GLOBALIZATION IS NOT THE ANSWER

Georgie Anne Geyer

WASHINGTON -- As the World Economic Forum at Davos, Switzerland, enters its 50th year, one can rather easily trace the manner in which "globalization" -- the idea that totally open and unencumbered trade among nations -- was expected to save the world. Endless sessions on the theme entered the economic and political parlance and seemed to the elites and to the free thinkers to be the world's salvation.

It used to be that globalization was an idea no person in his or her right mind would think of challenging. It was so good, so right; it was the moral answer to the globe's economic inequities. It opened the formerly closed markets and borders of the industrialized United States and Europe, and finally let the outsiders from the Third World "in" on the feast.

Before anyone knew it, globalization had taken over. American factories that had moved to the Mexican border now moved to China, or Thailand, or Indonesia. Japan went rapidly from being a war-torn sister nation to being one of the advanced economies. As this happened, the workers in the First World hardly gave it a secondhand notice -- until the steel mills in Chicago closed, and factories in Ohio were suddenly still, and American universities began training more and more Chinese students to "borrow" our technology, go home and become engineering marvels.

When someone would ask innocently at Davos, as someone did the year I attended the meeting, what would happen to the former workers of those now-empty factories, the answer was always, "They'll go into the service industries. The service industries will blossom in the new America."

Nobody ever asked how a steelworker, however brave and good at his job, would become a concierge in a hotel, or how an assembly-line worker without a high school education would become an interpreter at the United Nations. And that was the absurdity: Nobody ever asked how empty factories could possibly serve America. Or how moving the jobs, technology and training that goes with them, and then the research and development, would not naturally make us poorer and them, richer.

So today the United States trails in manufacturing, and China whizzes by us with annual growth rates of 8 to 10 percent. But everything will be OK; we can keep borrowing money from Beijing.

A funny thing happened on the way to understanding what globalization did to us: The Davos participants finally sat down in the snow and gave us some cool assessments.

Former E.U. trade commissioner Peter Mandelson told one luncheon meeting that politicians need to persuade people that globalization and free trade were still good, even though they are now blamed for higher unemployment and stagnant wages in the West.

That same week, President Obama gave his State of the Union address, promising to bring manufacturing jobs and factories back home, which most economists see as impossible. He would even set up a "trade enforcement unit" to investigate unfair practices in China. Some new-thinking European leaders picked up on that theme and talked about "reindustrialization."

Some politician-thinkers even see the current Wall Street sickness as beginning with the West's loss of manufacturing to Asia. Mahathir Mohamad, the former prime minister of Malaysia from 1981 to 2003, wrote during Davos in the Financial Times: "Unable to compete, the Europeans and particularly the Americans opted for the financial markets. Inventing new financial products such as short selling of shares and currencies, subprime lending. ... But the finance market spins off no real businesses, created hardly any jobs and gave rise to no trade. Getting greedy, they abused the system, manipulating the market for greater profits."

Showing clearly the new American concern about globalization and what it has done to us, The New York Times has been running an excellent series, cleverly titled "The iEconomy, an Empire Built Abroad."

One article elaborated on how the U.S. lost out on producing the iPhone in America. Whereas only recently Apple boasted that its products were mostly made in America, today almost all of the 70 million iPhones, 30 million iPads and 59 million other products sold last year by Apple were manufactured overseas.

When President Obama asked the late Steve Jobs why that work can't come home, Jobs answered unambiguously, "Those jobs aren't coming back."

But perhaps even worse for the future of America than the loss of jobs is the fact that our own big companies and corporations -- the "babies" that Mother America fed with her natural resources and universities and scientists -- no longer feel any loyalty to her.

The Times quotes Betsey Stevenson, the chief economist at the Labor Department until recently: "Companies once felt an obligation to support American workers, even when it wasn't the best financial choice. That's disappeared. Profits and efficiency have trumped generosity."

Despite the fact that there is no immediate answer to the globalization problem for the industrialized nations, change IS happening. At least now, Americans realize the problem. They know where and why their jobs have gone. With President Obama, Americans are finally looking for answers, and this is something we're good at.

This is where change begins -- when one era ends, and is known to end, and a new one begins.


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