Arlington, VA August 7, 2016
A brief overview of the history of perhaps a premature 'death'
If you look through the news feeds on Google News, and others, there seems to be a lot of comment lately, possibly due to the positions of both US political candidates, that globalization as we know it, may be dead or at least dying. let me pose two questions here about that issue:
- Is it possible to stop the global flow of commerce and economics?
- If it is possible, how can it happen in this 'connected' world?
Answering one or both of those questions many not be as easy as it seems. Let's look at some of the rhetoric and see what they say, but first, let's define what we really mean by globalization. Merriam-Webster gives us a simple definition, that is:
"The act or process of globalizing : the state of being globalized; especially : the development of an increasingly integrated global economy marked especially by free trade, free flow of capital, and the tapping of cheaper foreign labor markets"
So, what do we have; First, a Process, a State; Second, developing an increasingly integrated economy; Third, Free trade;, Fourth Free flow of Capital; and Fifth, Tapping of cheaper foreign labor markets.
Globalization is truly a process, an organized and dedicated effort to design, produce, and sell products and services. it is also a state, not in a physical sense, but more allied with the logic of combining resources of all kinds to produce products and services people want around the world. Not every nation or region has all the resources needed for the products or services they seek; it falls to others to provide those additional resources and it is logical that, if they work together, the end result is something acceptable to all from an economic and social perspective.
That concept of process and state logically leads to the sense of an increasingly integrated economy. This is not a new concept; in fact, the Ancient China trade through the original Silk Road lent itself to a similar economic model. China produced silk and other goods, some from their own capabilities, or imports from other local areas and provided finished goods available for purchase. Traders took those goods, arranged caravans, and moved along the Silk Road, selling goods and they progressed, using the available resources for housing, shelter, food, and other necessities along the way, and creating a somewhat integrated trading environment, at least for its time. At the end of Silk Road, stood Constantinople (Byzantium) and other ports along the Mediterranean Sea with access to Europe, where people, thanks in part to the Polo family, had introduced these goods to those who wanted them throughout Europe. In turn, art, sculpture,m recipes for food and some manufacturing made their way back through the route to the East, whi9ch extended their capabilities and introduced Western culture and ideas.
Further along the historical timeline, early banking houses turned barter into trade with money exchange, and eventually the early mail services.
Importantly, for this type of trade to occur, freedom across boundaries was critical, where they existed, and while profit dictated who could buy, the imposition of government tariffs and imposts came much later. Since much of the early trade involved barter rather than exchange of gold or silver along the route, doing business with locals was simpler--you received what you wanted for what you had to trade.
The Chinese were the first to create the currency markets; using measures of silver and then gold to price their goods. By the time of the Polo's and others, caravans carried with them various forms of gold and silver to supplement their trading. Precious metals were a universal medium for exchange, but also dangerous to carry on a long trip.
The fifth part of the definition, cheap foreign labor markets, was the easiest part in earlier days. Kings and other rulers simply took the people they wanted to work the fields or produce goods, paying them nothing, and eventually either killing them or sending them back to the farms. Over the centuries, this form of labor continued in the East, and the West through the feudal system as it developed, and eventually into colonialism as the Age of Exploration began in the early 15th Century in earnest, lasting until the middle of the 20th Century. People with power took the people, resources, and labor capabilities and sold them, or lost them to the highest bidder, caring little for its effect on the local economy, but supporting the Age of Industrialization with it factories and need for expansive raw materials and labor.
The real difficulty is that, once globalizing efforts have begun, stopping them is an extremely difficult proposition. Think about this from a practical perspective. Manufacturers want to sell their goods to the widest possible audience. Similarly, they also want to manufacture their goods or provide their services at the lowest possible cost, increasing their profit. In those instances where there is little inhibition to importing goods for sale, costs for taxes and imposts are reduced if not eliminated. Labor, the single largest part of the cost equation, is at its lowest in those areas where there are no unions, low wages, and large numbers of people willing to work for those wage levels. Locations such as these are not generally located within developed countries; rather, they exist more plentifully is so-called 'third world' countries, and that is where the trans-national firms go for their labor force.
Breaking that chain requires much more than simply winning an election in the US or one of the other industrialized countries., Where one country reduces its investments, others will quickly follow, especially countries such as China which want expanded markets and manufacturing capability. In a world where access to any nations is virtually hours away, and economically nations share currencies, products and services and resources, globalization, in my view at least, will not die. it may evolve somewhat, but it will remain a major player in markets.
Please note in closing that I have not discussed either the ethics or the governmental controls over globalized efforts. These I will discuss in future articles.