By Geoff Metcalf Wooldridge has written for the Wall Street Journal, the New Republic and the Times of London, and has appeared on NPR and the BBC. He was interviewed by WorldNetDaily's Geoff Metcalf.
Question: I disagree with a great deal in this book. However, I feel strongly that it is important for people to understand what is being said here. This borderless world concept and the rise of globalization -- please share a few words on this.
Answer: I think a lot of problems with the criticism of globalization is that they are based on a series of myths and misconceptions about what globalization actually is. For example, that the idea of globalization means the triumph of giant companies like Coke and Disney. I mean, globalization might mean that but the people who are most likely to do well out of it are smaller companies, smaller entrepreneurial organizations which can become global at birth.
Secondly, I think the idea that we have a borderless world in which nation states no longer matter and capital just sort of whizzes around the world without any restraints is just not true. You know the nation states takes a big percentage of our paychecks and nation states are still very powerful economic players, as Bill Gates can tell you.
Q: You say, "Globalization is a savage process but it also has beneficial elements." You say it shouldn't be judged on the numbers of the winners and losers. I guess that really depends if YOU are winning or losing?
A: Uh-huh. I think it is a savage process and I think we try very hard in this book not to be optimistic. And we point out that many of the nicest people we met going around the world were likely to be victims of globalization. I think of Dwight Bovo there in Flint Michigan, who had been a car worker all his life and has seen car-making jobs moving south of the border.
But I think we argue two things: the first is that the number of winners is outnumbering the number of losers. And, secondly, in the long term there is no real reason to think just in terms of winners and losers. The overall size of the pie can increase and everybody can get some of it.
Q: I remember back in '92 during the NAFTA debate. I was a harsh critic of NAFTA and the GATT / WTO deal. At the time, we were hearing from people like Al Gore and others supporting it who were saying, "Yeah, we're going to lose hundreds of thousands of jobs, but those jobs are going to be replaced with better jobs -- arguably in industries that haven't even been created yet. And you know, we haven't seen that yet.
A: I think America's unemployment ever since NAFTA has actually been going down. And we have seen in those years a huge explosion in high value added jobs in the computer and telecoms and information economies. Not just because of NAFTA, but we have seen people moving to higher value added jobs.
NAFTA has not been cost-free. There has been harsh competition at the lower end of the wage spectrum. But I think, in general, we have seen jobs created -- not just north of the border but south of the border. What's happened in Mexico has been astonishing over the past few years. Mexico has gone from being about the 26th in the world in terms of exports back in 1992 to being, I think, 8th now. It has been a period of huge progress for them AND progress for the United States. Unemployment has never been lower in this country.
Q: There are a number of arguments. One is that a lot of the manufacturing that is being exported out of Mexico is really American manufacturing that has moved south for cheaper labor. So although the product is being sent back to the United States, and is being reflected as an export, what it really did was cost us those manufacturing jobs that, frankly, can't compete with the lower Mexican wages.
A: The level of unemployment in the United States has never been lower. There are manufacturing jobs going south of the border. Just because a job goes south of the border doesn't mean a job doesn't exist here. Companies don't necessarily export jobs. Companies can create new jobs south of the border. I also think the manufacturing sector in this country is not just driven by the desire for cheaper wages and lax conditions -- although sometimes that matters. There are lots and lots of manufacturing companies that are still here that might be able to manufacture cheaper abroad, but just don't want to go abroad. I think that everybody can gain. I don't think there needs to be winners and losers.
Q: Adrian, please explain these three engines of globalization?
A: Technology: not just things like the Internet, although that's very important, but things like air conditioning which allow people to live in parts of the world that are too hot or humid or unpleasant to live in.
Q: Like Sacramento, California?
A: Yeah, that's one of them. Or even just the containers that ships use to ship things around the world. It's not just high tech but lower tech things as well.
The second thing is finance capital, which can slip around the world now at astonishing speed and in astonishing volumes.
The third thing is management techniques, management skills -- just ways of producing things more efficiently. Ideas about supply-chain manufacture, just-in-time production -- that sort of stuff that people teach in business schools and write about in management books. I think it can make a real difference to the quality of business.
Q: One of the advantages technology provides is that a lot of manufacturing companies don't maintain the kind of inventory control they used to and they now order things as they need them. There was the big scare during the Y2K flap, when they thought they wouldn't be able to service their assembly lines in time.
A: Absolutely. It is a huge way of cutting costs too. Manufacturing companies used to have to keep vast quantities of inventory. That meant having vast storage facilities and constantly monitoring what's there. Now you can order it on a need-to-use basis more or less. So someone else has to manage the stuff. It is a big improvement in the manufacturing sector.
Q: You have a chapter under the Engines of Globalization titled, "Sex, Death and the Welfare State." Explain, please.
A: Absolutely. We try to illustrate how globalization is affecting the sort of industries you wouldn't expect it to influence. One of these industries is the sex industry, particularly down in Los Angeles and the San Fernando Valley. L.A. is the biggest center for the production of adult films in the world -- and, it is going global. It is going global partly because you can distribute this stuff much, much more easily over the Internet than ever before. And, I think, some of these companies are actually thinking about going public to get money through the stock market. What used to be a pretty local industry that worried about getting stuff across state lines is now becoming a global business.
Q: You include the five myths of globalization -- some of which others and I believe.
A: One is the idea that global big companies always trump small companies in the global marketplace -- that Coca Cola or Disney will triumph. We don't believe this. We think that small companies actually have the best advantage for globalization.
Q: In what way?
A: Well, you used to have to be a big company in order to get access to capital in order to get access to technology, particularly computers, which used to be very expensive. And you needed to be a big company to be able to do deals with governments that got you into foreign markets.
Q: One example you use is Charlie Wu.
A: Yeah. Now, it is much easier to get into foreign markets. Things are cheaper, computers are cheaper, capital is more available. Down there in Los Angeles, in the grimiest bit of downtown Los Angeles, is a guy by the name of Charlie Wu who set up this toy business from nothing. It manufactures stuff in China and Hong Kong and brings it into Los Angeles. But it also has a lot of customers down in Latin America. Now he is not a guy who had a lot of capital or connections with big companies or with governments. He just had an idea, and he was able to come from nowhere and set up a very flourishing nexus of toy companies.
Q: You say your second myth is the triumph of universal products. You suggest there is really great opportunity in these niche markets.
A: Yeah, the idea that you just create a global product and then roll it around the world -- I think companies find that difficult. Even if you look at global products like Coca Cola -- it actually changes and adjusts its taste in Japan because they prefer it sweeter. If you go into a McDonald's in Korea, they are going to have kimchee with your burger. What you are tending to get with modern manufacturing techniques is products that are targeted on niche markets rather than global or universal products.
Q: Next?
A: Another myth we talk about is that globalization is ending the business cycle. That we are now in a new economy where inflation is no longer a threat and the boom will go on for 20 years. We think globalization increases the speed limit of the economy and it makes it easier to manage inflation than it has in the past. But inflation is still a threat, and the business cycle is still something that will go on.
Q: We have been talking about what you term myths. What is this whole "zero-sum" thing you discuss?
A: The zero-sum game is something that pervades a lot of the thinking of the anti-globalists. It is the very simple idea that in order for somebody to win, somebody else has to lose. The fundamental rebuttal to that is that we are not in a zero-sum game. It is not the case that someone has to lose in order for someone to win. There is no limited number of jobs. There is no limited amount of wealth. We are not all fighting for our share of a fixed pie. Economies can grow. The American economy has grown hugely over the last few years. The global economy is growing. We can all get richer together. That is the whole point of trade: that everybody can win from it.
Q: Your fifth myth is the disappearance of geography. You've got to explain that.
A: It is a very common idea that in a borderless world, capital just sort of whizzes around the world without any geographical constraints. I think that is nonsense. In fact, in a more mobile world, geographically rooted advantages become more important, not less. Just look at Silicon Valley.
Silicon Valley is now an area that is more distinct than it has ever been before, because it is attracting talent and money and technical skills from all around the world. It is becoming more of a mecca for the entire world. So, the world doesn't become the same. Places don't disappear. Places, especially that have a lot of skills or some sort of comparative advantage, actually become more important and distinctive in a global economy than they are in a local economy.
Q: As a critic of this whole concept, what I found interesting is what you write in your book, "One of the aims of this book is to drag the debate about globalization away from the dire catalog of winners and losers and toward a fundamental appraisal of modern liberty." The critics, including me, are concerned that globalization will erode and attrite (sic) liberty.
A: Absolutely. What we try to say is that the whole argument about globalization has been rather hijacked by economists ... who give you all these formulas about whether we get richer or poorer.
Q: I get a headache from economists. I can get a hundred economists to tell me a hundred different things about any given issue.
A: And they get hung up on technical arguments. And what we say in this book is, let's do battle on the question of Freedom. The key question here is whether globalization makes people more free. We argue that it does -- partly because of the freedom to travel around the world, the freedom to exercise your talents across borders. The freedom as a businessman to trade with other countries or to form partnerships with other parts of the world -- that's a very fundamental freedom. The freedom as a consumer to buy stuff that is the cheapest and best the world has to offer -- that's a fundamental freedom. But more importantly, we argue that in the long-term free trade advances liberal freedoms. In the long term, the countries that tend to prosper under capitalism essentially are those that have open institutions and free exchange of information.
Q: The catch-22 is that if you continue to move manufacturing jobs away, and you effectively destroy the middle class, they won't have the buying power to buy the products that are being manufactured cheaper somewhere else.
A: I just don't think that has happened. The American middle class has not disappeared. Some good manufacturing jobs are gone but many good manufacturing jobs have appeared in places like Mexico and Brazil. But we do have a middle class that is much more based on information technology industries -- the sunrise industries -- rather than on the car industry. But that is the nature of economic progress. I think it is good for America to compete on what it is good at -- what it is uniquely good at -- like high-tech industries, rather than trying to compete with other countries with things it is not good at.
Is globalization, on the whole, a good thing or a bad thing?
Adrian Wooldridge, Washington correspondent for the Economist, along with colleague John Micklethwait, has authored a controversial new book on globalization called
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Future Perfect: The Challenge and Hidden Promise of Globalization.