The weakest link.
Barry C. Lynn, the former editor of Global Business magazine, doesn't hold back when criticizing globalization. He's not the first, either. In Globalization and Its Discontents, Nobel-prize winning economist and former vice president of the World Bank Joseph Stiglitz argued that globalization hurts developing economies. Lynn, on the other hand, takes it a step farther. According to Lynn's argument, globalization is damaging rich economies as well.
He uses as an example the devastating earthquake that rocked Taiwan in September 1999, killing 2,500 people. Building after building fell into rubble, houses were utterly demolished and basic services like water and electricity vanished. But Taiwan wasn't the only one thrown off kilter by the quake. In a matter of days, the tremors took their toll across the planet, thousands of miles away from the epicenter, in places like Texas and California. The event literally paralyzed the country's semiconductor sector, one of Taiwan's biggest industries. Companies like Hewlett-Packard and Dell were thrown out of whack when broken supply chains forced them to halt assembly lines, disrupting life for thousands of employees. Wall Street also felt shockwaves as the technology companies' stock prices tumbled. The Taiwan earthquake made crystal clear the vulnerability of the global economy's network.
One of the key facets of globalization has been the shift of manufacturing from one side of the planet to the other. Factors such as cheaper labor, proximity to raw materials and lax government regulations have sent corporations racing toward the cheapest countries to work. Yet with rewards comes risk. "A breakdown anywhere increasingly means a breakdown everywhere" says Lynn, the Taiwanese earthquake case-in-point. Globalization has created a very specialized but rigid economy where certain products vital to developed economies, such as the United States, are made in very few places. Such trends threaten U.S. economic stability, which in turn threatens national security.
Former U.S. President Bill Clinton signed free trade agreements or began negotiations designed to establish free trade deals. By doing so, says Lynn, the former president put an end to centuries of U.S. protectionism that kept the country from the risk of dependence on foreign imports, that is, a policy that protected the country from problems abroad, such as occurred in Taiwan. Lynn also provides analysis of the phenomena of outsourcing: the movement of jobs from one country to another; its effects on U.S. workers; and the ideological siren song that has permitted the exodus of U.S. jobs with little or no serious protest, on the expectation that the moves would ultimately benefit everyone in society.
Loyalties. In the United States, however, the only true beneficiaries of globalization are big companies, which have found ways to operate across borders, free of any U.S. regulations or any vision of the future that includes society as a whole. Big corporations, the author says, have become extraterritorial, loyal to their shareholders and their investors but not to the citizens of the countries in which they operate, nor to their own employees.
What next? Lynn suggests that we should start out by bringing back industries and jobs that have gone abroad. He doesn't come across as a total nationalist, instead calling for a global balance of goods and services, supply chains, production and labor and a more-level playing field among businesses, with more opportunities for everyone. Globalization can bring prosperity, he writes, but only when it's managed by national economic and political agendas.
Lynn comes up short when he descends into alarmism. But his fresh arguments and way of voicing his concern with the world's new economy, one that gives in to no ideologies, merits a close read.
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|Title Annotation:||End of the Line|
|Author:||Alende, Andres Hernandez|
|Article Type:||Book Review|
|Date:||Nov 1, 2005|
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