Shifting gears back to politics and the parallels between the US elections and Brexit, one thought on my head lately is the discussion on jobs and the sentiment against globalization. There are a 100 reasons to hate the result of the election but we also need to take away that there is a sentiment that is building which hasn’t been talked about enough.
As a student of economics, we have always been thought that globalization is a wonderful thing- free movement of people and products across countries without barriers resulting in economies of scale and lower prices. That premise has brought the world closer- we drink Kenyan coffee brewed in a German coffee machine in a cup made in China.
People who opposed globalization were labeled protectionist and countries pursuing such policies were pressured into joining the global free market for trade.
But there is a price to pay: developed countries like US and UK have seen jobs move to China and Mexico. The people working in these factories in the small industrial towns presumably don’t have degrees that offer them new jobs and don’t have the luxury to re-skill with mouths to feed and mortgages to pay. The result is they take lower paying jobs to pay the bills but might end up in a lower income segment. This group doesn’t reflect in any unemployment number but they feel forgotten by their governments. This article Article: Revenge of Forgotten Class has examples from the swing states. There were similar anecdotes from UK, where a builder interviewed said he worked for 20£ an hour but was outbid by Polish migrants who work for half that. His choices are to work at half pay or risk going hungry, even if he went the half pay route, he feels significantly poorer.
The lack of focus by the Democrats on this issue cost them a lot of votes- Michael Moore called the result in July and cited this particular reason for the Rust belt- Ohio, Pennsylvania, Michigan, and Wisconsin- traditionally Democrat states to switch to Republican.
There needs to be more thought on how this situation needs to addressed otherwise those negatively affected by globalization with hold the politicians responsible for negotiating trade deals that resulted in cheaper items for them to buy but not enough money to afford them.