Recently a friend of mine shared a story on his encounter with a local old lady. The story like goes this.When my friend introduced himself as a foreigner, her response was “Oh you are not one of those guys, who earns dollars here and send it back to your country right? Because that really pisses me off. Thats why our economy is in tank” . It certainly wasn't particularly a nice way to talk to strangers. After hearing this story I went into contemplation which forced me to write this blog.
In summary the lady was blaming globalization for America's current hardship. People do have short memories and it seems it gets shorter in time of crisis. In the 90's American consumers and businesses regarded globalization and free trade as net positives when integration of China and former soviet bloc into the trading system lowered inflation, opened new markets and brought billions of workers into the labor force. Globalization was good when US got all the upside of it. May people then considered globalization as one way traffic, where they thought they were the only ones who where going to be the beneficiaries. Now probably America is getting some downside of it. You got to consider globalization as two way traffic, where you will gain some and lose some. It can be net positive or net negative all depending upon how you manage your trade policies, regulate your companies and how often do you find a way to distribute gains from the markets that are benefiting. [ I hope I won't be called communist for saying this]. I believe globalization is net plus for USA.
Yes, its true that jobs have been moved en masse recently to developing world, whether its IT jobs or Auto jobs but don't forget globalization has also created lots of jobs in U.S. for engineers, nurses, professors, computer programmers, accountants, bankers etc etc. People now shout loud about outsourced software jobs to India and China but forgot they already made billions by selling computers to those countries. Do you really want to sell them millions of personal computers but hope they remain ignorant ?
As I mentioned earlier globalization has both pros and cons and they are applicable to both small and big players of global economy. Its not that developing countries are always benefiting. For example, in India's PC market HCL (India's own leading company) is the big loser. The company introduced notebooks three years back but is not being able to compete with the American giants Lenovo, Dell and HP. Currently the U.S. economy crisis has shaken the whole world. Globalization enabled the U.S. to infect the rest of the world with its toxic mortgages.
The global economy is still the similar game but has welcomed lot many influential players. U.S. is still the most powerful player but can no longer determine the direction of global economy singlehandedly. The competition is tougher than before and will grow more fierce with the inclusion of stronger and ever improving opponents. U.S.A too will have to keep improving to win this game and I believe they will win gold if they can maintain their innovative edge against all its competitors.
