Thomas Friedman wrote a book a while back called “The World Is Flat“, about globalization and the implications of such on the world economy. It’s a pretty good book; we read it for our IS Managment class specifically because of the parts on outsourcing and offshoring, both of which are pretty big movers in the information economy. He recently followed up with “Hot, Flat, and Crowded“, which I haven’t read yet.
One of the underlying premises of The World Is Flat is that globalization is essentially unstoppable, and that the economic consequences to this country are mostly unavoidable; Friedman’s trying to issue a wake up call to his liberal brethren who think that economic protectionism is good for the U.S. worker. I agree somewhat with his point – you can’t stop people in Bangladesh from producing things cheaper than we can produce them here, and trying to correct for that with tarriffs (or Obama’s currently proposed tax breaks for companies that keep jobs in-country) just impacts the U.S.’s ability to compete with other nations in the global economy. We can’t subsidize our way out of the world’s desire to build crap cheaply.
But, overarching globalization is not unstoppable. True, IT work will probably still spread out among any country that has a digital infrastructure, because of the nature of the work…. but manufacturing won’t. Agriculture won’t. There are three reasons that China produces most of the goods the U.S. consumes: one, the cost of living is astronomically lower there so the workers get paid less; two, the environmental and regulatory burdens are lower in China so the companies can externalize more of their costs; and three, shipping is still (in spite of the current price of oil) dirt cheap.
The first is already correcting itself; China is building a middle class, and middle class workers want to *buy* the stuff they make (not to mention the fact that China is going to have a horrrrrrendous problem with an aging population – you think our worries about Social Security are bad because of Baby Boomers, just wait until China’s 1-child-per-family policy ripens in one-worker-per-two-retirees fruit). The second is going to correct itself – if nothing else, the air quality in Beijing during the Olympics illustrated the current depth of this problem. In the rush to build, China has ignored all of the environmental lessons that we learned during our own Industrial Revolution, and they’re going to have to deal with the consequences of that, and soon. The last is also going to correct itself – shipping is cheap because the bunker fuel that is used is excruciatingly bad for the environment, and that problem is becoming untenable.
The world is becoming round again; at least when it comes to real goods. Your children are not going to be able to buy buckets of cheap crap… the crap isn’t going to be cheap, and it’s not going to be plentiful, barring some major paradigm-shifting event like fusion. There will be a manufacturing renaissance in the U.S. in the next 20 years; it’s simply impossible for us to continue to move this stuff around the globe for the price we’re currently paying. Of course, by then we’ll have retired or finished outsourcing all expertise in manufacturing to those countries that currently make things… and we’ll have to import that expertise again.
You think the immigration problem is bad now, when we have millions of undocumented workers working the fields and the few manufacturing plants we still run here… imagine what it’s going to be like in 20 years when we have to rely on immigrant labor for middle managment and manufacturing plant design. We’ll have illegal immigrants filling middle class jobs. Whether you like it or not, get ready. The borders will be broken down, and people will be coming here from everywhere… or you’re going to be paying $10,000 for your desktop computer again.
I imagine quite a few of the more liberal types I know will have made remarkable 180s in their thoughts about immigration when they’re in their 50s and a quarter of their neighborhood doesn’t speak English, I’m already amused at the future grumps complaining that their neighborhood is changed and nothing is the same. Me, I’m kinda looking forward to it.