A qualified defense of globalism

Back in the day, I was a partner in a printing company.  For the first ten years, we used only one type of press — a model that had been in production for decades.  There were so many of these presses in circulation that we could buy used ones that had been completely refurbished for a lot less than a new one would cost. 

Then one day, at a local trade fair, I first saw a new kind of press that was made in Hiroshima, Japan.  It did what we needed done, but a lot more efficiently.  And it cost more than ten times what we usually paid for a press.  But we bought one anyhow — because we had been trying to improve our efficiency ever since we started the company.  This new press was so much more efficient that we could afford to start providing a full package of benefits to our employees — and still pocket a lot more profit.  It's a real-world example of going from labor-intensive to capital-intensive.

It then occurred to me that campaigns to "buy American" may be missing the point.  The manufacturer of this new press got paid only once for the machine, but the users of the press received financial benefits from its improved productivity every day, for years and years to come. 

The obvious defense of globalism is based on the mutuality of business relationships.  When different nations rely on each other for commercial success, threats of war are suppressed and, perhaps, ultimately abandoned.  A particular facilitator of this planetary web of commerce is the modular sea-going container.  Before its invention, ocean-going freight was man-handled into the holds of ships and extracted in the same labor-intensive fashion.  This was known as "break-bulk."  Ironically, the San Francisco longshoreman's union voted to prohibit containerized freight at its port.  So they were all put out of work — unless they moved across the Bay to Oakland.

Sea-going containers have increased the efficiency of shipping freight to such a degree that they are commonly used to bypass the Panama Canal, mostly by ships too wide to fit in the "ditch."  Ships come into Oakland, Long Beach, Tacoma and off-load onto trains that cross over the continent to the Atlantic ports, and vice versa.  The containers are bar-coded to maintain tracking accuracy and moved by cranes designed to handle only one kind of thing.  New cranes are getting taller and taller, just so they can pile up containers ever higher on the new super-freighters.  When the Ever Given recently blocked the Suez Canal, this whole process and the consequences of its interruption, for once, were exposed to public scrutiny. 

Critics of globalism emphasize the forfeiture of sovereignty.  Buyers and sellers usually each yield, at most, a little sovereignty to complete a transaction.  But what the critics are complaining about is really cheating.  Expropriation of intellectual property is not a free-market process.  Nor is currency manipulation.  For the sake of comparison, I refer you to the diamond market in Antwerp, Belgium.  Legend has it that the deals are done on nothing more than a handshake — but if you cheat someone, they will no longer let you through the front door.  Milton Friedman would be proud.

In commerce, there is the expression "sharp practices."  It refers to using deception and coercion to take improper advantage of a party in a transaction.  This happens on small and large scales.  When Chinese interests require foreign companies to disclose trade secrets or agree to waive patent enforcement in order to do business, that is a sharp practice.  More than twenty years ago, a friend who taught at the University of Wisconsin complained vociferously about Chinese foreign students making inquiries into matters not relevant to the subject matter — but to our national security.

Many critics of globalism have an ulterior motive: protectionism.  Artificially high labor costs require legal barriers to prevent off-shoring the work.  Go figure.  Who's responsible for these artificially high labor costs?  Gee, let me think.

There are, however, legitimate critics of "globalism," who are concerned about a push toward global government.  Again, sovereignty is the issue, and the existence of "tax havens" is the target of the pseudo-globalists.  Currently floating around are concepts for multi-national tax policies.  I consider this phony globalism — a façade concealing the forces opposed to sovereignty.  Having many sovereign nation-states doing business with each other is a stabilizing quality, supporting beneficial competition that keeps the various governments honest.  Such has always been the case within the federation of several states we call the USA.

Image via Needpix.

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