National differences are easily observed in the laws countries enact, from tax codes to zoning and labor safety. Simply expecting the same rule of law across national borders is a folly: different cultures have different beliefs and ideals they enshrine in their laws.

It’s not that the Chinese refuse to abide by Western intellectual property laws; it’s that they have ancient traditions that find personal ownership of ideas quite perplexing. The idea that some can copyright an idea is foreign to them. And the Indians think of the legal system as an ongoing conversation whose interpretive flexibility would be dumbfounding to American lawyers.

When Adam Smith encouraged us to think in terms of the division of labor and added foreign trade as a source of national wealth (1776), he couldn’t have imagined current globalization trends. For him, trade was supposed to enrich all parties, rather than some at the expense of others. But as we look around us, we feel impoverished at the expense of Chinese and Indian ascendancy.

A befuddled President Obama was chastised by the late Steve Jobs about Apple’s labor practices. Jobs was clear in asserting that 20,000 overseas jobs (plus around 700,000 subcontractors in Asia and in Europe) “were not coming back.” Wake up, this is the real world, and not fantasy American labor-land (with about 43,000 Apple-related jobs)! But we want to make things here: we want factories to work three shifts a day, employing skilled labor at reasonable wages, the way it was a century ago.

Is the American dream of manufacturing over? The car industry is proving otherwise, with record profits at GM, Ford, and Chrysler, and added jobs from Michigan to Tennessee. Yes, two of the three got bailout money. But unlike the banks that got much more, this industry added jobs over time. While banks reduce their workforce to become more profitable, robotics on assembly lines still require human labor.

The sanctity of Jobs’ legacy should come under closer scrutiny when it comes to profiteering from cheap labor abroad while Americans are the main target consumers. Does Apple have a moral obligation to employ Americans rather than exploit Chinese workers at Foxconn? Should Apple care about the economic well-being of America? Should it sacrifice a lower profit-margin to sustain the health of the local economy?

This may sound xenophobic, even protectionist; it may sound contrary to classical economic principles of capitalism and even of communism, where the laborers of the world must unite. Instead, this is meant as an urgent reminder that the fruits of a global economy may turn out to be sour at the end.

Bud and Sam Walton would turn in their graves, unlike Jobs who didn’t care, if they knew that Wal-Mart employees can’t afford to buy the items sold there. Their efficient distribution genius wasn’t intended to increase joblessness in America and create a permanent unemployed class.

Capitalism’s dream was to make everyone more prosperous, not to make some richer at the expense of others. Can we revive the dream?

Raphael Sassower is professor of philosophy at UCCS. He can be reached at rsassower@gmail.com Previous articles can be found at sassower.blogspot.com