Sinking Globalism

John Ralston Saul has a new book that’s coming out called the end of Globalism. I haven’t read the book, all I've read is a little blurb about it that didn't really say much. However, when I heard the title I began to think about it in the context of what I’ve been reading lately.
I don't know if Globalism is dead yet, but it looks sick, and I think the pressures on it are only going to get worse.
To accept Globalism means to accept that market forces will determine the direction of society unimpeded. This is a fine proposition when you're winning. But when you're losing then it doesn't seem so wonderful.
Let’s examine some evidence.
The US congress is lobbying for a 27.5% tax on Chinese goods unless China goes and revalues their currency peg against the dollar. The tax is the outcome of politicians looking to appease dissatisfied Americans who feel that American jobs are being undermined by cheap Chinese labour. For example, the average Chinese auto-worker makes about $2/hour. And that's a heck of a good wage there.
People in the US are dissatisfied because job growth in the US sucks. We're well into an economic recovery and job growth isn't even keeping up with the birth and immigration rates.
Job growth in the US sucks because the average Chinese worker makes about $2/day.
In France there is a May 29th European Union constitutional vote that looks like it could go either way. A no vote would be a blow to the EU. Its true that part of the discontent in France is with the reigning Chirac government, but part is based on skepticism about whether the constitution will usher in a plethora of low wage competition for French workers.
Other established EU nations are nervous about the cheap labour competition that they are facing from fellow lessor developed EU nations like Hungary, Slovakia, Poland. Germany, for one, is looking at legislation to limit the wages of Hungarian immigrants coming to Germany, as the influx has weighed on the standard of living Germans. In Hungary, wages are about 1/10th that of Germany.
I could go on, but this is a blog, not a scientific paper, so I don't have to prove my point ad nauseum.
There is a massive disequibilrium in wages. Our Globalist formula depends on letting markets choose their labour. Until that disequilibrium disappears, markets will almost always choose the cheapest labour.
Any disequilibrium in the market, or anywhere in nature for that matter, will tend towards equilibrium. The disequilibrium in wages won't be any different.
We, in the west, will lose.
Tell me how we are going to maintain our current Western wage standards in the face of extremely low wage competition? Yes, the wages in the poorer nations will rise, but I find it impossible to believe that this will be done in a vaccuum, without a corresponding fall in wages for the richer nations.
Meanwhile, on another stormy front, oil is at what today? $55/bbl or something close to that. Saudi Arabia keeps making promises of putting more oil on-stream, but nobody believes them. Even if they do, its going to be heavy oil, its going to need more refining, and its not going to be cheap. Oil, in the longer term, is only going to become more scarce, and this is only going to strain relations between countries further.
When you look at the supply/demand dynamics of oil over the next 5 years, you quickly realise that its going to get ugly. There just isn't the supply coming on-stream to keep up with solid economic growth. Much of the potential supply is in areas that aren't politically stable.
What does this mean? It means that countries are going to be under increasing competition for dwindling oil reserves. The obvious question is - how far will a country go to secure oil supplies? Well we have a first example with Iraq.
I just don't see how globalism is going to survive all this hostility. We're already seeing the buds of such hostility in the above mentioned events. People will fall back on their governments to protect their standards of living. Businesses will fall back on governments to protect their energy supplies. And the globalism ship, with its open market rudder, will sink.
And then we can come up with a grand new theory to pad the pockets of business.
- posted by Sigurd4/22/2005 11:13:00 AM