One of the good things about the stock
market coming back down to Earth after a
prolonged bubble is that it leads people to
question other misconceptions about the
economy. When stock prices were soaring we
heard all kinds of nonsense about a "new
economy," technological revolutions, and profit
projections that were just too miraculous to be
The standard litany about the wonders of
globalization could be the next myth that is ripe
for debunking. For decades we have been told that
increasing global trade and investment was great
for everyone, with the exception of some
inevitable "losers" who would hopefully retrain
for new jobs (perhaps in the "new economy.")
Like the investment advisers who hawked
Enron and WorldCom stocks as they were
heading toward disaster, most of the "experts" on
globalization have long been avoiding the real
For starters: the real median wage in 1973
was $12.45 (measured in 2000 dollars). In 2000 it
was about $12.90. Considering that the US
economy grew by 72 percent (per person) during
that period, somebody got shafted. Since the
median is by definition the middle of the wage
ladder, that somebody includes the majority of
employees in the United States -- not just the
textile or steel workers who have been hit directly
by foreign competition.
Anyone who is old enough to have lived
through the 1950s, 60s, and 70s knows that it was
not uncommon for a typical wage-earner to buy a
house, support a family, and even put the kids
through college with just one income. That doesn't
happen any more, and these statistics are another
way of expressing America's changed reality.
Interestingly, almost all of the research by economists shows that our opening up to foreign trade contributed to this massive redistribution of income. The only question is: how much? Even if we take the smaller estimates of how much redistribution was due to increased trade -- not to mention US firms moving production overseas -- it is easy to show that about three-quarters of the US labor force has suffered a net loss due to globalization. This takes into account (as do the above numbers on the real median wage) all the cheap DVD and CD players, clothing, and other consumer goods that we now import from overseas. For the vast majority of Americans, the losses from globalization have outweighed the gains, in strictly economic terms.
This should not be surprising, since our
political leaders have made it their mission for
more than 30 years to rewrite the rules of global
commerce (for example, in such agreements as
the North American Free Trade Agreement or the
World Trade Organization) in ways that give
corporations more power and workers less.
What about the developing world?
Unfortunately the official, undisputed numbers
tell a very different story here, too, than the one
we have heard from the cheerleaders on TV. The
growth of income per person in the low and
middle-income countries dropped sharply over the
last 20 years. If we compare the last two decades
(1980-2000) to the previous 20 years (1960-
1980), we find that these economies advanced by
less than half their prior rate of growth.
As a result of this slower economic
growth, most developing countries also saw
reduced progress over the last 20 years in such
areas as life expectancy, infant and child
mortality, literacy, and education.
This long experiment in corporate-led
globalization has been a failure, at home and
abroad. As with the end of the "new economy," it
is time to face up to the facts.
Mark Weisbrot is Co-Director of the Center for Economic and Policy Research,
in Washington D.C. (www.cepr.net)