Globalization is a ship that has long sailed. And in its wake it has left many beneficiaries and even more victims. Barack Obama must have seen the writing on the wall even before he ran for president – His main message to the American worker during the 2008 and 2012 presidential campaigns was simple: Retool and retrain yourselves to prepare for the tide of globalization.
The free movement of goods, information, people and culture are the main tenets of globalization. However for America, globalization must be examined in the context of consumerism. It is in this context that America finds itself in its current peculiar position – the struggle between globalization and protectionism.
As a result of belonging to a broad and relatively affluent middle class, many Americans can easily afford so-called “luxury” items in large numbers.
And therein lies one of the main propellants of globalization, American consumerism. But there are two caveats to the story of the type of consumerism seen in America.
First, Americans will pay for luxury items but they will not overpay for them. It is for this reason why the label imprinted at the back of an Apple iPhone proclaims “Designed in California. Assembled in China,” simply because it is cheaper to build the phone in China but to protect Apple’s intellectual property all innovation occurs in California. (This CNN Money article sums up why the slogan “Buy American” in this day and age sounds good in theory but not practice)
Secondly, Americans will vehemently demand for quality and reliability in their products leading to one of the reasons why foreign manufacturers continue to do so well in America. A great example is Toyota, which at one point had eclipsed General Motors as the largest car seller in the US. With their “no-frills” approach, Toyota was able to outshine the American auto manufacturer by selling cheaper but highly reliable cars.
It is the inability of American auto manufacturers to sell reliable cars coupled with the great recession that led to the 2009 near-collapse of the American auto industry. Inevitably, it was accompanied by massive job losses. However, when the car manufacturers recovered and addressed the reliability deficit, they still had to contend with cheaper cars from Japan. To stay competitive in this new reality, they began sending jobs to Mexico!
Hence the unintended consequences of consumerism and globalization.
Therefore as long as consumerism in America drives the economy, even the most well-intentioned protectionist policies by the government to curb globalization will backfire. Especially if they hurt the financial bottom-line of the ordinary American.
The question is, are Americans willing to pay let’s say $300 more for their iPhone, $3000-5000 more for a car or even $3 more for a six-pack of Mexican-brewed Corona beer (as the proposed 20% Mexico wall surcharge would certainly be passed to the consumer) to keep jobs in America?
Countries like China are also dealing with their own expansion in consumerism, therefore adding more fuel to globalization. Their population’s appetite for Western-made luxury goods is fast becoming legendary. So what happens when China escalates its protectionist policies in response to America’s protectionism? Maybe a consumer revolt of their own?
It is quite obvious that world corporations are not innocent in all this and are probably the biggest offenders especially in perpetuating the negative effects of globalization. Increasing shareholder value is their guiding principle and be rest assured they will never leave money on the table. Looking at President Trump’s businesses he seems to be a great beneficiary of globalization and I bet he did not become a billionaire by leaving money on the table.
One assured fact is that as long as globalization favors corporations and continues to feed consumerism, globalization will continue being this well-oiled machine that is unstoppable and will run over anyone who tries to stand in its path.