A High-Tech Worker's Guide to Globalization's Myths

Computerworld - Myth 1: Free trade is an economic wonder. Protectionism is a disaster.
No economy is completely free or completely closed. While mainstream U.S. economists tout the virtues of free trade, they barely mention all the restrictions we have on trade stemming from national security concerns (thousands of items restricted because of potential "dual-use"), moralistic reasons (e.g., online gambling), health and safety concerns (we can't even import medicine from Canada), or plain old import quotas (e.g., textile import quotas or "voluntary" import quotas on cars made in Japan).
In the past 50 years, nations of East and South Asia (Japan, South Korea, Taiwan, Malaysia, Thailand and, yes, China and India) have become the world's economic powerhouses. But they have never believed in or practiced "free trade." They practice something called "managed trade," what we call "protectionism." Whole industries are protected from foreign competition until they have enough competitive advantage to be strong exporters. Consumer imports are allowed only when protecting domestic producers isn't part of national long-term economic plans. If protectionism is that bad, these countries would be basket cases, not 21st century challengers to the current economic order.
Free trade is a wonderful thing for the "true capitalists" in a capitalist economy -- those who make money from money, rather than by producing something or serving someone. If you can live off your investments in corporations that buy cheap in low-wage countries and sell dear in good-wage societies, free trade must be great; the freer the better. But what's good for the owners of capital isn't necessarily good for those they employ. Our blue-collar workforce found that out over the past 25 years. The white-collar professionals are coming to grips with that reality now.
Myth 2: Globalization is inevitable. It's impossible to save your job.
Beware the classic half-truth! As electronic communications get ever better and cheaper, as transportation links become truly global, this planet has become a smaller place. This process started two centuries ago and will undoubtedly continue. In that sense, globalization is inevitable and should be welcomed.
Globalization makes the wholesale transfer of jobs from one continent to another possible, but it does not make it inevitable. Several industries and professional groups in the U.S. have been quite successful in protecting themselves from the downsides of globalization. Let's look at a couple of examples:

1. Walk down the aisles of a Wal-Mart or Target, and you'll find that most items are made in China (or at least Asia) and are surprisingly inexpensive. Then walk into the pharmacy section of the same store, and something magical happens. Very few medicines have the "Made in China/Asia" label, and they aren't cheap. Hmm! What's different here? Are Asians incapable of manufacturing pharmaceuticals?
   Actually, India and China are huge manufacturers of bulk painkillers, antibiotics, cough syrup and much more. Most everyday medicines are available there at prices ranging from one-fourth to one-tenth the U.S. price. But the big pharmaceutical companies have poured tens of millions of dollars over many decades into political lobbying. Politicians have rewarded them with import regulations (often disguised as health and safety rules) that prevent any real price competition from lower-cost foreign manufacturers. We can debate whether such restrictions are good or bad for the average American. But they unquestionably protect the huge profits of the big pharmaceutical companies and the jobs of their employees. If global sourcing can be halted for as big and as basic an industry as pharmaceuticals, it can surely be done for other industries as well. All that's needed is political clout.


2. Here's a smaller and very local example, but it illustrates the same point. I live in the Austin metropolitan area, which has seen stunning high-tech job losses due to both offshoring and the importation of work-visa (H-1B, L-1) holders from low-wage countries. Recently, the biggest local newspaper ran an article about how the Austin City Council wouldn't license more than two or three taxicab companies to operate in the city, thus protecting the high fare structure of the current companies and the livelihood of the operators. So, an Austin taxi driver is politically protected from lower-priced competition from even 100 miles away. But an engineer in Austin has to constantly battle low-wage competition coming from 10,000 miles away.