Global Give-and-Take
It would be tough to scan the headlines without seeing a story driven by economic globalization. Take the recent decisions by the Teamsters and the Service Employees International Union--3.2 million members strong--to break off from the AFL-CIO. These historic moves were motivated by both intense disagreement about how 21st-century unions should cope with globalization and the dramatic decline in the power of domestic industrial unions as manufacturing moves overseas. Not surprisingly, the "new nonfiction" shelf at your local bookstore is also stocked with globalization fare. Policy wonks, both pro and amateur, couldn't wait for New York Times columnist Thomas Friedman's recent The World Is Flat (Farrar, Straus & Giroux, $27.50).
And what an uplifting read it is. Friedman writes that the Internet-driven elimination of geographic barriers to global competition--the "flattening" the title refers to--is unstoppable but ultimately desirable. Everyone will compete with everyone, and eventually everyone will win as free trade forces up the wages of foreign workers and expands their economies, creating a bigger pie available for "knowledge workers" who are willing to continually update their skills. As Friedman writes (the italics are his), "The Indians and Chinese are not racing us to the bottom. They are racing us to the top--and that is a good thing!"
Not all commentators are quite so sunny. Clyde Prestowitz, president of the Economic Strategy Institute, argues in Three Billion New Capitalists (Basic Books, $27) that new economic competitors in China and India will cause the center of global wealth and power to shift to the East. He expects China to become the world's largest economy by 2050, a title that may eventually be captured by India.
Champ (or chump). And the home team? Well, the best the United States can do is remain as competitive as possible--which, Prestowitz contends, this country is not doing. ("Among international travelers, the U.S. telephone system has become a bit of a joke," he sniffs.) What should America be doing? Oh, the usual think-tank favorites such as declaring energy independence, dumping the current complex IRS code in favor of a national sales tax, and ditching agricultural subsidies in favor of worker education. Critics of Prestowitz note that back in the 1980s, he was touting Japan as the nation sure to unseat America as the planet's supreme economic superpower. In this new tome, Japan and the European Union are identified as economic also-rans, "two creaky old behemoths." Prestowitz also barely touches on the environmental and demographic weaknesses of China and India. Perhaps he overestimates the challengers and underestimates the champ, but Prestowitz contends that America needs a national economic strategy other than simply pursuing more free trade.
Now, Barry Lynn is a man with a plan. A fellow at the New America Foundation, Lynn thinks it's time government reasserted regulatory control over globalizing corporations. In End of the Line: The Rise and Coming Fall of the Global Corporation (Doubleday, $26), Lynn says today's global economic system and just-in-time supply chains are too vulnerable to the vagaries of nature and political strife. He notes that a 1999 earthquake in Taiwan and the resulting disruption in the supply of computer chips closed factories in California and Texas.
Lynn would force companies to use multiple nations as suppliers. It's hard not to conclude that by raising the costs of doing business overseas, many of Lynn's solutions are aimed at India and China. He even admits such a program "will be opposed by global-scale economic behemoths able to spend vast sums of money" --and perhaps to hand out free copies of The World Is Flat .
This story appears in the September 19, 2005 print edition of U.S. News & World Report.
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