Globalization Requires Redistribution of Wealth
I understand and sympathize with globalization. The problem is that, in the United States and other countries that globalized its operations by moving manufacturing and other operations to low cost region, there needed to be redistribution of wealth and income in order to counter the effects of lower labor power and fewer jobs. We did it by making borrowing easier, and that led tot he housing bubble and the financial collapse. We propped up the banks and left the public with that bag. There was no redistribution of wealth in order to counter the negatives of globalization. We needed to smooth out the pain of that transition, and we failed to do that.
I’m not against globalization. I’m completely and 100% for it. What I am against is the idea of globalization coupled with no redistribution. The people of this country were sold a bill of goods that never produced anything of true value to them.
“The third challenge is distributional. As the tradable part of the global economy (goods and services that can be produced in one country and consumed in another) expands, competition for economic activity and jobs broadens. That affects the price of labor and the range of employment opportunities within all globally integrated economies. Subsets of the population gain, and others lose, certainly relative to expectations – and often absolutely.
Many advanced countries – in fact, most of them – have experienced limited middle-income growth. … In the United States, income inequality has risen as the upper end of the income and education spectrum benefits from globalization, while the rest experience declining employment opportunities in the tradable sector. …
What does it mean – for individuals, businesses, and governments – that structural adjustment is falling further and further behind the global forces that are causing pressure for structural change?
Above all, it means that expectations are broadly inconsistent with reality, and need to adjust, in some cases downward. But distributional effects need to be taken seriously and addressed. The burden of weak or non-existent recoveries should not be borne by the unemployed, including the young. In the interest of social cohesion, market outcomes need to be modified to create a more even distribution of incomes and benefits, both now and in inter-temporal terms. …
None of this will be easy. … Nevertheless, the unemployed and underemployed, especially younger people, expect their leaders and institutions to try.”
“And, when people say “the economy is bad” they do not mean to suggest we have a problem producing prosperity. They mean to suggest we have a problem distributing prosperity.
Its also why suggesting that government interference would mean ‘zero unemployment but nothing to eat’ falls on deaf ears today. We have no shortage of prosperity.
That people can see goods and services in the shop window but have no money to buy them is the classic failure of capitalism. That people have money but there are no goods in the shop window is the classic failure of socialism.”