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Don't fear globalization

Dave » 12 years 48 weeks ago

Jagdish Bhagwati is the author of In Defense of Globalization, a book that, as its title suggests, takes on globalization’s critics and aims to show that globalization is in fact the most powerful force for social good in the world today. He’s surely qualified, as Columbia University’s Professor of Economics, Senior Fellow in International Economics at the Council of Foreign Relations, and a former Special Adviser to the United Nations on Globalization.

I only recently purchased the book and will share more as I read it, but I’ve been meaning to share a bit from a recent CIO Insight (March) interview with the author.

In the interview, Bhagwati says that fear over losing jobs to places like China and India is largely unfounded. Many of these jobs would simply not exist otherwise, but are instead made possible in a world marketplace.

It’s important to remember that some jobs are just gone. It’s not that they’ve been transferred elsewhere; they’re just gone because they’re too expensive here.

That is where a whole lot of low-value, low-wage jobs are going, and that is adding to our consumer satisfaction in many ways. That is international trade in developing countries’ favor. But against that, we have large numbers of high-value jobs being created here. There’s no need to panic about the rise of India and China, because there’s going to be a lot of trade, and both sides are going to win.

He says that foreign investment is a two-way street, and it benefits America nearly as much as it benefits other countries.

A lot of what we send out is to the poor countries. A lot of what we get is really high-value investments from places like Germany. If you go down Interstate 95 in South Carolina, there’s a lot of German investment. That particular segment of Interstate 95, I’m told, is now called the Autobahn. The Germans have really lifted it up. And there are lots of examples like that.

Globalization is a source of gain, he says, and we need to adapt to what he calls “the Age of Flux”, rather than fear it.

[W]e could say, “Go to hell. We don’t really need you. We can manage by ourselves.” But today, if you’re in the international economy, if you want to lead a happy life, you have to be continuously coping with globalization and flux.

I personally agree with much of what I’ve read on Baghwati so far, and I’ll know more after I read his book.

I myself started offshoring to India in 1999, long before it really hit mainstream discussion, and I’ve often encountered the question, “But what about the fact that we’re giving away our jobs?”. The answer I give from personal experience is that if it weren’t for the easy access to talent and the associated cost savings, I would not be able to be in business. I would not be able to hire a local project manager. I would not be able to innovate and focus on what’s next. In short, lower-level jobs are being offshored, enabling higher-level jobs to exist here, and I believe that’s a good thing. That said, many of these countries are vying to be the innovaters, for the high-level jobs, and that’s something we’ll look at in a future post.

I often start with a broad stance. What should be? I firmly believe we’ve all got something to offer, and we’re all entitled to work together, fairly and morally. If our world economics impedes that, it is our world economics which we must adapt.