Globalization is Killing The Globe: Return to Local Economies

Globalization Is Killing the Globe: Return to Local Economies

by Thom Hartmann

Globalization is killing Europe, just as it's already wiped out much of the American middle class.

Spain and Greece are facing immediate crises that many other European nations see on the near horizon: aging boomer workers are retiring with healthy benefit packages, but the younger workers who are paying for those benefits aren't making anything close to the income (or, therefore, paying the taxes) that their parents did.

Globalists/corporatists/conservative "free market" and "flat earth" advocates say this is a great opportunity to cut benefits for the old folks (and for the young folks in the future), thus bringing the countries budgets back into balance, and this story is the main corporate media storyline.

But it overlooks the real issue (and the real solution): how globalization is killing these nations' economies and what can be done about it.

From the days of Adam Smith, classical economics pointed out that manufacturing and extraction are the only two ways to "create wealth."

"Wealth" is different from "income." Wealth is value, which endures at least for some time. Income is simply compensation for work. If you wash my car for $10 and I mow your lawn for $10, we have a GDP of $20 and it looks like we both have income and economic activity. But no wealth has been created, just income.

On the other hand, if I build your car, I'm creating something of value. And if you turn my lawn into a small farm that produces food we can all eat, you're creating something of value. Not only do we have an "economy" with a "GDP," we also have created wealth.

A stick on the ground has no commercial value, but if you add labor to it by carving it into an axe handle -- a thing of commercial value -- you have "created wealth." Similarly, metals in the ground have no commercial value, but when you add labor to them by extracting, refining, and forming them into products, you "create wealth." Even turning seeds and dirt and cows into hamburgers is a form of manufacturing and creates wealth.

This is the "Wealth of Nations" that titled Adam Smith's famous 1776 book.

On the other hand, when a trader at Goldman Sachs makes a "profit" trading stocks, bonds, or currencies, no wealth whatsoever is created. In fact, to the extent that that trader takes millions in commissions, pay, and bonuses, he's actually depleting the wealth of the nation (particularly to the extent that he moves his money offshore to save or invest, as many do).

To use the United States as an example, in the late 1940s and early 1950s manufacturing accounted for a high of 28 percent of our total gross domestic product (and much of the rest of the economy like agriculture that, in a classical sense is "manufacturing" wasn't even included in those numbers), and when Reagan came into office it was at a strong 20 percent. Today it's about ten percent of our GDP.

What this means is that we're creating less wealth here, because we're not making much anymore. (And the biggest growth in American manufacturing has been in the military sector, where goods are made that are then destroyed when they explode over foreign cities, causing even more of our wealth to vanish.)

The main effect of the globalism fad of the past 30 yearrs -- lowering the protective barriers to trade that countries for centuries have used to make sure their own local economies are self-sufficient -- has been to ship manufacturing (the creation of wealth) from developed nations to developing nations. Transnational corporations love this, because in countries with lower labor costs and few environmental and safety regulations, it's more profitable to manufacture products. They then sell those products in the "mature" countries -- the places that used to manufacture -- and people burn through the wealth they'd accumulated in the earlier manufacturing days (home equity, principally, along with savings and lines of credit) to buy these foreign-manufactured goods.

At first, it looks like a good deal to consumers in developed nations. Goods are cheaper! But over a decade or two or three, as the creation of real wealth is reduced and the residue of the old wealth is spent, the developed nations become progressively poorer and poorer. At the same time, the "developing" nations become wealthier -- because those are the places that are producing real wealth.

Which brings us to Spain and Greece -- and the problem of all developed nations including the USA. So long as globalism continues apace, the transnational corporations and their CEOs will continue to become fabulously wealthy. But, more importantly, they also acquire the political power that comes with that control of economies.

So they tell us that instead of putting back into place tariffs, domestic content laws, and other "protectionist" policies that built America from the time the were first proposed by Alexander Hamilton in 1791 (and largely adopted by Congress in 1793) until they were dismantled by Reagan/Bush/Clinton/Bush, we should instead simple "accept the reality" that we're "living beyond our means" and we have to "cut back our wages and social programs."

In other words, they get richer, our nations become poorer, and national sovereignty is reduced.

Nations -- and in large countries like the USA, even states -- must again rebuild their manufacturing base and become locally self-sufficient, so their own consumers are buying products manufactured by their own workers.

"But won't that make Wal-Mart's stuff more expensive?" whine the flat-earthers.

Yes, it will. But most Americans (and Greeks and Spaniards) would gladly pay 10 percent more for the goods in their stores if their paychecks were 20 percent higher. And manufacturing paychecks have always been higher, because manufacturing is where "true wealth" is generated (thus the basis for most union movements, which further guarantee healthy worker income and benefits).

The transnational corporations benefiting from globalization are also, in most cases, the transnational corporations that own our media, so even the word globalization is rarely heard in reports on economic crises around the world.

But globalization is the villain here, and one that needs to be taken in hand and brought under control quickly if we don't want to see virtually the nations of the world end up subservient to corporate control, a new form of an ancient economic system known as feudalism.

Love Thom and he is always spot on

how long do corporations think they can off-shore manufacturing jobs and industries, pay the locals a pittance to do the labor and STILL have a market to sell the final goods to in the end? They have burned through cheap labor pools across the globe at breathtaking speed in the past 3 decades....Central and South America became China became Taiwan became Vietnam became Singapore...each time locals started demanding better compensation, the manufacturing was moved to another country with more friendly terms on labor and "externalities". Now, with the victory of abolishing the United States vis a vis the Supreme Court capitulation in Citizens Untied v. F.E.C., the multinationals have seized the power to not only make American politicians and laws, but also the keys to the greatest war machine ever assembled in the history of the planet. If you believe that they won't use these new toys against non-compliant people, just wait...the REAL fireworks are still to come.

The disgusting trajectory of our entire civilization is depressing already....perhaps thats the REAL reason most Americans have already given up and watch 4.5 hours of mind numbing TV a night to self-medicate...

It makes me very sad because it did not have to be this way. It did not have to end like this. We have all become a metaphorical Marlon Brando from "On The Waterfront"...we coulda been somebody, we coulda been a contender, instead of a bum, which we are now...

Are they kidding?

Or are we kidding ourselves?

Hey, in the Dark Ages, the peasants didn't buy stuff and the Aristocracy did great, so clearly under the feudalist system this piece of apparent common sense doesn't work.

We were spoiled by certain ideas which, in a Feudal world (the one we are heading to, if not already there in a Plausibly Deniable way) simply don't exist.

We are in transition to the return of feudalism and the return of the Dark Ages (or something even worse) and so, if we are to understand the Aristocracy of the Present and Future, we also need to understand that certain commonsense Enlightenment notions are null and void, just as the Enlightenment itself falls prey to the same old Authoritarian Darkness that has always been waiting for it's chance to reassert itself.

Thus, the idea that the Aristocracy NEEDS a Peasantry that can buy it's products is ludicrous, given the world we are heading towards now at breakneck speed.

http://www.huffingtonpost.com/randall-amster/why-ostrom...

Very much worth a look, and there's a great deal to be found if you look further than one article; the main thrust of her work is that local control of resources, and so local control of local economies, is what actually provides the best outcomes for people and the best management of resources. If you think about it for a minute, this is the opposite of what everyone in government has been trying to do for a very long time...

Just in my county, its hard to look around an see any resources at all that are managed locally...everything goes up to the state and federal levels, and even there global policies are deferred to, ahead of good management.

I too like Tom, a lot! His voice pierces the darkest conservative mind with unequivocal truths. China will become the new Rome and the US will fade like old Europe, providing there is not another global war like I and II. And this is were the money changers want to take humanity, it has always been their last maneuver, their last grab at securing what might remain of a continent or two's wealth. The elite can escape war, live secure, and profit greatly from war. The Rothschilds', Vanderbuilts', even Bushs' made their family fortunes by war profiteering. So once the population is reduced by war, they benefit again. The cycle of what the elite to do the masses is historical record, albeit not openly published or acknowledge by the elite. Now I am not talking about mom or dad who are run of the mill millionaires, but those families that are at the very top of the money game and have been there for a long time. Of course I could be wrong, but it is how I have felt for quite sometime.

edited buy to by

thomhartman. May I ask the Op if he is indeed Tom Hartman himself? I would be delighted to know one way or another.

... he's the real deal.

Here's his web site from his profile.

http://www.thomhartmann.com


And the content of his article says he is the real Thom Hartmann (or a lawsuit waiting to happen for plagiarism/copyright infringement).

We're lucky to have him here.

Maybe it's Louise?

Take the good parts, and then let the bad stuff fall away. It doesn't work that way. If we want instant global communication, we're going to have globalization.

Globalization is the outcome of stateless corporations. Communication can exist without it, and did for centuries. The technology, the medium is the only thing that changed to make it faster. If stateless corporations are banned from it, communication can still go on. There are other ways to organize the world, and not too much time to get that reorganization underway.

Stateless corporations are the result of it, not the other way around. States, as in more and more people being organized over ever larger areas, are the result of it.

Organize the world. Interesting that you phrased it that way. The whole world needs to be organized. There is a word for that.

Think about the millions of gallons of fuel burned to schlep crap across oceans and then on rail and trucks to get to Walmart. It's such a waste.

Explains the situation with great clarity and is supremely respectful.

it does not take economic theory to figure that one out, just basic physics.

One world government succeeds the last empire/US as corporations take over the globe so argues Obama foreign policy strategist Z. Brzezinski.

Adam Smith's theories of wealth creation through manufacturing and extraction had the fatal flaw that they were based upon the world with then so-called limitless resources. This is also the fatal flaw of some of Locke's assumptions about private property.

Back in their days the concept of comparative advantage made sense. Now it's just being able to take "advantage" of poorer countries to enrich fewer and fewer people at the top.

You tell 'em Thommy Boy! I love this guy! Thanks for the OP!

control blocks of land with nominal "governments."

if I recall correctly --

Nixon, I think, overturned that --

Bit by bit, the right wing has dismantled the rules and regulations which provide

for economic democracy -- moving us into an economic system today that can only be

called "organized crime" -- !!!

the right wing globalizers are anti-world trade for the most part. They do not understand the contradiction in their embrace of right-wing corporate theories and leaders and their wish for a strong America. They think we are the socialists. But in fact we are not. Free trade will eventually destroy not only our economy but our national traditions including our Constitution and our political system. I am more and more convinced of that.

Unfortunately, the money is betting on globalization. Our insights are not read or heard by ordinary people. We are ignored.

Much as I love Maddow, Schultz and Olberman, Thom Hartmann is the greatest -- the man!

Just as the religious right has been created and funded by the wealthy right wing --

Listen to Cheney on this -- "We create the reality - you live it!"

There is no legitimate rise of the right --

the only way the right can and does rise is thru political violence which we've had

en plaine air for 50 years and more -- and stolen elections.


We should be socialists -- capitalism is a ridiculous "King-of-the-Hill" system

intended to move the wealth and natural resources of the a nation from the many to the

few.

Unregulated capitalism is merely organized crime --

a strong middle class and a safety net for the poor, elderly and disabled.

By the way, please don't be offended but for future reference it's "en plein air."

http://en.wikipedia.org/wiki/En_plein_air

That's the problem -- and we still have not reinstituted the rules and regulations

on capitalism which would prevent new criminal activities and new bailouts!!

And of course we ALL support safety nets for the poor, elderly and disabled --

but they also overturned much of that, as well!!

And they're headed for privatizing Social Security and Medicare!!

And when I say "they," I mean a Democratic president and Democratic Congress!!



PS -- Thank you for the correction -- I started out with it right in my head, but

wrong on paper!

And Obama???

perks of being in the rarified air that surrounds the Elites, it makes you light-headed and you forget what's happening to the little people who're waaaayyyy down below you.

Excellent post. Thanks for posting this, Thom.

Too late to rec. But not too late to buy my organic food locally and to patronize businesses that are tuned in to this economic model. This is the ultimate grassroots movement.

That's how it feels to me.

I remember being warned there was going to be suffering during the transition to a global economy, but we would be in a better place when everything worked out as intended.

I recall that at that time, a couple of Democratic Congressmen in what was probably a congressional committee hearing were arguing against "free" trade. One of them predicted that if the U.S. lowered trade barriers, American workers would ultimately be reduced to passing hamburgers back and forth for a living. He was, of course, absolutely right. A modern Cassandra.

Some years later, during a hiatus from work, I read about the Seattle protests against globalization and "free" trade. I was new to the internet. Somehow, while trying to e-mail some purported expert on trade (whose name I had read in an article posted somewhere -- had never heard of him before that article, never actually met him and don't remember his name), I landed in a sort of very short IM exchange with this guy.

My question to him was what global trade would do to the ability of local governments, even of national governments, especially our own, to decide their own policies. In other words, is local or even self-government possible in a global economy?

My personal conviction is that it is not. I believe that globalization will bring the end of self-government as we know it.

My conviction was confirmed when I worked in a very minor capacity on a case involving international law in which country A was sued by country B for implementing a policy which country A claimed was intended to protect its environment. I'm not certain, but I believe that ultimately country A lost although its environmental policy made a lot of sense to me.

The ability to protect our own environment is just an example of what we may be giving up in exchange for the low prices at Walmart. Remember the controversy about emissions from Mexican trucks allowed to cross the U.S. border and transport goods in California?

Since I posed my first questions, and even more so since the administration of George W. Bush, I have come to believe that globalization does not just jeopardize the sovereignty of nations with regard to environmental policy. It places the ability of Americans to maintain and enforce our great Constitution and in particular our Bill of Rights in serious jeopardy.

Already, we have relinquished our right to privacy in our internet communications. And for what purported reasons? To fight terrorism -- a problem that seems to have grown as globalization has developed. Also to protect copyrights, trademarks, intellectual property -- since violations of these interests are difficult to control in a global environment? Do we really believe that global trade justifies throwing out our Fourth Amendment?

While some argue that globalization is the natural consequence of increased global communication and travel, I have to ask: "In addition to the loss of certain of our rights, is international terrorism also a natural consequence of increased global communication and travel?" I haven't answered that question for myself. I wonder if anyone else is asking it.

Are we importing terrorism along with cheap underwear? Or is the terrorism unrelated or merely coincidental to globalization?

Will these United States that we love so much, our traditions of self-government, of freedom and of individuality survive globalization?