Updates for Tuesday, May 10th [2005]
The Global Money-conomy.
Dear Friends,
Summer approaches in this sweet land, a very mild climate of which I am accustomed to, it makes me glad to have started the Americas moving westward. Not more than an hour hence my waking today, I immediately began to regret the feelings of a good morn, as I headed out from the bedchamber and into the parlor...
Daniel: That's what I was trying to tell Tommy, but he seemed a little apprehensive about a woman President.
James: Well, Tommy will be like Rudy Giuliani in 2008 - sucking President Hillary's left tit.
Me: I never milk off the government's breast.
Daniel: Well, good morning.
James: Heya Corporate Defender, how goes the trade in Fascism?
Me: I keep telling you I'm not a Republican, I'm a Democratic-Republican, there is a big difference...
James: You're just another one of those guys who stride the fence. It's so annoying. At times you are pro-Democracy then the next moment you're up in some corporation's ass. The last time I was over here we had that big argument about Wal-mart. Daniel, weren't you here?
Daniel: Oh yeah, I was.
James: You can't have things both ways Tommy, you can't say that corporations are only expansive because of government charters and then say the government needs to be less involved. Then we take no responsibility for our government or our corporations.
Me: It's not the responsibility of the government to watch the entrepreneurs and the corporations, or to charter them. If it would stop meddling altogether you'd find the worst intentions of a businessman to be the most modest of all ills. I've been reading the history books, and Hitler killed more men from the seat of government than Wal-mart executives ever did at the seat of the economy.
James: You wouldn't say that if you saw those kids in the executive slave camps making dimes a day.
Daniel: You know, I just started eating breakfast and you two are already at it.
Me: And what of it? If labor can be purchased cheaper overseas, then won't the increased revenue, however cheapened, help their economy? Sequentially, leading to an established demand for higher wages?
James: You just don't understand money. You see, let me tell you this, and I'm an economics as my secondary major at Portland State...
Daniel: Yeah, James is all up ons when it comes to the economy.
James: See, it's like this. Corporations want to gain power over the world economy, by globalizing. So they send OUR money out overseas, and we lose lots of trade, see? But they earn all the profits.
Me: So, free trade, when private persons send THEIR money overseas, is what you mean by "globalization".
James: Yeah. So, these greedy corporations ransack third world nations, enslaving their populations in conditions that put concentration camps to shame. I mean, just look at some of the jobs that go overseas: making Wal-Mart clothes and NIKE shoes, IT and computer jobs, and sweat shop condition assembly line manufacturing... assembly line! With little kids too, jeesh. And their wages are a fraction of an American worker's livable wage.
Me: Certainly. So let me get this straight, we pay people overseas to weave garments and run 'enternet' websites, likewise there are new factories built where there were none before... but since they make less money than Americans would, that is "sweat shop" conditions?
James: See, you're already being a cynic. Globalization is evil and downright wrong and must be stopped... why would you pay someone else less than another person? It's not fair.
Me: It's not fair that to offer that person a job in a remote location you must offer them less money for the expense of the added commute either. However that God ordained us to suffer the inconvenience of such travels, maybe tempers the spirit of most men, but offers them opportunity.
James: Economists might agree with you, but Globalization's full effects aren't always taken into consideration. It disrupts distributionary communication paths, restrains the flow of labor, ignores job availability and stability, ignores future trends in favor of the same ol' ways, and is very uneven! Take it from me, economists would disagree with you.
Me: Uh... okay. So what should we do to make things more "even"?
James: Well we are taking so much from these countries the very least we can do is make it illegal to send work over borders and then send those third world nations reparations for our economic damages. I mean, sure, there can be exceptions but this is the world we're talking about. We can't just force laissez-faire on these people. They're starving... and if they're working at their jobs all day, how can they feed themselves?
Me: So what you mean to say by this is that our state should take away jobs from the poor people of other nations who would sell their labor cheaper rather than dearer for the hard times, and in the place of industry, simply give them money they don't have to work for? I don't think that's going to help them develop the commercial establishments necessary to make any of their lives easier. So far you haven't convinced me that this "globalization" issue is anything other than the same old thing even antient governments practiced: the furthered meddling in the trades of private people across borders. I do admit I am concerned about international trade, for instance, I was worried when you said jobs were going overseas, for the agricultural market. We cannot afford to export too much food or fall behind in our farming efforts and technologies.
James: Well, no, we really don't export much food. Do we? Americans are fat pigs, they import so much food that everyone else starves... just look at the global market and you tell me how the world can grow so much food but only the Americans are the ones getting fat? Manufacturing is more important than agriculture anyways, ANY economist will tell you that, we should worry more about our higher tech jobs and the kind of things the average American should be doing, besides working in services. Service-based labor is demeaning to the individual. It makes you feel unproductive... we're becoming a nation of do-nothings who don't do any REAL work. I mean, we hardly have anything left of our tech industry... Apple, Microsoft and Sun are the only American-based companies I can even think of! I tell you, if we brought back our manufacturing sector we could easily get out of this recession.
Me: The question remains: why make dearer what could be bought elsewhere cheaper?
James: Because that's the American way! It'll help solve the world money economy situation. We're running out of money at this rate, giving it all out to everyone else. It undermines international currencies. And with us specializing so much in fewer things, we have to rely on other nations more. And what if a terrorist wanted to attack us? They'd cut our high speed internet wires on the ocean floor or use jamming technologies or hack their way in... they'd put the economy into a nasty recession without lifting a finger. That's the modern age of terrorism, and the U.S. economy would be crippled.
Me: I thought the modern age of terrorism was best represented by this horrible event, "9-11"? And I thought that was one of the reasons we just had a recession, which I hear thankfully is ending.
James: And we've become too reliant on others for help. Other people's economic problems are becoming our own. And we wouldn't want some other nation screwing us by closing their trade at the wrong moment, right?
Me: But I thought "Globalization" was "free" trade, if they did close their trade channels and meddle, wouldn't they be guilty of anti-Globalization, which you seem to advocate? I've heard other words for it, like "Socialism".
James: You don't know anything about history. The Great Depression was caused because of our dependencies on the international trades being cut off, and not because of "Socialism". It was Fascists that rose to power, and we all know Fascists aren't Socialist. Anyways, you don't know about the great deal of economics behind depressions and recessions. Why if it wasn't for that lucky tech bubble bursting we would've been in a full scale depression all because of Globalization.
Me: Lucky?
James: It's just putting all of our eggs in one basket, relying too much on the global economy can screw us. It rewards those who are willing to work for cheaper instead of giving the jobs to the best talent, who charge too much. It'd be better if people just paid the better prices to the better people. Then we'd all be happy.
Me: Well, if we were the better people who don't really need to do the work, we would be. Anyways, I don't understand how diversifying trade is putting all of our eggs in one basket.
James: You never understand anything, Adam Smith isn't going to do your job for you, you know. He can't guarantee jobs. Only the United States government can guarantee jobs... that's what we elect Presidents for after all.
Me: Maybe that's the problem. Maybe instead of working for Presidents and government trade planners, we should be working for Adam Smith and Jean-Baptiste Say.
In the events of my life, I have managed to make no progress to the eventful searching for lost researcher Julius Rothsbard. Natalie seeks my company daily, and garners much of my affections. I fear for the misplaced yearnings I have lost for not having put letter to type as I have today, and reassure you of my finest health & fitness. Accept, friends, my respectful salutations, and assurances of great considerations.
- TH. Jefferson
Editor's Notes:
Globalization is a hot topic in today's society, but it reflects many of the same old misconceptions about the way the economy works. Globalized trade is the act of freeing trade amongst nations, but between few nations is there much "globalization" actually occurring, making this a very hollow threat. Politically motivated organizations such as the World Trade Organization and the International Monetary Fund coordinated with government offices (too numerous to count) control more capital than the entire private sector, so it's hard to say that our international market is very "globalized". Globalization suggests a uniform and open market, not one riddled with preferred trading favors granted between nations and special deals set up by politicians. The problem with Globalization today stem less from "free" trade and more with unfree trading arrangements, arrangements made both by advocates and dissenters of "Globalization", hand-in-hand with the political body of influential nations.
When our productivity soars, we can't complain, even if it soars in a period of job loss. Job loss and capital/monetary loss can often be full of misleading statistics anyways. Many times you'll see job loss figures quoted or economic "gaps" shown, but very rarely will you see job creation rates or estimations of the advancements our investments in overall returns to our nation. For instance, take the case of import/exports, and trade deficits... right now our world trade deficit is nearly half (we export about half what we import from other nations). When we look at this we find that most imports are oil-based and our world-wide trade disparity virtually disappears if we rule out that single sector. We don't consider everyday trading for oil a "deficit"... the capital stock (the raw oil produce we bring in) is not a "net loss" for us, so the figure revolving around our imports is misleading about how it affects our economy. Yes, we would make more money if we were getting the oil from ourselves, but we have so little oil that such an act would be disastrously expensive... assuming the market is free of meddling (it often isn't) we would be doing our nation a disservice to attempt to infringe upon making such trades more accessible and free. Of course when we talk about oil we aren't talking about a globalized industry: many authoritarian nations have combined into the political body of OPEC and fully control the oil market, hardly making it "free" in any way.
Facts are that the American economy is currently robust and becoming better able to manage itself, and while we should worry some about the interference other governments might have in that, the interference of private individuals is really of the most insignificant concerns. The wealth of nations never relied on the mere collection of any particular commodity (be it the money we want to prevent from being spent abroad or the products and industries we want to prevent from being exported - we literally don't need every industry at home), instead it is reliant on the national production of all commodities, and given the sheer degree of technological opulence most Americans live in, we are not for major fear of concern. If there are concerns to be had, it's not on account of passed up manufactures and special skilled labor sent to foreign powers... most of the rational fears we should have regarding the economy are still domestic and stem within our own government.
Globalization is cited for most of the foreign ailments, including third world poverty, environmental decay and overall degradation of social values. It's blamed for a dragged down economy and high unemployment. In fact, there are few things it's not blamed for... people are afraid of Globalization. Others hail globalization as a saintly practice, although few really understand what it really is. All globalization is, is the act of making trade more free between nations. Most nations don't want this. In fact, most people claiming to be globalization advocates don't want this. Even people who want more domestic free trade tend to want trade protectionism. Ultimately, we can only rely on our own political body as well as the political body of other nations, if we want more free trade, and ask them to stop interfering. Seeing as most nations are motivated by socialism and are deeply corrupt, we can't rely too much on that today, not with all the OPEC's, WTO's and IMF's in the world swaying the international opinion. However, as little as we can rely on foreign powers for good trading decisions, we can rely even less on those who want to make our government create another huge, centrally planned economy. It's those kind of economics that create the problems in international trading in the first place.
On the issue of foreign trade, we must be sure that there is actually free trade in the first place, before we start freaking out about its "disastrous" effects. The worst thing in a fair market that we would discover is that we aren't all we were cracked up to be. And I'm confident that if there are many of those realizations to be made, they aren't in American business, which is at its core healthy and vibrant. We only need to fear "globalization" if it's not being used to make trade more "globalized", but instead being a farce cover for furthered political control of the international markets... with organizations like the World Trade Organization and the International Monetary Fund, we certainly run that risk. The international market resembles the domestic market in this single respect: it's free trade or bust. Most choose bust, and with the lack of control we have over other governments and their free trade decisions, we can't afford to let alarmists and wannabe economists spook us into playing the game of centrally planned foreign trade. Where trade would otherwise be free between us and other people, the government, as always, should have limited ability to interfere. As that's not always the case, the very least we need reasonable trade policies that are not rooted in political movements, be they motivated by fanatical Socialism, or the self-interest of private parties who have penetrated the political system with corruption. By self-interest I mean both the self-interest of greedy corporate executives, as well as desperate out-of-work tech losers... those interests do conflict, but neither interest is in favor of truly free trade. That kind of moderation will only happen when we limit the powers our foreign trade regulators have over the international economy.
