Globalization Goes Bad

I (and others) have previously noted that as economic conditions worsen, so will the social mood. One unfortunate consequence of this shift will be heightened antagonism towards "outsiders," (e.g., immigrants) as well as widespread resentment towards those who seem to be "winning" at others' expense (e.g., China). The upshot? Increasing protectionism and a contagious tide of xenophobic nationalism.

As it happens, there is plenty of evidence to suggest that attitudes in this country are already moving in that direction -- despite the fact that the U.S. economy has not (yet) fallen off a cliff. In "The Economic Isolationists Are Winning," the eponymous publisher of Greg Mankiw's Blog details a recent poll result that could be the precursor to a more direct and concrete collective response.

A new poll from NBC News/Wall Street Journal (conducted Dec. 14-17, 2007):

"Do you think the fact that the American economy has become increasingly global is good because it has opened up new markets for American products and resulted in more jobs, or bad because it has subjected American companies and employees to unfair competition and cheap labor?"

28 % of the American public said globalization is good, while 58 % said it is bad.

Note that even the pro-trade part of the question presumes a mercantilist approach to the issue. In actuality, trade is not primarily about more or fewer jobs but about allocating labor among industries toward those in which we have a comparative advantage. I doubt, however, that a more economically literate rewording of the question would have found the American public sympathetic to globalization.

While Professor Mankiw seems to blame the results on isolationist propagandizing or poor schooling, I believe they reflect a structural sea-change that will find popular appeal in nations around the world as the glory days of global growth come to an end.

Comments

[deborah]

You think resentment towards China and I think resentment towards Wall Street, and the Banking Industry.

But then, I am not American, yet I find my sympathies of anything befalling wall street dramatically diminishing and I don't find China at any fault what-so-ever.

I think it is ignorance to suggest that anything but greed is responsible for the mass job loss to China. It was in the short term corporate interest to move jobs to China. It was in the short term household interest to buy cheaper products made in China. It was in the short term line the executive's pockets interest to allow loans that could never be repaid, and the commission paid sales people.

Greed and self interest is human nature.

And so is denial and blaming others when what is needed is a mirror.

[IndependentAccountant]

Mankiw can say what he wants. At least one academic is not sold on the benefits of illegal immigration from Mexico, George Borjas. If Manikiw wants, let him look at Borjas findings. I'm with Borjas. There is a substantial difference between a few thousand NRIs coming to the US and creating companies in the Silicon Valley and millions of illegals from Southern Mexico, average IQ 82, average years of schooling five. If Manikiw wants to feel better and call me a racist, let him feel free. What does Manikiw think is behind California's $14 billion budget deficit?

[Slumlord]

I'm not American but Australian. Over here we have the same problems as in the U.S. A very large current account deficit due to imports from Asia, a declining manufacturing industry and a still propped up housing bubble. I'm a big proponent for globalisation but not as it currently stands.

Japan is not a free market and lives under a protectionist wall. The BOJ's policy of weakening the yen to maintain competitiveness is flagrant market intervention to defend it's industries. Chinas massive pool of low wage labour means firms that want to set up in the west are going to be crushed by firms which employ exactly the same process and materials but with labour at only one fifth the rate. Furthermore with regard to China. There is far less unbureaucratic interference with a business as is in the west. China's policy of a fixed exchange rate is also is an indirect support for it's industries. The comparative advantage of China and Japan may be more as a result of deliberate government policy than any sort of "natural" competitiveness. Devaluing the yen by 10% has the same effect of putting up a 10% tax on all imported goods.

I'm in favour of protectionism, but not the specific industry targeted type. Rather I would like to see all countries have a neutral trade balance, with mechanisms placed to enforce the policy; that way every country benefits from free trade.

[Slumlord]

Erratum

Furthermore with regard to China. There is far less unbureaucratic interference with a business as is in the west.

should read

Furthermore; with regard to China, there is far less bureaucratic interference with business as is in the west.

Apologies, first thing in the morning here.

[Thomas Shawn]

There are no hard feelings toward legal immigrants, hell I married one. Its the illegal immigrants we dispise.