The rising sense of individual risk from globalization

EDITORIAL: “Rich man, poor man: A poisonous mix of inequality and sluggish wages threatens globalization,” The Economist, 20 January 2007, p. 15.

ARTICLE: “In the shadow of prosperity: Hard truths about helping the losers from globalization,” The Economist, 20 January 2006, p. 33.

ARTICLE: “The Income Gap: Is globalization to blame? Only in part,” by James Pethokoukis, U.S. News & World Report, 22 January 2006, p. 53.

Thoughtful collection of articles on the ever-present-and-now-rising-anxiety on globalization (which, not surprising, always grows when globalization is moving fastest).

The new source of fear on globalization is located within white-collar job categories. The globalization of R&D creates this, but so does the growing outsourcing of tasks previously seen as protected by their high status: like components of lawyering or doctoring.

Then there’s this lurid fascination with the top 1 percent who are cleaning up--Michael Jordan style--as the search for global talent gets hotter and hotter. But that’s a hard one to curtail, since the rising complexity of managing global corps simply drives up the cost of effective leadership.

I mean, who wants less effective leadership of these globe-spanning industry leaders?

Plus, while everyone’s whining about the need for more “soft power” leadership from America, there it is, staring us in the face: our execs get the chance to shape the economic futures of foreign economies through such work. We grow the Core by first and foremost preserving it and making it more resilient over time.

If that “winning” generates mini-Gaps back home (my hometown of Boscobel is surrounded by such “losing,” as factory after factory sees jobs go abroad), then we can either step up to the implied challenge of job retraining and life-long learning, or we can put up walls and simply delay the inevitable.

The way ahead is one that many experts have frequently cited in the past (from The Economist:

In Europe, Denmark has led the way. The Danish system of “flexicurity” appears to offer the best of both worlds: dynamic labour markets and low unemployment couples with generous support for those who lose their jobs.

Denmark has a long history of weak job protection. Employers hire and dismiss people at will. Around a quarter of the workforce is unemployed at some point in any year. But the jobless enjoy generous welfare benefits while they look for work, around 80% of their previous wage on average. To ensure this does not deter people from finding new jobs, the Danes oblige the unemployed to be trained and to look diligently for work.

The European Union is urging its member to follow the “flexicurity” model. Democratic wonks in America enthuse about it too. But Denmark’s approach has evolved over decades and cannot easily be copied. Besides, it is extremely expensive.

Denmark spends 2% of its GDP on such stuff, while the USG spends about 0.16%, so we’re told America could never match such a program--at least with our state. But since, as the article points out, “employers are far better at training workers than the state,” our best approach would seem logical enough: tax breaks or other incentives for private business to engage in this sort of effort as broadly as possible.

Another option described is wage insurance.

The Economist’s final take is a good one:

The tasks of freeing up labour (in Europe), reforming health care (in America) and improving education (everywhere) are far more important than any amount of experimentation with wage insurance or retaining schemes.

Will we see that from the ascendant protectionists in Congress? Not if Lou Dobbs and others of his ilk get their way.

You want to watch the most awkward hand-off on TV today? Just check out Wolf Blitzer giving Lou Dobbs preview time at the end of his nightly broadcast. It’s like watching a scientist introduce an evangelist--a total freak show during which Blitzer can barely keep a straight face (he often references Lou’s “conversion”).

Comments

[Nathan Machula]

The Danish ambassador to the US spoke at the University of Minnesota in November. He bewildered the overwhelmingly lefty crowd that was reflexively anti-Bush/anti-Capitalism/anti-globalization, but I was pleasantly surprised. I'm generally opposed to socialized healthcare and long-term welfare for the able-bodied, but Denmark seems to have found a compromise that works for them. Much of what he said about Denmark's support of US foreign policy sounded like he understands Tom's vision. (If I recall correctly, Tom spoke in Denmark a couple years ago.)