In my mind, the word globalization is often equated with modernization.  In ideal terms, it’s a rising tide, the spread of ideas and technology which will hopefully improve the lives of a people around the world.  In more realistic terms it seems that the poor are being taken from farmlands and placed in factories which promise to lead them on the path to modernization, but in fact their lives do not experience real improvement without political and social changes. 

When I think of a country that has reaped the benefits of globalization I first think of the U.S., but according to this article maybe I shouldn’t.  This article lists the top 5 countries on a globalization index.  Go ahead and think of 5 countries you would consider to be globalized.  Now look at the list in the article (3rd paragraph).  Pretty surprising huh? I was certain I would see the U.S. there, but instead it says that the U.S. is ranked 50.  What does one make of this?

The article claimed, “the world’s largest economy… can afford to be more inward-looking because it relies on internal trade and production.”  It becomes concerning when we consider that our economy is not growing as quickly as certain other countries around the world.  It is common knowledge that over the past few decades the U.S. has transformed into a service based economy, meaning that a larger portion of our GDP is from the sale of our services, and based on the statistic about our degree of globalization it would seem we are largely selling those services to ourselves.  There are times when specializing can pose a threat.  For instance in the worldwide food economy, developing nations are told to rely on trade for food, but “The more they are told to rely on trade, the less they invest in domestic agriculture.” This means there is no escape for an economy that has made this move, which becomes problematic because “Food moves where purchasing power is highest, not where the need for it is most urgent”. There seems to be a focus on finance in the U.S. I would call it the ultimate level of specialization, which allows our economy to make money simply by moving money around.

A quote from the book “Enough” comes to mind:

Some men wrest a living from nature and with their hands; this is called work.

Some men wrest a living from those who wrest a living from nature and with their hands; this is called trade.

Some men wrest a living from those who wrest a living from those who wrest a living from nature and with their hands; this is called finance.

So how does this relate to globalization?  Is the U.S. sitting on the sideline while this phenomenon occurs?  Is globalization something that is generally a good thing? Should we become more involved? More co-dependent?


2 responses »

  1. The quote from “enough” pretty simply lays out different layers of profitability. Some may view this a negative latter where “finance” profits from “work” without getting their hands dirty. I think it is more of a reflection of different levels of economic development in countries. More developed countries are able to be involved in trade and finance which are more attractive because a) there is a need for them and b) they are more profitable. There is more return on less labor. All 3 levels are needed to drive global commerce and increase GDP around the world.

    • Jim says:

      I think your interpretation of the quote is a fair one, but I think its purpose is more than just to highlight a latter existent within economies. I think its other purpose is to highlight how removed finance is from the most fundamental activities in our economy. I believe that the quote still begs the question, and I think it’s a fair one, “what intrinsic value is left by the time we are as far removed as finance?” I agree that finance is a necessary function which provides more efficient investment and therefore economic growth, but I wonder if it has gone too far. In other words, is it possible that some of the efforts of people in finance are not actually working to create value? Have people just found a way to make money without providing any societal benefit? The idealist in me wants to believe that whenever someone makes a dollar the world should be better off, and I’m not sure it always is when someone in finance gets rich.

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