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« Who will rule globalization's emerging middle class? | Main | 12 steps for Obama’s historic moment »
Sunday
Feb152009

Globalization ‘R’ U.S. — a price of success

The United States has been the demand center in the global economy for so long that we can’t remember when that wasn’t true.

And yet global corporations increasingly view us as just another market among many as the global middle class expands dramatically, and rising India and China collectively compete with America’s demand function.

What’s it like to be the global demand center?

The world revolves around your needs, desires and ambitions.

You determine the new rules that naturally emerge from all this economic connectivity and transaction rates because the most important power in the global system resides with you — the consumers.

That’s what it’s been like to be the Boomer generation in the U.S. economy for the past several decades. But just as the Boomers inevitably cede their demand dominance to their demographic successors, so too does America cede its demand dominance to the rising great powers of our age — the price of our success in spreading globalization.

This shift naturally elicits fear. We sense both a zero-sum loss of our agenda-setting power and a new fiscal discipline being forced upon us by this highly competitive landscape.

But consider our greatest advantage: We’ve been mastering this “new” globalization phenomenon of economies integrating and states uniting for quite some time — indeed, we pioneered it.

Think of all the economic and political and security rule sets these United States had to build up over the decades to handle the massive amount of daily transactions between our member-states: all the travelers, cargo movement, service traffic, communications, cross-border investment flows, interstate contracts and product standards.

That’s one-quarter of the world’s economy packaged into a multinational state that the European Union’s 27 member-states seek to emulate today.

If our members were matched by gross domestic product to equivalent nation-states in the global economy, this is our putative lineup:

* Our West consists of France (California), Turkey (Washington), Ireland (Nevada), Israel (Oregon), Ukraine (Idaho), Nigeria (Hawaii) and Belarus (Alaska).

* Our Mountain states are Thailand (Arizona), Finland (Colorado), Hungary (New Mexico), Peru (Utah), Tunisia (Montana) and Uzbekistan (Wyoming).

* Our Central states feature Canada (Texas), Mexico (Illinois), Poland (Missouri), Indonesia (Louisiana), Norway (Minnesota), Denmark (Indiana), Argentina (Michigan), South Africa (Wisconsin), Venezuela (Iowa), Malaysia (Kansas), Pakistan (Arkansas), Czech Republic (Nebraska), Philippines (Oklahoma), Croatia (South Dakota) and Ecuador (North Dakota).

* The Southeast is South Korea (Forida), Switzerland (Georgia), Sweden (North Carolina), Austria (Virginia), Saudi Arabia (Tennessee), Iran (Alabama), Portugal (Kentucky), Singapore (South Carolina) and Chile (Mississippi).

* Finally, the Northeast is filled by Russia (New Jersey), Australia (Ohio), Brazil (New York), Netherlands (Pennsylvania), Belgium (Massachusetts), Greece (Connecticut), Hong Kong (Maryland), New Zealand (District of Columbia), Algeria (West Virginia), Romania (Delaware), Bangladesh (New Hampshire), Morocco (Maine), Vietnam (Rhode Island) and Dominican Republic (Vermont).

Any superstate that can stitch together all that economic power into a single overarching rule-set must know plenty about unleashing the cumulative creative power of its people. Those nation-states listed above represent over 2 billion people, and yet somehow 300 million Americans match their combined output.

America arose as a global power, thanks to its ability to knit together its constituent states: the integration of interstate trade through the disintegration and geographic distribution of production chains, with transportation infrastructure paving the way for national firms with national networks that peddle nationally branded products.

That American system is now replicated on the global stage in the same manner: integrating trade by disintegrating production, thus making possible global firms with global networks for globally branded products.

As we grew, America’s greatest challenge came in improving the rule sets that bound together participating states. The same is true for globalization today.

When it comes to wringing out competitive efficiencies through improved rules, nobody’s done it — or does it — better than America. If we can remember that one thing from our history, we’ll be fine in the years ahead.

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