Business Week Concedes Globalism Is A Problem

Eagle Forum ^ | 12/13/2006 | Phyllis Schlafly

[Paul Ross]

Business Week Concedes Globalism Is A Problem

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by Phyllis Schlafly, December 13, 2006

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Economists, academicians and financial consultants for years have been preaching that globalism is the wave of the future and that anyone who wants to survive in business must ride its surfboard or drown. All of a sudden, Business Week is having second thoughts.

This voice of business now says that the United States is no longer the captain of our fate because "globalization has overwhelmed Washington's ability to control the economy." As recently as ten years ago, the United States could set its course for economic growth by tax and spending decisions made by our elected representatives.

But no more. Whether you are a Republican supply-side tax-cutter, a Wall Street deficit hawk of either party, a Silicon Valley techie, or Nancy Pelosi pandering to those who want to boost the minimum wage, you must face the fact that you are marginal in comparison with the elephant in the room, which is globalization.

By many traditional criteria, our economy is doing great. Unemployment, inflation and interest rates are low, the stock market and household wealth are high, and goods are cheaper than ever.

But real wages for many U.S. workers are down over the past five years and have stagnated for others. Business Week now admits that our weak wage growth is driven by competition from cheap labor in Asia and that Congress is virtually powerless to make any significant difference.

The effects of globalization are not equal. Janet Yellen, president of San Francisco's Federal Reserve Bank, warned in a recent speech: "Globalization and skill-based technological change may have been working in combination to particularly depress the wage gains of those in the middle of the U.S. wage distribution."

Gone are the days when the man once acclaimed as the most powerful in the world, Federal Reserve Chairman Alan Greenspan, could manipulate our economy by tweaking our interest rates. Although President Bush's tax cuts poured hundreds of billions into the economy and cut our federal deficit by 40 percent because taxes on business and high-income individuals were so much higher, they generated fewer U.S. jobs than expected.

What about the area we brag about: research and development? Business Week admits that it's no longer a given that U.S. workers benefit directly from U.S.-funded research because India and China are increasingly attractive places for U.S. companies to do R&D, and education is no answer because globalization depresses wages for the better educated as well as the poorly educated.

In the Franklin D. Roosevelt era of the 1930s, conventional wisdom was that socialism, based on government spending to deal with all problems, was the wave of the future. That folly persisted into the 1970s, when Richard Nixon famously said, "We are all Keynesians now."

Fortunately, such nonsense died with Watergate and was replaced by Reaganomics and its assumption that government is the problem, not the solution.

Now the fashion is to promote globalism as our inevitable future, but that means world socialism because any free market requires a government to regulate and enforce its rules and contracts. Business Week seems to concede this when it reports that some are toying with "the creation of global institutions for governing the world economy."

The 2006 election showed that the middle class understands that globalization means the free movement of labor as well as goods across borders, and that is the enemy of well-paid American jobs. Even if U.S. workers give up pensions, health care, overtime, and all the employment benefits that have become the norm in America, there is no way they can be competitive with the very cheap labor in Asia.

Republicans should listen attentively to the campaign messages of the Democrats who won in November 2006. Sherrod Brown, who defeated Senator Mike DeWine (R-OH), promised: "In the U.S. Senate I want to revamp U.S. trade policy to reward corporations that create jobs at home."

Campaign materials of Bob Casey, who defeated Senator Rick Santorum (R-PA), proclaimed that Casey "opposes unfair trade laws like CAFTA that put U.S. workers at a disadvantage." Jim Webb, who defeated Senator George Allen (R-VA), said, "The middle class is continuing to get squeezed by stagnant wages and rising cost of living. . . . We must reexamine our tax and trade policies ... so that free trade becomes fair trade."

Ben Cardin, who was elected to the open U.S. Senate seat in Maryland, said, "I will soon be introducing legislation to restore international tax fairness to prevent further discrimination against American workers." Even Robert Reich, Bill Clinton's Labor Secretary, who is now at the University of California/Berkeley, asks, "How long can and should the U.S. continue to subsidize the rest of the world?"

The Democrats are full of rhetoric but are bankrupt of solutions. Nor does Business Week suggest solutions, merely pointing out that the old tools don't work any more.

If Republicans want to take back Congress in 2008, they will have to find solutions other than the tiresome mantras that we should improve our educational system and be more competitive with cheap labor abroad. The winners will be those who make friends with the middle class, a.k.a. the Reagan Democrats.

Eagle Forum • PO Box 618 • Alton, IL 62002 • phone: 618-462-5415 • fax: 618-462-8909 • eagle@eagleforum.org

Read this article online: http://www.eagleforum.org/column/2006/dec06/06-12-13.html

[traviskicks]

"globalization has overwhelmed Washington's ability to control the economy." As recently as ten years ago, the United States could set its course for economic growth by tax and spending decisions made by our elected representatives."
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If true, that is the best dang news I've heard all year! :)

[LtKerst]

Gee...the "experts were wrong"!!!??

Just like Al Gore and the Eco-Retards...

The Older I get the less I respect these "Experts".

They will be the death of us all...

[Paperdoll]

Good for Ms Schlafly. I could have written the same sentiments a decade ago. Globalism is not and never will be good for the U.S.A. It's just a way for the super rich to get super richer, and the middle class to lose their means of earning a living. The socialism that goes along with it is certain suicide, and also turns back the pages of history to outright slavery for the "common man."

[goldstategop]

Exactly! I believe in fair trade, not free trade. My view is America should not subsidize the rest of the world and we shouldn't give up our standard of living to do it. We can't compete (and we shouldn't) with cheap labor from Asia and Latin America. We should do whatever it takes to protect our middle class from the effects of unfair foreign competition that eats away at its well-being and existence.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." -Manuel II Paleologus

[Paul Ross]

If true, that is the best dang news I've heard all year! :)

Notice, it still hasn't quite persuaded them to reverse course...while we still can. And the New York Times Thomas (Mr. Globalism) Friedman is still an honored speaker at Congressional hearings...

[cripplecreek]

Free trade is great. Conscience free trade sucks.

[oblomov]

>>We should do whatever it takes to protect our middle class from the effects of unfair foreign competition


How do you distinguish between unfair foreign competition and fair foreign competition?

[goldstategop]

He happens to be a liberal. The question is if any one in both parties IS listening to the middle class?

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." -Manuel II Paleologus

[pissant]

She should stick to feminism fights.

[colorado tanker]

What a pantload. We're still the wealthiest country in the world and accelerating. Kill free trade and we kill the golden goose.

[Old_Mil]

Janet Yellen, president of San Francisco's Federal Reserve Bank, warned in a recent speech: "Globalization and skill-based technological change may have been working in combination to particularly depress the wage gains of those in the middle of the U.S. wage distribution."

This would fall under the category of "Federal Reserve Bank Chairman confirming to be true that which a few of us have been accused of being tin foil hatters for proclaiming." I suspect that you'll be able to hear a pin drop on this thread in short order. It will be like garlic to a vampire for free traders.

[goldstategop]

By unfair foreign competition, I mean foreign goods that are subsidized by foreign governments to make them cheaper than our own while at the same time placing barriers that make our own goods that we want to sell to them more expensive than they need to be. I'm not opposed to trade; I am opposed to trade that puts our country at a disadvantage.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." -Manuel II Paleologus

[dinoparty]

If you think I want to go back to the days when my car needed a major repair every 10,000 miles, and there was precious little competition for labor-heavy US manufacturing companies, you're crazy.

[BeHoldAPaleHorse]

Could someone explain why polticians in Washington should "control" (key word from that article) the nation's economy?

[indylindy]

The last two posts are so true. This is what is happening, this is why the liberal foot is in the door! Wonder why? Huh?

[goldstategop]

Unless you like losing that $15.00 an hour job plus benefits to globalization, then you won't appreciate its benefits. Americans who've seen those kinds of high-paying jobs disappear don't like the future globalism portends for them and their families.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." -Manuel II Paleologus

[who_would_fardels_bear]

When will Ms. Schlafly and all her neo-protectionist cronies finally realize that from a strictly economic point-of-view ...

... which by the way is the only scientifically correct point-of-view ...

that all humans can be accurately represented as units of production and consumption.

And when you run all the numbers through the proper algorithms it turns out that globalism leads to the greatest amount of unit production and lowest cost of unit consumption!

It's amazing that we free marketeers have to continuously spend time restating this obvious conclusion!

/sarcasm

[BeHoldAPaleHorse]

How do you distinguish between unfair foreign competition and fair foreign competition?

My guess:

Fair foreign competition: we win.

Unfair foreign competition: they win.

[proxy_user]

"Could someone explain why polticians in Washington should "control" (key word from that article) the nation's economy?

The question is not whether, but how. What could they do, other than total isolationism? And if we were isolated, we would stagnate while the rest of the world got wealthier without us.

But I don't think isolation is an option any more. Modern technology has made it possible for foreigners to compete with us, whether we like it or not.

[BeHoldAPaleHorse]

The question is not whether, but how. What could they do, other than total isolationism?

Well, we could do what we did last time around that made the world willing to pay top dollar for bottom-drawer goods made by Americans for thirty years...flatten the rest of the world's industrial plant...

[WatchingInAmazement]

What could they do, other than total isolationism?

Why does it have to be one extreme or the other? The global thing has gone extreme. Enough. Time for the pendulum to swing back a bit.

[WatchingInAmazement]

Duncan Hunter on the Issues

http://www.freerepublic.com/focus/f-news/1753477/posts

[unspun]

It would be fun to get a hundred Libertarians in a room to discuss globalism.

heh heh heh....

[OpusatFR]

Somebody better find out PDQ exactly what Paulsen is giving the Chinese this week. I'll bet what is fantabulous for Goldman Sachs is not wondrous for Joe6P.

We have our own autocrats coming onstage.

[Ronaldus Magnus]

I ♥ Phyllis Schlafly

[Paul Ross]

We're still the wealthiest country in the world and accelerating.

No, skip the accelerating balderdash. In fact the U.S. is demonstrably weakening...as shown by the U.S. dollar for the last six years.

The drivers behind the decline are clear:

The only thing provably accelerating upwards is the "welfare effects" redistributing the outsourcing loot to the upper-most echelons. All made possible by the U.S. taxpayer...who is getting soaked. With typical Cato and Von Mises inversion of reality about trade.

The old nostrum of "Where you stand, depends on where you sit" is still true. For you to lamely try and stick up for globalism with your potty-mouth "what a pantload" doesn't persuade anybody.

So let's look at the one argument you make that's debatable:

Kill free trade and we kill the golden goose.

"Kill free trade" and precisely whose goose do you kill? The ones who PROFIT off the declining U.S. wages? The ones who abet the five-to-one deficit with China? And the two-to-one overall trade deficit? Those who rationalize debasing our currency for their own short-sighted gains and perverse economic self-interests. The outsourcing and espionage transfer of our technology to the Chinese Communists and their military?

Methinks your golden goose resides in Beijing.

U.S. enforcement of Fair trade apparently is deemed the Communists #1 fear. They haven't quite finished draining us dry yet....

[TheCrusader]

"This voice of business now says that the United States is no longer the captain of our fate because "globalization has overwhelmed Washington's ability to control the economy."

"Stay the course" - oops

"Family values don't stop at the Rio Grande" - oops

"I looked into his eyes and saw his soul" - oops

"NAFTA and GATT and trading at a huge gap with Communist China are good for the American economy" - there, got it.

[Paul Ross]

Bump!

Janet Yellen, president of San Francisco's Federal Reserve Bank, warned in a recent speech: "Globalization and skill-based technological change may have been working in combination to particularly depress the wage gains of those in the middle of the U.S. wage distribution."

Good catch.

This is The end of any legitimate apologias for the devastation being inflicted for the sake of Communist despots in China...and their enablers here.

[TheCrusader]

"We're still the wealthiest country in the world and accelerating. Kill free trade and we kill the golden goose."

Yeah, before globalism began to take control of the world's economies the United States was a poverty stricken, third-world country. Praise God that we can now deal at a 50 billion dollar a year deficit with the ChiComs, allow thousands of Mexican truckers to barrel through our border every day with nary a check, have opened up our borders to the hordes of , ahem, "workers", from Central and South America. Heck, we even get to "trade" with Vietnam now. Man, things were horrible before all this happened. Back before globalism, trade wasn't "free", we were a poor isolationist country who didn't do much importing or exporting of goods and services. Yep, globalism's the 'golden goose', and I'm Santa Claus.

[OpusatFR]

Paulson will act once more as the Wall Street investment banker ambassador, to strike secret deals on stock issuance and public offerings. The pressure to open up their financial sector comes with unspoken mega-million$ in fees for the Manhattan insiders, who will surely not share their booty with small fry Wall Street firms, not with Paulson at guard. Paulson repeatedly has referred to the path of reforms, which is the euphemism for opening up their banks to US partnerships and competition. It is more than banks though. Numerous other US corporations across numerous industries, from construction firms to car makers to telecommunications, they wish to enter China, which has concrete roadblocks in place to obstruct. They must remember all too well the days of colonialism early in the 20th century. Chairman Mao fought the foreign devils, and the memory lingers.

Wall Street lusts and drools over the prospect of investment banker fees. This is the immediate opportunity, with many zeros on pay checks and coveted bonuses. In addition, major Manhattan firms are putting their initial positions in place BEFORE the initial public offerings to sell the stock. The deals will profit not only US princes of government service, but Chinese communist captains. Chinese leaders, like their US counterparts, have vested interests for personal gain in the sale or capitalization of some trophy corporations (mostly big banks) with enormous future prospects as the Middle Kingdom continues to emerge as a world leader. The losers are the US workers and investors. Systemically, global village forces continue to exert pressures, both to level the wage playing field and to provide exploitation opportunities for those in power. The trend of outsourcing jobs to Asia has both assisted US businesses and wrecked US worker lives."
http://www.financialsense.com/fsu/editorials/willie/2006/1213.html

[oblomov]

How do you define "our goods"? Most Toyota (Japanese) vehicles sold in the US are assembled here by US workers. But the steering column is assembled in Mexico and the steel comes from Korea. The instrument lights are built in Malaysia and the floor mats are made in the Phillipines. Which of these countries is putting US workers at a disadvantage? If they didn't make these parts, there wouldn't be any car to assemble.

[oblomov]

The great killer of US manufacturing jobs is not outsourcing, but automation. Have you been to a modern factory lately? They are nearly empty of people! Should we increase the minimum wage of assembly robots (maybe they should be fed the good syntheic oil instead of the cheap stuff) so US workers can compete with them?

[ccmay]

This voice of business now says that the United States is no longer the captain of our fate because "globalization has overwhelmed Washington's ability to control the economy."

"This voice of business" is the most left wing of all the business magazines, by a wide margin. It is directed at people like George Soros, Al Gore, and Maria Cantwell, who mouth the platitudes of capitalism while doing their level best to overthrow it. I am not surprised that they see a loss of the government's ability to "control" the economy as a very bad thing.

"Business Week" is the enemy of business, a Gramscian termite undermining the foundations of capitalism. If they are against it, I am usually for it, and so it is with globalization.

-ccm

[Paul Ross]

Praise God that we can now deal at a 50 billion dollar a year deficit with the ChiComs

Actually the deficit with China is admitted by the U.S. to be over $202 billion per year. And the five-to-one trade imbalance with them...accelerated drastically over the last year as more U.S. industry fell into the maw of its black hole. The most recent numbers as of October 2006 has the U.S. trade imbalance with China at Six to One.

This is a devastating defeat for the phoney free trader arguments, who always contended that these things would "self-correct." They don't because the imbalances were never naturally-created! They aren't the product of the "invisible hand" ...but explicitly products of the mercantilist interventions across the board by foreign governments...all sanctioned by the WTO where we are outvoted 50 to one. From subsidized socialist aircraft production in Europe...to China's manipulations of currency, taxation of U.S. products, theft of U.S. intellectual property, and subsidization of Foreign Direct Investment outsourcing their manufacturing plants to China.

[khnyny]

http://euronews.net/create_html.php?page=detail_eco&article=396210&lng=1

US Treasury Secretary Henry Paulson is again in China, at the head of a large delegation, hoping to reduce the record trade gap between the two countries. He is also urging Beijing to do more to stamp out software piracy and to allow the Chinese currency to float more freely against the dollar.

But Wu Yi, China's Vice-Premier, responded that the US just does not understand how Beijing is moving forward on economic reform and she said that is "not conducive to the sound development of bilateral relations." However she did admit these talks are of critical importance, pledged further reforms and said China is aiming for a rough balance in its trade.

Paulson is under pressure from some US lawmakers who blame China's strictly controlled exchange rate and other economic restrictions for lost jobs in the US and Washington's record trade deficit. Coinciding with the talks China did let its currency, the yuan, rise to the highest level since it was slightly revalued last year. At that time it was allowed to float but only within a tightly managed range. Some members of the US Congress and business leaders say the yuan remains substantially undervalued giving China an unfair export advantage.

http://travel.nytimes.com/2006/12/14/business/worldbusiness/14trade.html?n=Top%2fReference%2fTimes%20Topics%2fPeople%2fP%2fPaulson%2c%20Henry%20M%2e%20Jr%2e

[khnyny]

Yes, see post 36.

[Paul Ross]

"Business Week" is the enemy of business, a Gramscian termite undermining the foundations of capitalism. If they are against it, I am usually for it, and so it is with globalization.

BTW: Business Week has been trumpeting and touting the virtues of Globalism for the last 15 years... The empirical evidence against it has finally embarassed them enough to revisit their euphoric assertions.

So by your reasoning...you should have been opposed to them.

Especially while they steadfastly ignored the ever-mounting evidence against Globalism being "good" for the American Middle Class. Wake up to the truth. The truth will set you free.

[khnyny]

IMHO, you (and others re trade deficit, China, etc.) really know what you're talking about.

[Zon]

The FairTax adresses that quite well.

[Paul Ross]

If they didn't make these parts, there wouldn't be any car to assemble.

Suddenly it's somehow impossible to restore the U.S. production?

That places you in contradiction of the apologists who claim U.S. production is never better.

Or uneconomic?

That places you in contradiction of those who claim were are almost totally automated. [ Of course labor cheap enough, is a disincentive to such automation...you don't think that could be going on, do you? H'mmmm??? ]

[pissant]

Boeing employment climbing in Washington--Dec 5, 2006

SEATTLE (AP) - Boeing added 400 workers in the Puget Sound area last month and spokesman Peter Conte says hiring is expected to continue into next year.

Vista's 'Bounce' To Add 100,000 U.S. IT Jobs, Says Report--December 11, 2006 (4:32 PM EST)

Microsoft's Windows Vista will give a 100,000-job "bounce" to U.S. IT employment next year, a study released Monday said. The report, which was done by research firm IDC and commissioned by Microsoft, is similar to one published in September by IDC that claimed Vista would create 50,000 new jobs in Europe. Microsoft released that report in the midst of tense negotiations with the European Union's antitrust agency over possible infringements of a 2004 ruling by Vista.

From job shortage to too few workers in just a few years--Minneapolis Star Tribune, Dec 01, 2006

A few years ago, after a recession and the dot-com bust, we were complaining about joblessness among technology and manufacturing workers. When the economy bounced back, we worried about a "jobless recovery." Today, amid a growing economy and low unemployment, Minnesota employers are complaining that there are too few qualified workers.

STATE SEES LOWEST UNEMPLOYMENT RATE IN 30 YEARS-- Palladium Times, Dec 11, 2006

October was a good month for New York state workers. The unemployment rate fell to 4 percent, matching the lowest monthly rate recorded since the current system for setting the rate was adopted in 1976, according to state Labor Department officials.

Not bad for a doomed economy.

[Paul Ross]

Not bad for a doomed economy.

Actually...it is. The empirical evidence is in.

Because the jobs being added so far are clearly quantitatively and qualitatively insufficient to address the declining and stagnating wage cohort of the Middle Class...which the Federal Reserve and the Census Bureau are finally acknowledging.

Being optimistic is one thing.

But denying we are badly losing in a lop-sided unfair trade war is just foolish.

You start out here....

And end up here...

[Paul Ross]

And are you familiar with GAAP accounting? The Treasury Report mandated by Congress using it is supposed to be issued tomorrow...

[DustyMoment]

If Republicans want to take back Congress in 2008, they will have to find solutions other than the tiresome mantras that we should improve our educational system and be more competitive with cheap labor abroad.

With a globalist like Bush at the helm, I'm not optomistic. Many of us have been opposed to globalization for quite some time, but our opposition has fallen on deaf ears. Perhaps, now, those who really want to be in control of Washington can start formulating a plan that eliminates the disaster that globalization has produced. If it is to be Republicans who will control Washington after '08, they will have to formulate a policy and socialize it in a way that makes it attractive to the most diehard globalist and Keynesian fan . . . . . . . before I finish typing this!!

[meadsjn]

When will Ms. Schlafly and all her neo-protectionist cronies finally realize that from a strictly economic point-of-view ... ... which by the way is the only scientifically correct point-of-view ...

In what accredited college or university is Economics considered a "science"?

It's amazing that we free marketeers have to continuously spend time restating this obvious conclusion!

Whether you made it through college or not, you're not fooling anyone here.

[Last Dakotan]

Your analysis only makes sense in a world without borders.

[khnyny]

Um, did you guys happen to see the sarcasm tag, or am I missing something here?

[Last Dakotan]

Have you been to a modern factory lately?

Very, very few here have.

Aside from the obvious automation changes the way factories are run has been changed too. For instance teams of clerks and accountants made reams of paper records. These jobs were once classified "manufacturing" but are now done on contract and so classified as a "service" if they are done at all.

The service sector greatest customer is still manufacturing.

[Tench_Coxe]

Well, true free trade would eliminate corporate insurance policies such as OPIC, and would also elminate subsidies. Then again, free markets can't quite meet the same shine as those 30 pieces of silver the politicians like to collect.