Out of Control Policy Blog

Globalization: Rejoiced in Practice and Misinterpreted in Theory

Two days ago, the Financial Times published an article based on a recent FT/Harris poll that supposedly proves people of rich countries are "backlashing" against globalization. Upon close inspection, however, the conclusions drawn from the poll are superficial and over-speculate opposition to globalization.

When looking at the full poll results, it is apparent that people hold an intricate view of globalization that is not adequately reflected by the poll and misrepresented in the article. The article reports that:

citizens of rich countries are looking to governments to cushion the blows they perceive have come from the liberalisation of their economies to trade with emerging countries.

Nevermind the fact that no question in the poll addressed trade with emerging countries. Only one question addresses the role of government in solving apparent problems of globalization, and that question dealt with the EU's role. Individual governments were not addressed at all relating to the impacts of globalization. As well, the results show that people are weary of government intervention in the economy, with many across national boundaries believing the government is currently too large.

As well, while majorities of respondents in each country responded that globalization had an overall negative effect on their country, pluralities and majorities of respondents also believed that 'free competition' should be a goal of the European Union. This goes to show that people support the act of globalization, but have been taught to blame the name globalization for so many downfalls.

This leads in to the second problem with drawing significant conclusions from this poll: what people say and what people do are entirely different. While people say that they think globalization has negatively impacted their country, people in the countries polled clearly have a demand to wear more foreign fashion, feast on fast food or take countless trips abroad for family vacations. Indeed, consider these findings from a recent Financial Services Forum report:

-Living standards in the United States are $1 trillion higher per year than they would have been absent decades of globalization. This translates into an average gain of at least $10,000 per U.S. household per year.

-The overall U.S. trade deficit of $763.6 billion in 2006 masked a sizable services-trade surplus of $72.5 billion that partly off set a goods-trade deficit of $836.1 billion.

- A March 2007 WSJ/NBC poll found that 39% of Americans believe that trade agreements have helped the U.S. and 28% believe they have hurt the U.S.

-Global engagement fosters high productivity in American industries, but typically with substantial churn at the level of individual firms, with pervasive shutdown of inefficient plants and even entire companies.

-Looking ahead, a move to global free trade and investment in both merchandise and services will generate large gains for the United States and for the rest of the world as well. Annual U.S. income could be upwards of $500 billion higher; this translates into average gain of at least $5,000 per household per year still to be realized.

-From the mid-to-late 1970s to the mid-to-late 1990s, the real and relative earnings of less-skilled Americans was poor relative to both economy-wide average productivity gains and also the earnings of their more-skilled counterparts.

I doubt many people polled are opposed to these sorts of benefits they have experienced. All this report shows in the end is that globalization is still a dirty word. Good thing people still enjoy being prosperous in their actual lives.

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