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by John Brian Shannon | June 7, 2016
Globalization was inevitable. Both the positives and negatives of globalization were inevitable. And we’re now moving into a more mature phase of globalization — a phase where common sense plays a much larger role.
After all, does it make more sense to import onions from thousands of miles away in Chile or Indonesia for example, or to grow them on the rooftop of your local big box grocery store?
Think of the CO2 emission savings alone as one way of many to demonstrate how unrestricted globalization works against our common good.
For years I’ve talked-up the benefits of ‘Regionalism‘ where the largest share of goods and services are provided to consumers and business by producers and manufacturers within that economic or geographic region.
It’s not only in regards to fresh produce. With 3D printing and a regional facility ‘the latest thing’ can be manufactured in minutes, regionally, although the online order may have been received thousands of miles away — resulting in faster shipping and larger numbers of (regional) jobs, as opposed to the One Big Factory model, building ‘the latest thing’ in Shenzhen, China.
Of course it works both ways.
For Chinese consumers who want the latest Ford F-150 pickup truck, does it make sense to have one shipped from thousands of miles away in North America, or does it make more sense that Ford builds an assembly plant in China (and hires local workers) and fills orders from there?
I think there is still more growth to be milked out of globalization, but the next logical step is Regionalism which will cut costs, improve profits, and give consumers and business more and better choices. In high unemployment jurisdictions I would expect to see rates fall — perhaps dramatically, while low unemployment jurisdictions may see tiny improvements.
Although I agree with international trade agreements in principle, TPP seems excessively weighted toward corporate interests and not toward consumers or national sovereignty. For that reason I’m against it. The cloud of secrecy surrounding TPP certainly hasn’t helped. And the fact that someone of the rare and high calibre of Elizabeth Warren has doubts about it, tells me everything that I need to know about it. Full stop.
However, any trade agreement that enhances trade flows while enhancing national sovereignty and can show a distinct benefit to consumers and business alike should be aggressively pursued.
For me it isn’t about abandoning globalization, it’s about globalization reaching its full potential without destroying sovereignty, consumer trust, and entire segments of the economy.
It’s more about continuing to grow globalization (whenever that makes sense) and adding regionalism to the mix (wherever that makes more sense) and enhancing national sovereignty.
The day that Apple Computer is building iPhones in factories in every region of the world, that Ford Motor Company has assembly plants in every second country, every piece of clothing is manufactured regionally to the designer’s exact specifications, and most fresh produce is grown within 100 miles of its target consumer, that’s when we will see the maximum benefit from our investment in globalization.
We are where we are in regards to globalization and it has been a qualified success. But the potential of globalization + regionalism is one whole order of magnitude greater.
- The New Backlash Against Globalization (Project Syndicate)
- Globalization: A Brief Overview (IMF)
- What is ‘Globalization’ video (Investopedia)
- The Role of the International Organisms in the Globalization Process (Tănăsescu et al., PDF)
- Political regionalism in International relations (Wikipedia)
- Economic regionalism in International relations (Encyclopædia Britannica)
by John Brian Shannon | April 15, 2016
A long time ago when there were unicorns, there was a justifiable need for international trade agreements in order to spur trade, increase movement of capital flows and to promote movement of labour — but mainly to gain access to potentially larger markets in both developed and developing nations.
International trade agreements like NAFTA and even today’s TPP are throwbacks to a day when we didn’t have all of that. Many global economies then were practically closed markets, with few exceptions.
It’s almost the opposite these days — globalization has certainly prevailed — and it’s the rare country that isn’t buying or selling wares from around the world on a daily basis.
North Korea is a closed market, so is Japan (although it is a huge exporter) and only a handful of other nations could be considered ‘closed markets’ in any substantive sense.
In your home country you can probably buy a car, a music player, clothing, food, and almost anything else — and it likely wasn’t built, created, or grown, in your country.
Globalization has succeeded wildly and we now live in a globalized world.
How’s it working?
For the people in developed nations it has meant 25-years of inexpensive goods on store shelves — goods that were either built, created, or grown, in developing nations, which has been a real bonus for developed world consumers — and it has also benefited workers in the developing world.
Unfortunately, it also led to many high-paying jobs being sent overseas, resulting in higher unemployment and worse social ills than that in some developed nations.
Liberalized international trade has become all that it could be
Which is fine. It’s served it’s purpose and we now have open markets around the world with levelization of trade, capital, knowledge, labour, and general market equilibrium — if not market symbiosis.
But there isn’t much more room for globalization to grow. Other than tidying-up some intellectual and property rights regulations we’ve arrived at our free trade destination. We’re already living in the globalized economy.
Where do we go from here?
There are a number of things that can strengthen our domestic economies without turning back the clock to the (almost) closed economics of the 1960’s.
Ten Ways to Make Our Country Better and Stronger – While Helping Citizens to Succeed and Live Happier Lives
The Ten Ways: Increasing Intellectual Property Rights, Increasing Government Revenue Streams, Preventing Obscene Government Debt, and Enhanced Government Services Designed to Move the Bottom Economic Quintiles Towards Middle Income Status
- We and our trade partners should sign a simple trade agreement to protect intellectual property rights, one that includes universal patent, trademark and copyright protections. The point is to get it done now while it is still relevant. If we wait, there’s no point in bothering with it, as all the secrets (the patents, trademarks and copyrights) will be ‘out of the box’ and in the general marketplace. (The rule must be that we don’t trade with nations that won’t sign and abide by those laws)
- We and every country we trade with should pass legislation to allow a simple 5% tariff on every imported and exported good — from supertankers full of oil, to consumer electronics, to clothing, to food, — in short, everything. This simple tariff would replace all other import and export taxes/tariffs/levies and related charges. Billions of dollars of goods are imported and exported every month and the tariff revenue stream can be used by the federal government; To improve productivity by funding R&D, and to improve government services and infrastructure — or used to raise national GDP and quality of life for citizens, by reducing unemployment and to lower taxes on the poor and working poor.
- We and our trade partners that don’t already have a national Goods and Services Tax (of 7% for example) on all retail goods, should implement one immediately. This revenue can contribute to the overall economy to improve services and infrastructure, reduce unemployment, and lower taxes on the poor and working poor, and should be shared 50/50 with states or provinces — who after all, would be the parties responsible for collecting it.
- We, and every country we trade with should pass legislation making deficits of more than 4% of GDP illegal, at the federal, state, and municipal level. This prevents obscene government spending and prevents the trap of eternal debt servicing costs, once interest rates rise. Which they always do.
- Our own country and every country that we trade with should no longer charge income tax on those who earn less than the equivalent of $25,000. per year.
- We and our trade partners should pass legislation to the effect that every worker has the right to a minimum of 25 weeks of full-time employment, per year. Yes, it would require a job-sharing programme managed at the state level. Some workers may receive layoff notices in order to accommodate unemployed workers. On the positive side, long-term unemployed people could then contribute to the economy (and to their own personal income!) for a minimum of 25 weeks per year. In countries like Sweden, this is common in industries that can’t keep all of their workers employed, and it is normal for two workers to share the same job for many years (6 months ‘on’ and 6 months ‘off’) so that over the course of a year, every worker in the country will have worked a minimum of 6 months. Which keeps their skills sharp, makes them eligible for automatic unemployment insurance benefits during their layoff, and lowers the welfare rate to near-zero.
- Most government unemployment insurance programmes around the world pay 66% of a worker’s salary during periods of unemployment, often after a significant wait and a worker’s claim can be turned down for any number of strange reasons. It’s inhuman. Workers pay into unemployment insurance — it’s not their fault that there are millions more people looking for work than there are jobs available — because their jobs have been sent overseas since globalization began. In some countries, a brilliant solution exists whereby workers can opt to pay into a private unemployment insurance programme, one that can top-up their unemployment insurance payments to 99% of their normal salary for the equivalent of 1 or 2 cents per dollar earned. The employee merely indicates how much extra unemployment insurance coverage he or she wants to purchase, and the deductions are automatically made from their wages and directed to the private unemployment insurance company. The private insurer also begins paying unemployment benefits from the first day of a worker’s lay-off. Workers no longer need subsist on 66% of their normal income while unemployed. (Imagine working in the fast-food industry, living on subsistence wages, then getting laid off due to a slowing economy, and then having to exist on only 66% of your already subsistence-level wage!) NOTE: In Sweden, both the government-run unemployment insurance plan and the private unemployment insurance plan make a respectable profit, every year. That’s how easy it is to do, when it’s done properly.
- Every city, town, village or county in the country should have the option to receive a free website from the federal government for as long as certain information is continuously updated by the local jurisdiction. Simply by entering the name of a jurisdiction in Google Search, anyone should be able to find the local time, weather, federal, state, city, village or municipal phone numbers and addresses, emergency services and other essential services (like Hospitals and Veterinary Clinics) and employment information for that city, town, or region. Standardization is key so that workers looking for work, or visitors to a region can quickly navigate to and access important services without a frustrating search (or fruitless search, because not all jurisdictions have their own site or mobile-friendly site — but you don’t know that until you do an hour’s searching and discover that there isn’t one!) Quick access to important phone numbers and addresses can save lives and help to increase productivity.
- Streamlined government websites for self-employed people to set-up and begin working in one day with a minimum of confusion, stress and red-tape.
- Legislation to require internet service providers to provide basic internet plans of $10. per month with low entry barriers — enough to check emails, find a job, find rental accommodation, and perhaps practice the preferred local language in hopes of finding a job. The internet is an essential service in our era, and those entering the workforce or returning to work after illness, etc. need to be able to start somewhere.
It’s easy to look around the world to see what’s working well in other jurisdictions and write similar legislation.
Legislators in Sweden and Norway don’t have two brains nor any other super powers, that we know of. If they can manage to get these things done, so can we. And if we can’t, we’re not half as great as we imagine ourselves to be.
But we are! Therefore, all we lack is the will to act. So let us act, and help our country to leap forward by one order of magnitude.
- A Progressive Logic of Trade (Project Syndicate)
- The Secret of Norway’s Success (JohnBrianShannon)
- In Sweden: Nobody Sleeps in Dumpsters (JohnBrianShannon)
- The Silver Bullet for the Economy (JohnBrianShannon)
- The Most Profound Metric of All (JohnBrianShannon)
- Stephen Poloz calls for defence of free trade amid wave of protectionist talk (CBC)
by John Brian Shannon | June 11, 2015
The secrecy surrounding these agreements is a complete non-starter for me.
The obsessive secrecy is enough to tell me everything about this being a corporatist agenda on the one hand — and a latter-day containment policy concerning China (or any country that crosses the U.S.A.) on the other.
It really muddles the difference between trade and governance as many commentators have said.
Elizabeth Warren, as usual, has it right; “If transparency would make it harder to sell the final product to the public, it raises serious questions about the desirability of what is being negotiated.” — Elizabeth Warren (paraphrased by Professor Dani Rodrik)
Yet, having said all of that, I’m strongly in favour of international trade agreements!
What NAFTA could’ve been, vs. what it became
To this day I’m a strong proponent of NAFTA — but NAFTA had the potential to be so much more.
Instead, some of the more mediocre minds took over what was a grand overriding vision of peace, order, and good governance for all of North America — and one of the vehicles to help make that happen was the original NAFTA agreement, which was to be followed up by additional agreements, e.g. NAFTA II and NAFTA III.
But because it was handled so badly, the public mood turned against NAFTA and all talk of later NAFTA agreements were dropped like a stone
To state it a different way; The corporatist agenda greedily precluded the long term interests of North America.
And what did we get in exchange from corporations for opening up the North American market thereby allowing corporations to make additional billions per year?
They took their NAFTA windfall profits they had earned in North America to Asia, and 2/3rds of North American manufacturing jobs went to Asia, as well.
Thanks for that.
But it’s not the fault of corporations. They’re in business to make money for their shareholders — which increasingly, means the 1 percent.
To one person, the actions of these corporations might seem profoundly ungrateful to North America — while to another person, these corporations acted in their best interests.
It depends who you work for, I guess…
If you’re a person who works for 1 percent of the population, then this result is acceptable to you. If you’re a person who works for the 99 percent, then this is a wicked bit of business indeed.
Occupy Wall Street protests and other anti-corporate sentiments didn’t materialize out of thin air.
The Occupy movement happened because 99 percent of the population suddenly realized that both the corporations and government were ‘against’ the little guy — you know, the people who actually pay the bills and fight in wars — not the cabal of the 1 percent and their government acolytes
If we pass TTIP and TPP in a shroud of secrecy to further satisfy the corporatist agenda the #OWS protests will seem a minor historical disruption by comparison. (Just a friendly warning from someone who believes in trade agreements)
Some look for advantages between signatories of trade agreements
Which completely misses the point.
In the NAFTA example, many people were spending endless hours trying to decide if the NAFTA agreement benefited Canada? Did it benefit the U.S. more? Or perhaps Mexico was the main beneficiary?
NAFTA was about lowering barriers to improve the free flow of trade between the North American partners with the goal of making North American products and services more competitive in all respects — against other trading blocs or nations. Not against each other.
THAT is what NAFTA was about. Which many people missed originally, or have since forgotten.
It’s too bad that the subsequent windfall profits ended up strengthening the Asian economy instead of the North American economy where all of those profits had been earned
So; Are those corporations ‘traitors’ to North Americans — or are those corporations ‘heroes’ to their shareholders?
The answer is glaringly obvious.
If you’re a one percenter (or a government acolyte of the 1%) then these corporations were ‘doing their duty to shareholders’ under legal boundaries set by government policymakers and financial regulators, even though the optics look incredibly bad for both corporations and government policymakers.
If you’re a ninety-nine percenter you probably view these corporations as ‘traitors’ to North America — even though these corporations followed the letter of the law. Everything else is just spin for you.
A summary of NAFTA?
1. It could’ve been so much more.
2. The corporations made additional billions (maybe even trillions) due to NAFTA, and in that respect it scores a clear win for corporations — but they have lost much of the support and good will of ‘We the People’ in the process.
3. The additional revenue made by corporations due to the NAFTA agreement are now in China not doing a damn thing for the North American economy where those windfall NAFTA profits were earned, making NAFTA the third-largest transfer of wealth in modern history.
(a: The largest wealth transfer in modern history was from the Old world to the New world, b: the second-largest wealth transfer in modern history was from the West to the oil rich Kingdoms, since 1932)
4. NAFTA was a major instrument in the creation of the 1 percent and the societal problems that have since flowed from rising inequality.
Unprecedented in modern history, the 1 percent own more wealth than 1/2 of the world’s population and by 2030 the 1 percent will own 3/4 of the world’s total wealth.
Leaving only 1/4 of the world’s wealth for the 99 percent to exist on, going forward…
Can you say… inequality? Or how about… protest marches? This time with billions of protesters.
As productivity has only little room for improvement in the developed world, the only other factor to allow the present economic paradigm to continue is falling incomes for the 99 percent
If you don’t recognize that as a looming societal apocalypse, you’re not an economist.
If you are an economist, I apologize in advance for your nightmares.
It looks like it’s up to citizens to stop policies that are clearly skewed to benefit the 1 percent and are increasingly detrimental to the 99 percent.
- The Muddled Case for Trade Agreements (Project Syndicate)