Updated: Jun 21, 2020
Welcome back! We’ve got an exciting topic for you today: Globalization.
I know it doesn’t exactly sound like an exciting topic, but it is.
It’s an exciting topic because globalization is the driving factor of the two biggest political events of the past five (5) years:
...and the 2016 Presidential Election
If you understand the idea of globalization, then you’ll understand how both of the above issues happened.
A Tale of Two Definitions
The classic definition of globalization is defined as the “connection of different parts of the world”.
Here’s the problem though: the classic definition of globalization is not what we’ll be talking about today.
Today we’ll be talking about the MODERN definition of globalization. I like to call it Globalization. It’s spelled the same as globalization, but with a capital G.
Let’s differentiate the two.
The classic concept of globalization doesn’t have a start date. It’s always been happening. The creation of the Silk Road was globalization. The rampage of the Mongol Empire across Asia was globalization. The creation of Morse Code was globalization.
The classic definition of globalization is simply the process of becoming a more global and connected world: in trade, in networking, in culture, in politics, in travel. It’s always been happening, and it will continue to happen.
The modern definition of Globalization, on the other hand, isn’t something you’ll find on the internet. I just made it up, and it can be defined as such: Globalization is the current world order that focuses on a global society rather than a local society.
A Metaphor About Wind Turbines
Overall, Globalization has been an enormous good for the world. It has increased the wealth in many countries. It has closed the income gap in many countries. It has pushed countries to open their markets and to become more democratic in their approach to human rights and the pursuit of happiness. It has increased market competition around the world, which in turn lowers the prices of goods.
Globalization was supposed to make life better for everyone.
And it did! …..…sort of.
But, some people are still hurt by it. Go ahead and reread the first word of that last paragraph.
“Overall”. What does that mean? It means that, overall, things are better than they were 50 years ago. But the term ‘overall’ can be deceiving.
Let’s look at an example:
These are five (5) wind turbines in different parts of the world. And they each produce ten units of power. Together, they produce 50 units of power.
A new rotor gets installed for all five (5) of these wind turbines. It’s been said that these new rotors are more effective at gathering wind energy.
Let’s look at their energy production after a hard day’s work with the new rotors.
Wow! All together they’ve increased their energy output by 30 whole units! That’s amazing! On average, they’ve also increased their production by 6 units apiece.
The new rotors are a success. Great stuff, team. Keep those positive numbers coming in.
But wait, let’s take a closer look…
Okay, so energy output increased for 4 out of 5 of the wind turbines by 10 units each. But that 5th guy over there decreased by 10 units! He’s not spinning AT ALL.
So, while total and average energy production is up, you would never notice this malfunctioning wind turbine if you ONLY looked at the total and average increases.
This kind of stuff happens all of the time in many areas: in finance, in statistics, in factory production. Looking at the total and average increases is usually very helpful in life.
But the difference between those examples and the example of Globalization is that Globalization’s wind turbines are people.
And unlike those wind turbines, people have feelings and they can get upset. Wind turbines can’t get upset.
Another difference between the wind turbine example and Globalization is that the malfunctioning wind turbine doesn’t affect the productivity of the other four wind turbines.
In a town like Galesburg, Illinois, it’s hard to see it this way.
A Town Like Galesburg, Illinois
(and the story of the Zero-Sum Game)
This is Galesburg, Illinois.
For much of its existence, Galesburg, Illinois was an industrial town. It was situated right on the national railroad and was a perfect spot for factories to create and ship products…until the 1990s. In the 1990s, the North Atlantic Free Trade Agreement (NAFTA) was signed to make it easier for trade to happen between Mexica, Canada, and the United States.
Unfortunately, NAFTA also made it easier for factories to relocate in Mexico, where it was cheaper to produce the same products.
Simply put, Galesburg experienced a decline in power. Factories left, available jobs declined, and the factories that did stay were forced to provide lower salaries so that they could continue to be competitive with factories in Mexico.
Just to put this into perspective, salaries in Galesburg decreased 27% from 1995 to 2015, adjusted for inflation. For perspective, if the rest of the country was making $50,000 per year in 2015, they were making $36,500.
"But Eric, couldn’t these people just find other jobs or move somewhere where other jobs were available?"
Sure, they could. But humans are interesting creatures. Even when a solution is staring them in the face, it can be hard to see it. You find yourself jobless after decades of employment. Your parents were employed there in the town. Your grandparents were employed there in the town. You’ve worked in a factory most of your life and you don’t know what other industries are available for you. It’s also not guaranteed that any new job you find will be permanent. You find yourself caught in a geographic bubble and there doesn’t seem to be any way out.
Look at this image of the Rust Belt, an area known as a former industrial behemoth. If you’re smack-dab in the middle of the Rust Belt, it can be hard to find an escape.
In towns located in the Rust Belt, you watch factory after factory close and reopen somewhere else in the world. To you, it seems like there must be a winner and a loser in this global economy. If a factory closes, it must open again somewhere else. This philosophy is known as a zero-sum game. (we’ll get into the legitimacy of these claims in a little bit.)
This is part of the reason so many people start to dislike Globalization. In their opinion, the global elite are working against them.
A Brief History of Globalization
Modern Globalization (as opposed to lower-case globalization) emerged just after World War II during a world that was changing very quickly.
One of these changes was the creation and implementation of International Organizations.
I’m talking the UN, the IMF, the World Bank, the World Trade Organization, UNHCR, etc, etc, etc.
These organizations were meant to bring order to the world after the sheer mess that was World War II. And they did bring order to the world. For the most part.
Over the years, though, these organizations began to represent a global world order: a group of social elites who ignored the needs of the average person while pushing their own elite agenda. People began to feel like these social elites ran the world and didn't care about the average person, like those who lived in places like Galesburg, Illinois.
The General Gist of It All
So, who makes up these people-turbines? Well, they’re everywhere. They’re from many different countries and from many different socio-economic backgrounds and industries.
But they all have one thing in common.
They’re all that little wind turbine that lost power.
This decline in power is especially evident in industries like manufacturing, coal mining, and industries that used to be big but aren’t anymore.
Places like Europe and the United States are prime places where people used to feel powerful but don't anymore.
But this isn't always the case. The anti-Globalization sentiment spread to other people who felt less powerful than before. There's no requirement for people to feel this way, and you don't have to live in a town like Galesburg, Illinois. Because once an idea catches on, people who are experiencing a decline in power can influence other people to feel the same way. And the feeling has been catching on for forty years.
If you’re one of these people, you start to resent the politicians and social elites who let this happen. You start to resent the global world order because they don’t listen to you and they don’t acknowledge your concerns.
Acknowledging the Concerns of the People
And then suddenly, there is an opportunity for your voice to be heard.
In America, that opportunity is Donald J. Trump, who finally acknowledges you as a person. He acknowledges your concerns. He acknowledges your plight.
In the United Kingdom, that opportunity is Brexit. Brexit represents a chance to separate from the European Union and to finally reestablish itself as a sovereign nation.
And it doesn’t just happen in these two countries. You start to see people unite against Globalization all over Europe: in France, in Italy, in Germany.
In America, they’re told that coal jobs will come back. They’re told that America comes first, that Trump will personally place tariffs on other countries so that factories will return to America to save money. They’re told that the political swamp will be drained and that real politicians who listen to the people’s needs will be elected.
But are these promises real, or is it all a facade?
The Bitter Truth
It's all a facade. I don’t agree with the anti-Globalization sentiment. In fact, I’m very much against it.
Here the bitter truth:
Globalization is a net positive for the world and by allowing free, global trade and the opportunity for developing countries to develop further, it can help everyone.
Because we are in the middle of Globalization at the moment, it is hard to see the positive long-term effects, and it is all too easy to focus on the negative short-term effects. I also think the anti-Globalization movement is a short-sighted answer to a complex issue.
I recognize that it can be hard to see the positive long-term effects when the negative short-term effects are hurting you today. The people who are losing power are real people with real concerns. I empathize with them and I think that if I were in some of their positions, I would feel similarly.
It is difficult to find a solution when you are stuck in a vicious cycle. I also recognize that the world is moving faster than ever before and that technology and changing industries make navigating the world all that much more difficult.
But here’s the thing. Our world is the most peaceful it’s ever been. More people are being lifted out of poverty than ever before. And the tertiary effects are wonderful too: social equality, racial equality, gender equality, political equality.
There will always be people who suffer and, as morbid as it sounds, it relieves that Globalization is considered one of the worst things happening in our world today.
It'll All Just Work Itself Out........Hopefully
In the long run, the people who are suffering now will eventually find their way and it is my sincere belief that this anti-Globalization trend is a short-lived response.
Here is what I see happening in the next twenty-five years: The people who are experiencing the negative effects of Globalization will have to undertake some major life changes. They will have to take more risk and move to a new area and learn new skills. People everywhere (not just the people who are suffering) will need to adopt a new way of thinking about life. They’ll start to realize that education and skill-creation is a life-long journey. People will start to realize that jobs are impermanent and that skills must be sharpened throughout life.
I hope the anti-Globalization sentiments will slowly subside as people come to terms with these truths.
A Warning for Those Who Need to Hear It
Before ending this post, I think it is prudent to offer a warning.
The anti-Globalization trend has a big overlap with Nativism, Populism, and at its most extreme, White Supremacy.
They overlap because Nativism, Populism, and White Supremacy presents easy solutions to very complicated issues.
These three ideals are common because, like it or not, the general population of the people losing power are white. And by closing off trade with other countries, bringing factories back to the United States, keeping immigrants out, they hope to bring wealth back to places like Galesburg, Illinois.
However, know this: Nativism, Populism, and White Supremacy are dangerous ideologies to believe in. It’s dangerous for the economy. It’s dangerous for people everywhere. It’s dangerous for the country. And it’s dangerous for democracy.
We’ll continue to explore Nativism, Populism, and White Supremacy in future weeks as we explore the refugee crisis, immigration, and the Trump presidency.
And on that somber note, I'll see you next week!