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Wed

23

Jan

2008

The Globalization Hoax
Wednesday, 23 January 2008 14:34
by Richard Backus

Globalization, in theory at least, was an economic philosophy which espoused a more efficient production of the world's manufactures for the benefit of the world at large. It is based upon an economic theory proposed, I believe, by Adam Smith that if each manufacture was produced by the most efficient worker in the world, production would be maximized with the best use of the world's resources (manpower, materials, etc.). In theory this concept is sound except for the fact that it was based upon the presumption of full employment. Full employment these days does not exist and in the U.S. hasn't for some time. Unemployment is especially prevalent in the more populous countries of the world, especially those in Southeast Asia. There is widespread unemployment throughout the world, becoming more serious in western countries as work moves to Southeast Asia. The inapplicability of this premise (full employment) completely invalidates the benefits of globalization and the conclusions proposed and being supported by establishment-paid economists. These economists still have high hopes that the public will not become well-informed enough to understand this. So far, with the help of the controlled media, they have succeeded. This has culminated in the current serious financial crisis facing the U.S. today, a trade deficit that soon will ruin the U.S. economy (also conveniently overlooked by the media.


A result of this disregard of an unemployment problem in the western world is that soon most of the world's products will be manufactured in China. Containing 25 percent of the world's population, it is easily able to manufacture all the world's products and still have 500 million more citizens not suitably employed. This is leaving other wage-earners worldwide with no opportunity for work except for those willing and financially able to “retrain” in other occupations. In the U.S. a job in the construction trades or in agriculture is still possible, mainly because U.S. businessmen have been unable so far to find a means to ship these jobs overseas as well. The only other jobs left that are available from a perusal of yellow pages of the major U.S. newspapers are those in “service industries” such as burger flippers and sales clerks. The only positive aspect about this is that the “retraining” that is encouraged by establishment economists need be truly of short duration and the uprooted worker need not spend much time and money in doing so. But I really don't think these available new jobs are really as high paying as these economists might have one believe. In reality there are very few well-paying jobs available, or that will be available in the near future, offered to this ever-growing element of the society.

What is apparent to all reasonable persons is a situation in which most of the workers of the western countries will soon be working in “service jobs.” It is true that the total production of goods worldwide may possibly expand marginally, and that many products will be manufactured more efficiently but most probably by hard-working Southeast Asian workers. Those who fail in this worldwide contest will simply have to accept positions with salaries qualifying them as the “working poor”. This will, if things don't change, will be the fate of the great majority of workers in the western (previously-industrialized) countries.

All the laws created to produce a globalized world, those establishing zero duties, free trade zones, and special tax laws for multinational, have simply resulted in the ruin of western worker. What needs to be done now is to reverse the consequences of this fraud against western workers by the creation of international laws establishing a division of the worlds manufacturing proportionately throughout all countries of the world. Citizens of all countries should also have to accept the same proportion of “service jobs” western workers are having to accept. The most efficient workers in their own societies can compete for the manufacturing jobs available as their country's share in world production.

One final issue is that the U.S. government, having improperly manipulated the dollar for so long, now has established relative exchange rates which make it almost impossible for American workers to compete with their foreign counterparts. This has been taking place since the 1970s when a floating exchange rate regime was established to presumably correct a large trade imbalance. The rich weren't happy with allowing the dollar to adjust so they directed their minions in the FED to prevent this, assuring the continuation of large trade deficits. Since the dollar was not convertible into gold or redeemable by the FED anymore, this meant that foreign dollar-holders would simply have to trade their dollar holdings for other American assets, resulting in the stock market and real estate bubbles we have been experiencing ever more often.

This was the origin of the recent justification of raising interest rates. The FED pretended that we were experiencing “inflation”. This was simply a ruse to continue maintaining an overvalued dollar even though this practice does (and is meant to) decrease employment and create the possibility of a recession. In the meantime, any remaining U.S. assets as yet not foreign-owned continued to revert to foreign ownership. A consequence to the American worker of maintaining an overvalued dollar was a decrease in the money supply (needed to hold interest rates high) making a recession a good possibility. How the FED had the nerve to talk about fighting inflation while at the same time claiming to be concerned about a “slowdown” in the economy is really a laugher. And the media, as usual, just dutifully wrote this hogwash down without calling Bernanke on it. Our current threat of a recession is directly related to these all-too-recent foul-ups.

I mention this because globalization, combined with an overvalued dollar, causes other problems. Oh what a tangled web we weave... One problem is that not all American jobs can be shipped overseas. Workers in these industries are plagued by international labor rates too low for them to compete worldwide, just like their brothers in the manufacturing industries. American agriculture, although one of the most efficient and mechanized in the world, still has a problem selling its products in world markets simply because U.S. wages are, even with these advantages, still too high for their products to compete worldwide. So the government subsidizes this industry (what a great belief and commitment to globalization!) It hasn't and won't provide similar subsidies to help manufacturing workers, so why should it do it for farmers? If the government really is convinced that globalization is good for all workers throughout the world, then it should remove these subsidies to the farmers. If not, then give every American worker a chance for decent employment by creating subsidies for them as well.

This won't happen because the manufacturing jobs lost by American workers are being given to low-cost foreign workers employed by the very same American firms who have laid them off. If American workers were again able to compete, these American manufacturers would lose the cost advantages they so ardently pursued (and received) by moving manufacturing jobs offshore and their efforts to financially exploit foreign workers would have been useless. And finally, what a coincidence it was that the shifting of work overseas started right about the time that the FED started seriously manipulating the “floating”dollar. Could someone have advised these multinationals that the dollar would never be allowed by America’s “politically elite” (the rich folks) to fall to a level that American worker’s wages could compete worldwide? What else could have prompted such a significant move at this time? American workers have been screwed “every which way they could"!

Richard Backus, author of this article, is a free-lance journalist specializing in political economy and politics. He resides in Miami Beach, Florida and his personal website is uncensoredops.blogspot.com
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