Globalization Is Killing The Globe: Return to Local Economies
By Thom Hartmann
Thom Hartmann is a Project Censored Award-winning New York Times best-selling
author, and host of a nationally syndicated daily progressive talk program on the Air
America Radio Network.
The views expressed in this article are the sole responsibility of the author
and do not necessarily reflect those of this website or its editors.
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 foreignmanufactured 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.