The two sides of globalization


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. 

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2 comments on “The two sides of globalization

  1. Thigh provoking Rohini, I agree this problem should have been talked about more by the democrats. But I do have a larger issue with this: I don’t see how the politicians can fix this problem – it had to be fixed by the people facing them e.g. Go back and get more training if your current job isn’t working out. And let’s not forget, they are gaining from globalization in other ways too, given they drink coffee and eat and buy stuff and all that. So yes, politicians can hold our hands and tell us it will all be ok and maybe pass some programs that can help, but the ultimate responsibility of catching up with the times is ours

    • Thanks for reading! 🙂
      I agree- it is a person’s prerogative to retrain to fit into the new economy. But let’s face it, we are talking about a blue collar economy, probably without a college degree- if you are out of a job and have bills to pay, you end up taking a lower paying job not think about investing in future by gaining new skills. And it’s human nature to blame others and not look at how we can solve it. The election is the perfect outlet for these angry disillusioned people.
      The U.K. faces the same situation- that’s why there is discussion to nationalize tata steel after tata decided to sell the plant- they can’t afford to upset any more U.K. voters after seeing their anger manifested in the Brexit vote.

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