It would be remiss not to mention the on-going Supreme Court nomination hearings. However, the highly charged politicized process in DC is something too partisan to make for a good, positive discussion this week. We encourage our readers to watch and draw their own conclusions.
But the 24-hour news cycle always delivers stories that can, and, will affect your money. One of those stories was President Trump at the UN this week. Among the many topics he discussed, renouncing globalization was at the top of the list.
And good for him.
Love him or hate him, the President was right to assert the United States’ rejection of the ideology of globalization. The term globalization does not have a singular meaning. It can be the rather benign belief in open markets, free trade, and equal justice among nations.
However, that simplistic belief has no relation to how globalization has played out for American workers, and advanced economies, over the last 25+ years. For those who have seen declines in their standard of living over this period of time, globalization has resulted in unfair trade, lost blue collar employment, and growing economic inequality. It has also meant an allegiance to global institutions over US sovereignty. That is morally, ethically – and Constitutionally – wrong. Free trade is great, but not when only one side is trading freely, and the other is stealing your ideas and preventing you from selling in their market. To suggest such trade is “free” is laughable.
Despite the theoretical positives, globalization in its worst form has negatively impacted American workers and the American economy, and has been a direct threat to the supremacy of American constitutional law and American sovereignty.
Here is a Short History of the Globalization Movement Over the Last 25+ Years:
- “Bill Clinton pushed Chinese admission into the World Trade Organization (WTO) and NAFTA”: Globalization’s primary issues are related to trade. The WTO is a treaty bound organization, and the successor to the General Agreement on Tariffs and Trade (GATT). GATT and the WTO is an American created, American led organization whose sole purpose was to bid together like-minded Democratic and market economies in a rules-based global trading system. China was a backward, third world nation in the late-90s. But when Bill Clinton agreed to their admission to the WTO in 2000, the Chinese economy went into over-drive, benefitting from technological theft of American intellectual property and compliant US businesses. It is not a democratic country and is not a market-driven capitalist economy. The results have been predictable. The US hoped that Chinese admission would help them become more democratic and lead to a freer Chinese economy. It has not.
- “The first President Bush and Bill Clinton negotiated the free trade agreement known as NAFTA”: The second pillar of globalization was NAFTA. The US Senate ratified the treaty between the United States, Mexico and Canada, in November 1993. It was designed to create a large free trading bloc eliminating tariffs and expanding GDP for all three countries. It did expand GDP, but Canada continued to place tariff’s on US agriculture and Canadian firms regularly steal US pharma intellectual property to sell generic drugs at a lower price. Mexican labor is much cheaper due to few if any environmental or regulatory standards. President Clinton also promised it would reduce illegal immigration, as expanding markets in Mexico would provide greater opportunities for Mexicans within their home country. None of that proved true, and nothing more than an unequal marketplace has evolved.
- “Clinton argued, as did Bush 43 and President Obama since, that free trade would lead to more money in the pocketbooks of Americans”: On average, household incomes did rise over the last 25 years, but they remain stagnant when adjusted for inflation. Not all of the rise can be attributed to globalization, and the primary concern is that the average rise in incomes does not reflect an equal distribution, as the highest 1% has been the primary beneficiary from globalization. Blue collar and middle-income families have seen their wages either flatten, or falling behind (Economic Policy Institute, www.epi.org). This argument from our leaders has been proven demonstrably false.
- “Globalization has not led to greater global financial stability”: Free trade and the submission of our sovereignty to global institutions, has not led to greater financial stability and unencumbered GDP growth. In fact, it has led to quite the opposite:
-From 1945 through 1971, there were no substantial financial crises. This is best known as the “Bretton Woods system.” This era was a system supported by the US dollar anchored to gold.
-From 1971 through 1980, developed nations went through a period of stagnation and recession due to Nixon’s removal of the dollar from the gold standard, oil shocks, etc., but no systemic crisis threatened western economies.
-From 1980-94, developed economies enjoyed unperilled growth through the Reagan Revolution, led by tax cuts and a “strong dollar” policy. The 1987 stock market correction had no impact on the larger economy and was concentrated in financial markets for a short period of time.
-But from NAFTA 1994 forward, which most consider the advent of the globalization era, we have seen massive global shocks every few years. they have included and not been limited to: (A) Asian currency crisis; (B) Russian ruble crisis; (C) Mexican peso crisis; (D) Dot.com bubble burst; (E) Long-term Capital Management bailout; (F) 2008 Financial Crisis. And there are many more.
The basic tenets of globalization have proven untrue, and the consequences have been quite damaging to individual American families:
- China does not play by the rules, they do not enforce the same standards as western countries, and regularly steals US technological advances and intellectual property. They sell into our market with impunity, while restricting US companies from access to Chinese markets. We were told they would become more democratic from this engagement. This has proven untrue.
- Mexico was supposed to see an increase in GDP and business expansion which would slow illegal immigration into the United States. That has proven to be woefully untrue.
- Expanded wealth has not occurred, and US blue collar labor has been hollowed out by companies leaving to seek lower labor costs.
- There has been increased inequality, as most of the gains have gone to the upper end of the wage scale.
Globalization has proven to be a negative for US policy and more importantly US citizens. The promises of increased wealth for everyone has only proven to serve as increased wealth for foreign countries on the backs of US intellectual property and innovation. And actually, it has increased the wealth and power of a communist enemy of our country.
Globalization has not resulted in free trade or fair trade….it has only proven to be a bad deal for America.
Whether you love the President or loathe him, on this policy, he is absolutely correct. Globalization should be rejected by American leaders.